Korean Manufacturing Firms Research Articles

Strategic supply chain partnership, environmental supply chain management practices, and performance outcomes: an empirical study of Korean firms

Increasingly, firms have recognized the significance of environmental issues in gaining competitive advantage. Many firms have searched for mechanisms that integrate environmental supply chain practices and performance objectives. This paper explores how strategic supply chain partnership (SSCP) contributes to environmental supply chain management (ESCM). This study presents a research model that defines the details of SSCP and ESCM. Based on the responses of 141 Korean manufacturing firms, the research model is empirically tested through a structural equation model. To the best of our knowledge, this study represents the first empirical test conducted on the integration of SSCP and ESCM as a way of examining how these two critical sets of practices are implemented in the context of Korean firms. Managerial implications and future research opportunities are provided.

User Innovation in Korean Manufacturing Firms: Incidence and Protection

In this study we examine the user development of process technologies and protection of these innovations in manufacturing industries in a late industrializing context, Korea. Using data from both KIS 2008 and a follow-up survey, we study the characteristics of user innovations and user-innovators, as well as the protection of user innovations. This study has two major findings and a number of minor findings. The major findings are, first, that the incidence of user innovations in Korea is quite significant. Firms that are larger, more technologically capable, with a higher export ratio, or that belong to a business group are more likely to be a user-innovator in Korea. Second, we find that the proportion of user innovations sharing by innovators with other firms is much lower (3.2%) than that found in similar studies conducted in Canada and the Netherlands (about 20%). We suggest that the lower incidence and transfer of user innovation in Korean manufacturing industries may be due to the lower level of technological capability and social trust, and also due to the closed nature of the buyer-supplier relationship dominated by a few large Chaebols. The study concludes by discussing managerial and policy steps that could be used to encourage user innovation and its transfer in the Korean manufacturing sectors.

Operational capabilities and performance toward global supply chain: an overview of Korean manufacturing and service firms

Korea as a nation operates its global supply chain to design, produce and deliver diverse products and services to customers throughout the world. As an overview of Korean industries, we focus on how Korean manufacturing and service industries have developed their operational capabilities and business performances with global supply chain perspectives. This paper presents: 1) a research framework; 2) a summary of the evolution of Korean manufacturing and service industries toward global supply chain; 3) a typology of global supply chain.

Summary of General Discussion on “Firm Heterogeneity in the Choice of Offshoring: Evidence from Korean Manufacturing Firms”

Summary of General Discussion on “Firm Heterogeneity in the Choice of Offshoring: Evidence from Korean Manufacturing Firms”

Firm Heterogeneity in the Choice of Offshoring: Evidence from Korean Manufacturing Firms

Using firm-level data on offshoring of Korean manufacturers, this paper examines the relationship between firm heterogeneity and the probability of adopting offshoring. The results of the paper suggest that firm productivity may not be an important determinant for Korean firms' offshoring decision. A firm's global sourcing decision may rather depend on other characteristics such as factor intensity, research and development (R&D) intensity, information and communication technology (ICT) level, and affiliation with foreign markets when industry specificity is controlled for.

A Study on the Determinant of Foreign Market Entry Mode and Performance of Korean Manufacturing Firms

A Study on the Determinant of Foreign Market Entry Mode and Performance of Korean Manufacturing Firms

A Research on Pecking Order Theory of Financing: The Case of Korean Manufacturing Firms

This paper empirically tests pecking order theory. Korean listed firms are used as the samples. On the whole we find supportive results for pecking order theory. The fixed effect model on the whole period shows that as pecking order theory suggests that debt ratio decreases as cash flow. ROA, physical assets, and firm size increase. Again, it is shown that corporate debt ratio significantly decreases as cash flow or ROA increases in every sub-sample, which coincides with the prediction of pecking order theory. Corporate debt ratio significantly decreases as physical assets or jinn size increases in case of the whole sample, pre-financial crisis period, and the sub-samples by q-ratio, which also supports the prediction of pecking order theory. Statistical significance of the coefficients of physical assets or firm size completely disappears after Korean financial crisis. Perhaps it is because the role of physical assets or firm size as a mitigator of information asymmetry significantly weakens after the financial crisis as Korean financial market becomes more transparent. For small firms only size variable is negatively and significantly related with debt to assets. It seems that size is an important factor for smaller firms in making financing decision.

Firm size, age, industrial networking, and growth: a case of the Korean manufacturing industry

This paper investigates the roles of firm size, age, and industrial networking in determining firm growth. Analyses using the 2-year panel data of 7,889 Korean manufacturing firms between 1994 and 2003 confirm that firm size and age have significant negative effects on firm growth and significant positive impacts on firm survival. R&D and export activities are found to facilitate both firm growth and survival. The primary focus of this study is to examine the effects of industrial networking, such as subcontracting and clustering, on firm growth. The results show that subcontracting does not yield any positive effect for firm growth, but encumbers survival, which may be accounted for by the high subcontracting intensity among small firms. Clustering, on the other hand, is found to promote firm growth and survival. There is, however, little evidence that such a positive effect of clustering is derived from network externalities through cooperation and competition among firms in a cluster per se.

An Empirical Study of “Fringe Benefits” and Performance of the Korean Firms

This paper examines the effects of fringe benefits in the compensation package on performance of the Korean firms. Theoretically, fringe benefits have two implications in relation to employees: they are effective instruments that provide incentives; at the same time, some fringe benefits, especially the power-related benefits, are often used for exploitation of self-interests. Using a six-year panel data of the Korean manufacturing firms, we do a regression analysis and identify the links between fringe benefits and performance of the Korean firms. Our results suggest that, in general, these types of compensations do not promote good performance of firms. The results also imply that perhaps some designs in pay for performance in Korea are not efficient.

A Study on Developing Stage of Supply Chain and Performance of Korean Manufacturing Firms in China

A Study on Developing Stage of Supply Chain and Performance of Korean Manufacturing Firms in China

Innovation Types and Productivity Growth: Evidence from Korean Manufacturing Firms

The purpose of this paper is to investigate productivity growth according to three types of innovation: product innovation, product improvement, and process innovation, using firm-level data from the Korea Innovation Survey 2002 about Korean manufacturing companies. This study is conducted in two steps. The first step measures firm-level Malmquist productivity index by data envelopment analysis (DEA). The second step estimates econometric regression models by weighted least square utilizing the productivity index as a dependent variable and each of the innovation types and other characteristics of firms as independent variables. The empirical results partly support the idea that the types of innovation matter in productivity growth. Specifically, process innovation may result in higher productivity performance than product innovation in the short run. This result stems from the difference in efficiency growth when productivity growth is decomposed into two components: efficiency growth and technical growth. That is, product innovation by definition involves product development and radical innovation and so, it can deteriorate efficiency growth relative to other types of innovation due to the process of product development and the adjustments that are needed to new innovations whereas process innovation is implemented to reduce defects, lead time, costs and other factors, and as such is very efficiency orientated. Consequently it helps improve efficiency growth.

Interrelationships among Capital Structure, Dividends, and Ownership: Evidence from South Korea

This paper examines the interrelationships among debt policy, dividend policy, and ownership structure using a simultaneous equation framework. Our approach allows us to test both the convergence of interests theory and entrenchment theory. Using a sample of publicly traded South Korean manufacturing firms, we find that debt policy and ownership structure have a positive impact on dividend policy. We also find that both debt and dividend policy are positively related to ownership structure. Our findings support both the theory of convergence of interests between management and ownership and entrenchment theory, and also explain why many studies have found conflicting results.

Enterprise resource planning survey of Korean manufacturing firms

Enterprise Resource Planning (ERP) systems are packaged software designed to integrate and optimise the business processes of an enterprise. The ERP systems have been embraced by industry as a de facto solution to integrate their business functions. The adoption of the ERP concept is a truly global phenomenon. This paper reports a recently completed survey study on Korean manufacturing firms. The study used the same survey questionnaires used in two previous surveys done on US and Swedish manufacturing firms. Our objective is to determine the extent of adoption of the ERP system in the Korean manufacturing firms, their motivations, implementation strategies and benefits obtained, and to provide useful data to draw similarities and differences between different countries' practices.

The Impact of Family Ownership and Capital Structures on Productivity Performance of Korean Manufacturing Firms: Corporate Governance and the 'Chaebol Problem'

This paper examines the relationship between corporate governance and productivity performance, focusing on family ownership and capital structure. Paying particular attention to chaebols, or large business groups with entrenched family control, diversified business structure, and heavy debt-dependence, we find the positive relationship between family ownership concentration and productivity performance to be much stronger in chaebol firms than in non-chaebol firms. Moreover, high debt reliance (or low equity-asset ratio) is shown to be negatively related to productivity performance in non-chaebol firms but positively in chaebol firms.

The Intangible Assets of Korean Manufacturing Firms for Foreign Direct Investment

This paper attempts to apply the intangible assets approach to the emerging multinational enterprises of Korea. More specifically, it tries to empirically analyze whether Korean firms investing in foreign markets possess more advanced intangible assets than those investing only in the domestic market, and whether Korean firms exploit different types of tangible assets in different host regions. The following conclusions have been drawn by analyzing the data on Korea manufacturing firms listed on the Stock Exchange. First, firms investing in foreign markets possess more advanced intangible assets than domestic market-oriented ones. More specifically, firms investing in the Western developed region are shown to be superior in the economies of scale, R&D, advertising intensity, capital intensity, and interfirm linkages, whereas those investing in the Asian developing region are superior only in the economies of scale and organizational skills. This implies that Korean firms operating in developed countries seem to exploit a wider range of intangible assets to address intense competition and sophisticated demand in the host markets. And, when firms investing in the developed and developing regions are compared directly, the former group are found to exploit technological capability and interfirm linkages more intensively. Second, availability of internal funds and human capital intensity do not show statistical significances, implying that these abilities are not different between firms investing in foreign markets and the domestic market. Third, Korean multinational enterprises are more similar to Japanese than Western ones in terms that they actively exploit organizational skills and interfirm network. Nonetheless, these conclusions have been derived by analyzing the data on parent firms, based on the assumption that Korean overseas subsidiaries commonly share the intangible assets of their parents. This weakness is mainly due to the limited availability of data and should be properly addressed in future research.

The Intangible Assets of Korean Manufacturing Firms for Foreign Direct Investment

This paper attempts to apply the intangible assets approach to the emerging multinational enterprises of Korea. More specifically, it tries to empirically analyze whether Korean firms investing in foreign markets possess more advanced intangible assets than those investing only in the domestic market, and whether Korean firms exploit different types of tangible assets in different host regions. The following conclusions have been drawn by analyzing the data on Korea manufacturing firms listed on the Stock Exchange. First, firms investing in foreign markets possess more advanced intangible assets than domestic market-oriented ones. More specifically, firms investing in the Western developed region are shown to be superior in the economies of scale, R&D, advertising intensity, capital intensity, and interfirm linkages, whereas those investing in the Asian developing region are superior only in the economies of scale and organizational skills. This implies that Korean firms operating in developed countries seem to exploit a wider range of intangible assets to address intense competition and sophisticated demand in the host markets. And, when firms investing in the developed and developing regions are compared directly, the former group are found to exploit technological capability and interfirm linkages more intensively. Second, availability of internal funds and human capital intensity do not show statistical significances, implying that these abilities are not different between firms investing in foreign markets and the domestic market. Third, Korean multinational enterprises are more similar to Japanese than Western ones in terms that they actively exploit organizational skills and interfirm network. Nonetheless, these conclusions have been derived by analyzing the data on parent firms, based on the assumption that Korean overseas subsidiaries commonly share the intangible assets of their parents. This weakness is mainly due to the limited availability of data and should be properly addressed in future research.

Firm behavior and group affiliation: The strategic role of corporate grouping for Korean firms

The purpose of this study is to examine the relationship between group affiliation and firm behavior in the case of Korean firms by using recent data. Our empirical analysis is carried out by using data on 252 Korean manufacturing firms, including both group-affiliated and independent firms, for the period 1985–1993. Our results indicate that firms associated with chaebols had significantly lower annual profit rates compared with independent or non–group-affiliated firms up to 1989 but revealed little difference more recently. Furthermore, firms associated with the largest chaebols (but not smaller chaebols) also appear to have had somewhat higher growth rates and substantially lower variation in annual profit rates over this period.

Stock Market Development, Liquidity Constraint and Investment: A Case of Korean Jaebol and Non‐Jaebol Manufacturing Firms in the 1980s

The Korean stock market experienced sudden growth in mid‐1986. Since then, Korean firms have begun to rely on the stock market as a reliable source of funds. This paper analyses the change in financing behaviour after the 1986 Korean stock market development. Many researchers argue that in developed countries, the liquidity constraint binds a firm's investment decisions. What then is the effect of liquidity on firms in developing countries?These issues will be examined by using a Tobin’s Q model of investment. A total of 171 Korean manufacturing firms, both Jaebol and Non‐Jaebol, are investigated for the 1980s. Most empirical studies have not shown an economically large and significant Q effect when cash flow is used in the model. However, empirical results here show that with a strong liquidity effect, Q is large and statistically significant, implying a moderate adjustment cost.

Price Behavior in Korean Manufacturing

This paper investigates pricing behavior in Korean manufacturing. The two questions investigated are whether price behavior in the two markets are distinctly different in the pass-through of exchange rate into export and domestic prices and, if so, the subsequent question is whether observed differences in the price behavior can be explained by the price discrimination hypothesis. Using data from six manufacturing sectors for the period 1976-90, the authors find that Korean manufacturing firms appear to have followed distinctly different pricing rule in the two markets and the hypothesis of price discrimination in the two markets cannot be rejected. Copyright 1994 by MIT Press.

Export Behaviour and Attitudes of Small- and Medium-sized Korean Manufacturing Firms

DR. K. MARK WEAVER IS ASSOCLATE professor andJongmoo Pak a Ph.D. candidate at the University of Alabama, United States of America. Their paper is based on a selected sample of small- and medium-sized manufacturing firms in Korea. It looks at export behaviour and the conditions which influence export sales in these firms. Profiles of the firms are provided, in addition to discussions of channel selection, the key influences on and problem areas in initial exports, attitudes towards exporting, factors limiting export sales, and the perceived profitability of exports. The need for information appears to be the most significant factor that Korea could consider for future export development, say the authors, adding that the export orientation and willingness to deal in international markets are significantly positive elements in the long-term internationalisation efforts of Korean manufacturers.