Korean Companies Research Articles

An Analysis of Critical Factors Affecting the Success of Open Innovation Strategies in High-Tech Firms: The Case of South Korea

High-tech firms face constant innovation and challenges due to a rapidly changing tech environment. Open innovation strategies are an important solution for fostering rapid and efficient innovation by leveraging external capabilities. This study explores the critical factors that influence open innovation strategies in high-tech companies, assessing their importance and providing key insights for promoting these strategies. Through a comprehensive literature review and expert interviews, 16 key factors impacting open innovation were identified. A hierarchical research model was developed using the ser-M (subject, environment, resource, mechanism) framework, focusing on subject, environment, resource, and mechanism for a corporate strategy analysis. A survey and an AHP analysis were conducted with 30 participants, comprising engineers and open innovation experts, all with over a decade of experience in the field within Korean high-tech companies. The analysis focused on four critical elements: subject, environment, resource, and mechanism; subject emerged as the most critical factor for successfully implementing open innovation strategies. Specifically, the will of chief executives, the direction of decision-making, and technological environment changes were found to be significant contributors. The consensus between engineers and experts confirms that while environmental and resource factors are vital, strong leadership and effective decision-making are paramount for successful open innovation in high-tech companies.

The Effects of Supply Chain Alliance Orientation on Ambidextrous Innovation and Market Performance: A Multigroup Study of US and Korean Firms

This research explores the effects of supply chain alliance orientation on ambidextrous innovation and market performance with evidence from South Korean and US firms amid COVID-19. Three theories underpin the conceptual framework including the resource-based view, relational view, and ambidextrous innovation while psychosomatic items generate the variables: supply chain alliance orientation, exploration innovation, exploitation innovation, and market performance. Hypotheses are posed through a literature review. A multigroup analysis of 427 firms using MICOM with PLS-SEM is employed to reveal differences between South Korean and American companies. Here Korean firms generate ambidextrous innovation and market performance better than US firms. Mediation tests are also conducted. Implications are provided.

Research on Packaging Design Elements for Expanding Market Share of Fruit Juice Beverages in China

Purpose: By examining Chinese consumers’ preferences and needs in fruit juice beverage packaging design, this study provides scientifically grounded strategies and solutions for researching and developing packaging designs in the juice beverage industry. Research design, data, and methodology: This study systematically analyzes the packaging design of fruit juice beverages and introduces a demand evaluation methodology for fruit juice beverage packaging by integrating the Kano model and the Analytic Hierarchy Process (AHP). Results: Based on the calculation results, ‘Nontoxic’ and ‘Clear ingredient information’ were important in Must-Be Quality Element. ‘Portable’ and ‘Lightweight performance’ were the top 2 in One-Dimensional Quality Element. In the Attractive Quality Element, ‘Unique pattern’ was identified as the most important factor. Conclusions: The analysis results of this study suggest the importance of fruit juice beverage packaging design elements preferred by Chinese consumers and are expected to be used as reference material by Korean companies in the future when preparing plans to enter and expand into the Chinese beverage market.

Barriers to innovation and innovation performance: the mediating role of external and internal funding in Korean green companies

Barriers to innovation and innovation performance: the mediating role of external and internal funding in Korean green companies

Geopolitical risk and credit rating: evidence from North Korea’s threats

ABSTRACT We examine how geopolitical risk from North Korea’s threats affects South Korean firms’ credit ratings. North Korea’s threats, measured by the number of missiles launched, are negatively related to firms’ credit ratings. Employing a sample of South Korean public firms over the period 2012–2021, we find that the credit ratings of South Korean companies decrease with the number of missiles launched. Cross-sectional analyses indicate that the negative effect of North Korean risk differs depending on the firm characteristics. Specifically, firms with higher debt ratios are more significantly affected by North Korea’s threats. In addition, firms whose financial statements are audited by Big 4 auditors are associated with higher credit ratings than those by non-Big 4 auditors. Our findings contribute to the literature on geopolitical risk by identifying the effects of geopolitical risk on credit ratings.

기후변화 관련 보험섹터 대응에 관한 국제 규제 서설

The 2015 「Paris Agreement on Climate Change」 set forth carbon emission reduction targets by 2050. This landmark accord has catalyzed the formation and acceleration of concrete plans by international organizations, governmental bodies, and individual corporations. The insurance sector, in particular, has witnessed numerous countries enacting or planning legislation to align with these targets, implementing pertinent policies in response. As the proposition “Only One Earth” suggests, addressing the climate crisis necessitates the international community's unified objectives and coordinated efforts. In this context, various international organizations and initiatives have articulated numerous goals, standards, and implementation strategies. While most of these are predominantly voluntary, receiving endorsement from individual countries and insurance companies, there is a substantial possibility they will eventually be incorporated into domestic legislation or regulatory frameworks. Even before being legislated in each country, international organizations and major companies investigate, report, or disclose the participation status, level of participation, and compliance of individual companies. These international organizations and major companies analyze and evaluate the level of compliance to assess the value and reputation of the respective companies and determine whether they are suitable for transactions. Consequently, the recommendations and regulations of international organizations and initiatives often function as de facto norms. In the face of robust global trends such as ESG(Environmental, Social, and Governance), responsible investment, and the Sustainable Development Goals(SDGs), any country or insurance company exhibiting reluctance or passive engagement risks devaluation. Strategic, timely, and appropriate participation in these initiatives is imperative; however, the multifaceted nature and diverse approaches to addressing the climate crisis complicate decision-making processes. Additionally, existing initiatives may conclude, and new ones may emerge, further complicating the landscape. In the Korea Ins. L. J.(Vol.18, Issue 1, 2024.), I examined the “Net-Zero Insurance Alliance(NZIA)”, which was ambitiously launched in 2021 but encountered significant challenges due to warnings from several U.S. state governments. It was anticipated that the outcome of the U.S. presidential election in November 2024 would impact its trajectory. However, NZIA was unable to withstand the pressure exerted by Republican-led state governments and ultimately disbanded. On April 25, 2024, the United Nations Environment Programme Financial Initative formally announced the dissolution of NZIA and the establishment of the “Forum for Insurance Transition to Net Zero(FIT)”. The short-lived misfortune of NZIA, which included the participation of three Korean insurance companies, illustrates the necessity for prudent selection of international engagements. Simultaneously, regardless of the imperative nature of tasks essential for the survival of humanity, the stark reality of the international community is characterized by persistent obstruction and interference from vested interest groups. Consequently, addressing international regulations necessitates meticulous and strategic policy consideration. This paper provides a concise overview of the most pertinent and influential aspects of the insurance sector's engagement in the complex and diverse international activities aimed at addressing the climate crisis. Given the vast scope of this topic, certain areas remain unaddressed in this paper and will be supplemented in future research. Furthermore, subsequent publications will explore legislative and administrative responses by various governments, as well as the responses of individual insurance companies.

An Analysis of Conflict Patterns between Headquarters and Foreign Subsidiaries: Focusing on the Case of a South Korean Company's German Subsidiary

An Analysis of Conflict Patterns between Headquarters and Foreign Subsidiaries: Focusing on the Case of a South Korean Company's German Subsidiary

Perceptions of organizational politics and organizational commitment: role of personal motive and ability

PurposeThis study expanded previous studies on the relationship between POP (Perceptions of Organizational Politics) and OC (Organizational Commitment); and it examined the mediating effect of OCM (Organizational Concern Motive) and the moderated mediating effect of PS (Political Skills). Based on the uncertainty management and expectancy theories, the mediating role of OCM was assumed; also, the moderated mediating effect of PS was assumed, because of the effect of the POP on members' motives would vary depending on each individual's ability to respond.Design/methodology/approachTo collect the required data for analyzing the research model of this study, a questionnaire was conducted on employees of South Korean companies and institutions. To verify the hypothesis of this study, the measurement and hypothesized models were analyzed sequentially.FindingsThe results of this study indicated that the OCM mediates the relationship between POP and OC. Furthermore, the mediating effect of OCM is moderated by PS. Specifically the negative effect of the POP on the OCM was mitigated in the group with proficient PS.Research limitations/implicationsTo mitigate the negative effects of POP, this study suggests that managers should provide fair evaluation and reward based on performance, and consider PS as an important factor in employee selection and education/training.Originality/valueThis study is original in that it presents the mechanisms of both variables in terms of an individual's motive towards the organization. Furthermore, this study is valuable in that it suggests ways to mitigate the negative effects of POP through PS.

Competitiveness Strategy of South Korean Cosmetic Brands: Current Practices and Opportunities for Russian Cosmetic Brands

This study analyzes place, trends and competitiveness of the South Korean cosmetics brands to identify opportunities for the Russian cosmetics brands, whose country has suffered from a large trade deficit in the cosmetics industry despite the government’s vigorous attempts in implementing import substitution policies. We constructed the econometric models (with ordinary least square, weighted least square and robust least square estimators) of the cosmetics brands’ competitiveness by employing the endogenous factors of Porter’s diamond model, which are comprised of firm factor conditions, demand conditions, related and supporting industries, and strategy, structure and rivalry. From the regression analysis, it is revealed that the brand diversification, expansion of e-commerce sales and improvement of governance quality are factors that drive up sales revenues of a cosmetic company. The follow-up comparative analysis between Russian and South Korean companies allowed us to substantiate that the main factors causing the gap between Russian and South Korean cosmetic brands are e-commerce strategies and the efficiency of the governmental system. Russian cosmetic companies should construct stable global and domestic supply chain and expand contact points with foreign customers through big data analysis and development of customized product portfolio. Furthermore, the government is recommended to implement digital services and construct a data-sharing ecosystem to enhance efficiencies of the business process.

Examining the seniority-based pay system in Korean companies: current trends and its implications for Asian economies

ABSTRACT Human resource management, including the design and implementation of pay systems, is influenced by the specific national context in which it operates. Challenges often arise when HRM practices that have been established in advanced countries are transplanted to developing nations, as they may not fully align with the unique circumstances and cultural dynamics of the target country. Until the 1980s, rapidly growing South Korean companies embraced the seniority-based pay system (SPS) in order to encourage employee tenure. The 1997 IMF foreign currency crisis led to an effort to shift away from this model, which was seen as unrelated to job roles and performance, towards alternative systems. Despite two decades of reforming efforts, SPS pay still prevails, particularly among production workers at large manufacturing companies under trade unions. The workplace panel survey data provides evidence that the implementation of a SPS system does not display any significant negative impact on firm performance, as measured through various methods. As such, the question is not whether to abolish the old system, but instead how to accommodate the new system. The study emphasizes aligning pay systems with the nation’s history, culture and industrialization rather than imposing foreign models.

Productivity of the Korean Biopharmaceutical Industry: Exploring the Effect of Business Model and Open Innovation

The biopharmaceutical industry in Korea is considered a key strategic industry following the semiconductor industry. However, success in the biopharmaceutical industry depends on the outcome of research and development processes that require long periods and substantial investment, resulting in a success rate of only around 2.5%–4% for new drug development. Consequently, rational strategic choices, such as determining key capabilities to pursue business, deciding where to position within the value chain and identifying collaboration partners and strategies, are more crucial in the biopharmaceutical industry compared to other industries. In this study, we divided Korean biopharmaceutical companies into research and development groups and Integrated groups, which perform both research and production, and compared their productivity using the meta-frontier methodology to verify the significance of technology gap ratio (TGR) values between groups. We also investigated the influence of open innovation activities, including the type, partners and timing, on the TGR of each group with Tobit analysis. The investigation revealed that productivity and its influencing elements varied depending on the business model. This finding suggests that this information can be utilised to develop efficient industrial policies.

Panel Technical Efficiency of Korean Companies in the Energy Sector based on Digital Capabilities

Abstract Digitalization is a crucial driver of enhanced energy system efficiency, facilitating the energy transition and offering a gateway for technology companies to enter the sector. This study, employing stochastic frontier analysis as the chosen methodology, investigates the efficiency challenges faced by companies venturing into the energy industry with a digital technology focus. Our empirical analysis reveals a positive correlation between higher total assets and increased research and development expenditures, signifying the vital importance of talent acquisition and securing R&D funding. Additionally, it is noteworthy that smaller companies experienced a more pronounced negative impact of COVID-19 on their efficiency. These findings contribute to refining digitalization strategies in the energy industry, emphasizing the role of efficiency from a corporate perspective.

Strategies for Sustainable Management of Mineral Resources for Koreaʼs Major Battery Producers (LG Energy Solution, Samsung SDI, SK On)

The proliferation of global regulations concerning sustainability and environmental protection poses a significant challenge to maintaining corporate sustainability. Consequently, companies must strategically respond to navigate these regulations in their management plans. The objective of this research was to analyze how Korean companies(LG Energy Solution, Samsung SDI, SK On) are responding to sustainable mining and procurement and how they adopt environmentally friendly practices in their mineral supply chain for battery manufacturing. We also proposed new actions to enhance their management strategies for sustainable mineral resource management. Our observations indicated that companies should implement a long-term performance measurement throughout their mineral supply chain. Additionally, there is an urgent need to develop a more proactive environmental management plan when evaluating suppliers from mineral extraction to utilization, adhering to global guidelines such as OECD regulation. In addition to the widely adopted monitoring of greenhouse gas emissions, priority assessments must be undertaken concerning soil and water pollution, waste management, and biodiversity loss within the supply chain linked with climate change under the nature-positive concept. We recommended the establishment of a recycling system for battery waste(i.e., minerals), which is essential for a resilient battery supply chain.

베이지안확률변경분석을 이용한 국내 철강기업의 에너지효율성 분석

Steel companies, due to their production processes, emit a large amount of greenhouse gases. Therefore, improving the energy efficiency of them is a very important issue in responding to climate change. The starting point for effective management of energy efficiency improvements in steel companies is the objective measurement of their energy efficiency. Previous studies primarily utilized traditional Stochastic Frontier Analysis to estimate the energy efficiency of steel companies. Meanwhile, Bayesian Stochastic Frontier Analysis, which incorporates Bayesian Inference into Stochastic Frontier Analysis, offers the advantage of more accurate and flexible estimates by considering the uncertainty of parameters. Despite the advantages, there has been no research applying Bayesian Stochastic Frontier Analysis to analyze the energy efficiency of Korean steel companies. This study is the first to apply Bayesian Stochastic Frontier Analysis to Korean steel companies, using the Gibbs Sampling technique to estimate the energy efficiency of 22 major Korean steel companies from 2011 to 2019. The key findings of this study are as follows: First, the overall average energy efficiency of steel companies is 0.5450. Second, from 2011 to 2013, the yearly average energy efficiency of the steel companies analyzed shows an improving trend, peaking in 2013, followed by a decreasing trend. Third, a comparison of average energy efficiency across individual companies reveals the firms with relatively high energy efficiency, exceeding 0.8

The Effect of KOL Marketing through Contents and Traffic on Chinese Consumers’ Purchase Intention and Brand Trust

Purpose - The purpose of this study was to analyze how the content and traffic of KOL marketing influence Chinese purchase intention and brand trust on products during KOL live streaming. Design/Methodology/Approach - Four hypotheses containing 10 segmentation hypotheses were developed. 120 valid questionnaire results from Chinese consumers using live streaming platforms like Douyin, Kuaishou, and so on, which conduct KOL marketing, were collected from the Wenjuanxing online survey and data tool from June to July of 2023. With Confirmatory and Regression Analysis to confirm hypotheses and result reliability, SPSS 24.0 was utilized to analyze the results. Findings - Results displayed that KOL content with diversity, good two-way communication, and verticality did occupy an important place in trusting brands and purchasing. Ads from KOLs seemed be the most efficient way to allow Chinese consumers to trust new brands and products. The significance of the traffic strategy could also been seen. Research Implications - Through the investigation, Chinese consumers are developing higher standard toward the content brought by different KOLs. Creativeness, uniqueness, and personalization will be the key to win trust and purchases. Abundant but popular keywords with good indexes should be embedded into dynamic and static ads, posts, and keywords lists to let consumers find what KOLs promote, and target consumer groups can be efficiently developed for Korean companies entering into the Chinese market.

Determinants Influencing Korean Agri- Food Companies’ Modes of Overseas Market Entry

Purpose - Faced with the constraints of a limited domestic market, the Korean agri-food industry necessitates regional diversification through the establishment of offshoring production subsidiaries. This study tests the validity of Root’s model of the determinants of offshoring and sequential entry to overseas markets on Korean agri-food companies’ offshoring of production subsidiaries. Design/Methodology – This study employs the convergent mixed-methods research design, wherein qualitative and quantitative data collection and analysis are conducted, then compared, before interpreting the data affecting Korean agri-food outward direct investment (ODI). Methodologically, based on Korean agri-food manufacturing company ODI data from the KOTRA, a survey was conducted to quantitatively analyze the factors influencing their selection of production subsidiaries for ODI. Findings – Though Korean agri-food companies also consider Root’s external factors when selecting overseas entry methods, the sequential entry route and selection model, factors theorized to influence Root’s overseas market entry method, were not found to be statistically significant. Instead, they tailor their market entry approach based on the type of investment and the operating objectives of the local subsidiary. This is attributed to Korean agri-food companies’ deviation from sequential entry routes when entering markets through ODI, as well as the determination of the form and type of investment of these overseas subsidiaries according to the purpose of their operations. Originality/value - This study distinguishes itself by employing a convergent mixed-methods design, which combines quantitative and qualitative analyses to identify the determinants of ODI market entry by Korean agri-food companies. Furthermore, it evaluates Root’s market entry model from the perspective of Korean agri-food companies.

A Study on the Exchange Rate Linkage between Korea and China following the Reform of the Yuan Exchange Rate System

Purpose - This study aims to conduct an empirical analysis of exchange rate volatility and dynamic correlation between Korea and China based on the “8.11” central exchange rate reform in China. Unlike other developed countries’ foreign exchange markets, the Chinese Yuan has not yet achieved complete free circulation, and China has an onshore Yuan exchange rate (CNY) and an offshore Yuan exchange rate (CNH). In this study, we investigated the dynamic correlation between Korea’s won exchange rate and China’s onshore yuan exchange rate and offshore yuan exchange rate around the “8.11” central exchange rate reform in China. Design/Methodology – In this study, we attempted to analyze the average and the volatility spillover effect of the won exchange rate from China’s onshore and offshore yuan exchange rate before and after the 8.11 central parity exchange rate reform. In addition, the relation between the won exchange rate and on- and off-shore yuan exchange rate at various stages were analyzed through the VAR model and the VAR-BEKK-GARCH model. Findings – The results of analyzing the volatility spillovers between the KRW exchange rate and the offshore RMB exchange rate show that there are two-way volatility spillovers between the two markets, both before and after the “8.11” central parity rate reform. The dynamic correlation between the two exchange rates (CNY and KRW, CNH and KRW) is increasing over time. In addition, the two exchange rates are positively correlated with each other, implying that the volatility of the two exchange rate markets is moving in the same direction. The dynamic dependence relations between CNY and KRW become significantly higher after the “8.11” central parity rate reform. Originality/value - As a non-international currency, the won must engage in export trade and capital market transactions with other international reserve currency countries. Therefore, it is important for Korean export-import companies and investors to explore changes in the dynamic correlation between the won and the Chinese yuan through exploration.

Market orientation, corporate governance, and organizational learning: the rise of Korean popular culture

ABSTRACT Investors and managers of firms producing cultural products have long confronted the problem of low success rates. This study proposes a model arguing that corporate governance, in addition rates organizational learning, improves market orientation, which in turn influences the performance of cultural products. To support our model, this study collects 607 music videos produced by South Korean and Taiwanese entertainment companies. We measure their market orientation via the simple market research technique of data mining and examine the degree to which the characteristics of firm products are consistent with the results of market research. We find that market orientation is positively related to product performance. We also find that both corporate governance and organizational learning improve market orientation. Building on past research that has exclusively conceptualized market orientation as firm capabilities that could be improved by organizational learning, this study further suggests that agency problems between investors and artist managers hinder firms’ market orientation, and could be mitigated by strong institutions in corporate governance.

Main contents and implications of the 2023 revision of the OECD Guidelines for Multinational Enterprises*

Purpose This study aims to provide the main contents of the revision of the 2023 OECD Guidelines for Multinational Enterprises and suggest implications for the Korean government and multinational enterprises.Design/methodology/approach Following the brief history of the revision of OECD Guidelines for Multinational Enterprises, this study reviews and evaluates major substantive and procedural revisions of the 2023 OECD Guidelines, and then suggests countermeasures for Korean government and businesses.Findings The most significant substantive change of the 2023 revision is that expectations for environmental due diligence and disclosure obligations, including climate change and biodiversity, for multinational enterprises have been expanded and strengthened. Regarding procedural changes, the biggest change is the introduction of a basis rule for the National Contact Points for Responsible Business Conduct (NCPs for RBC) to judge each issue and a rule that the final statement must include follow-up details and deadlines, which is expected to strengthen the effectiveness of the NCP dispute resolution mechanism.Originality/value This study is the first academic paper to introduce major substantive and procedural revisions to the 2023 OECD Guidelines for Multinational Enterprises in Korea. This study also provides implications for the Korean government and companies following the 2023 revised OECD Guidelines for Multinational Enterprises as follows. First, the Korean government must establish a public–private partnership to closely communicate to prevent Korean companies from being harmed by failing to meet strengthening international Environment, Social and Governance (ESG) standards. In addition, Korean government should actively participate in ESG-related international forums, including the OECD, and strive to reflect the needs and interests of Korean companies. Second, the Korean NCP should strengthen its activities to prevent potential damage by expanding education and promotions for Korean businesses on related overseas legislative trends and NCP dispute case studies so that Korean companies can effectively deal with the strengthened ESG standards. Third, Korean multinational enterprises should preemptively establish an advanced ESG management system to seize new opportunities in the global supply chain previously concentrated in China and India in the process of reorganizing global supply chains according to the trend of strengthening ESG standards and the US value alliance strategy.

The Power of Political Connections: Evidence from Korean Chaebols and Government Procurement

ABSTRACT This paper investigates the impact of political connections on the performance of Korean chaebol companies. We use two indicators to measure the ability and diversity of political connections and find that chaebol companies are more likely to establish political connections compared to non-chaebol firms, which gives them an advantageous position in government procurement bidding. Significantly, our findings indicate that political connections correlate positively with the monetary value of government contracts secured by chaebols, underscoring the direct economic benefits of these connections. Overall, our study sheds light on the motivation for the political networks of chaebol firms and contributes to a better understanding of the direct benefits of political connections.