Korean Small And Medium Enterprises Research Articles

Launching new products in international markets: waterfall versus sprinkler strategy of Korean SMEs

PurposeThe purpose of this study is to investigate an understudied topic—new product strategy in international markets. Specifically, this study aims to address the crucial role played by organizational characteristics and market characteristics in determining a firm's decision of adopting either a waterfall or a sprinkler product strategy for international markets.Design/methodology/approachThe empirical analysis was conducted using survey data collected from a sample of 171 Korean small and medium enterprises (SMEs). This study uses logistic regression analysis to test the relationships among organizational characteristics, market characteristics and a firm's international product strategy.FindingsThe empirical results suggest that firm characteristics, such as higher degree of internationalization, lead the firms to choose the sprinkler strategy. Moreover, this research finds that a firm's choice between the waterfall and the sprinkler strategy varies depending on market characteristics such as competitive intensity and market turbulence. The findings indicate that the sprinkler strategy is more optimal for use when firms operate under a high level of competitive intensity, whereas a waterfall strategy is more suitable for firms that encounter a high level of market turbulence in targeted foreign markets.Originality/valueThis research contributes to the international marketing literature by exploring the impact of organizational characteristics and market characteristics on a firm's new product strategy in international markets.

What Makes Companies to Survive over a Century? The Case of Dongwha Pharmaceutical in the Republic of Korea

Considering their significant impacts on national economy, local communities, employees, suppliers, and other stakeholders, firm survival is an important goal for most companies. However, firm longevity is not an easy result to achieve, and it becomes more difficult as business environments shift dramatically. The average life span of companies listed in Standard and Poor’s 500 was 61 years in 1958, but it fell to less than 18 years in 2016. Nevertheless, more than 3000 companies over 200 years old still operate in Japan, mostly family inherited small and medium enterprises (SMEs), and Germany has many centenarian companies, especially in the manufacturing industry. However, in the Republic of Korea, with over 4000 years of history, there are no companies older than 200 years and only seven companies with over 100 years of history. Centenarian companies in Korea are very limited, and even after surviving over 100 years, they continue to face severe challenges they need to overcome in order to survive. However, it is not clearly proven what factors affect the survival of companies for over a century. Since SMEs contribute to the economic development and survival of a country, it is important to investigate the secrets of their longevity, which has become even more difficult than ever. However, as there is very limited research on firm longevity, the findings from this case study of Dongwha Pharmaceutical, balancing the continuity of tradition and innovation, provide significant implications and practical guidelines for Korean SMEs for their survival and sustainable management, which is an economic and business aspect of sustainability.

Structure of Green Supply Chain Management for Sustainability of Small and Medium Enterprises

Today’s manufacturing-based small and medium enterprises (SME) face the need to implement green supply chains more efficiently in order to overcome environmental barriers in increasingly competitive markets and to improve financial performance. This study examines the structural relationship between environmental collaboration, green innovation capacity, and performance based on the findings of previous studies in order to identify the factors affecting the green supply chain management (GSCM) performance of Korean manufacturing-based SMEs. The study finds that environmental collaboration in the green supply chain environment is an important driver of green innovation capacity for manufacturing-based Korean SMEs. It also finds that green innovation capacity has a positive effect on financial performance through environmental performance. This study establishes a theoretical basis for the systematic study of the structural mechanisms of green supply chains and suggests strategic directions for manufacturing-based SMEs’ successful GSCM implementation.

The effects of size‐dependent policy on the sales distortion reporting: Focusing on the discretionary sales management of Korean SMEs

This study analyzes whether firms manipulate size reports in order to seem as if they have not grown due to size‐dependent policies. The small‐and‐medium enterprises (SMEs) support policies of Korean provide various benefits such as tax reduction to companies with a sales lower than a certain standard. SMEs thus have an inventive to discretionally manage sales figures to hold on to such benefits. This study empirically tests on firms listed in the Korean Stock Exchange from 2006 to 2016 with models by Stubben (2010, 10.2308/accr.2010.85.2.695) and Giedt (2017, doi.org/10.1111/abac.12119) as a proxy for discretionary revenue. Results from analysis show that SMEs tend to reduce their sales discretionally. SMEs with large sales lower these numbers more drastically than SMEs with small sales, since they are at higher risk of being newly classified as a large firm. Such results suggest that SMEs discretionally lowered sales figure to hide their growth, unlike what is known as Peter Pan Syndrome.

The Effects of CEO’s Entrepreneurial Orientation on the Innovative Behavior of Organizational Members in Korean SMEs: Focusing on the Mediating Effect of Absorptive Capacity and the Moderating Effect of Perceived Organizational Support

본 연구의 목적은 중소기업(small and medium enterprises) 최고경영자의 기업가 지향성(entrepreneurial orientation)이 조직구성원의 혁신행동(innovative behavior)에 미치는 메커니즘을 검증하는 것이다. 이를 위해 기업가 지향성과 혁신행동의 직접효과 및 조직구성원의 흡수역량(absorptive capacity)을 경유하는 간접효과를 규명하였고, 이러한 간접효과가 조직지원인식(perceived organizational support)에 의해 조절되는지 확인하고자 하였다. 대부분의 기업가 지향성과 혁신성과 간의 선행연구들은 경영자의 관점을 바탕으로 많이 진행되었지만, 본 연구에서는 조직구성원의 관점에서 최고경영자의 기업가 지향성을 평가하였다. 그러므로 이번 연구결과를 바탕으로 한정된 자원을 효과적으로 활용해야 하는 중소기업에서 조직구성원의 혁신행동을 유발할 수 있는유효한 방안에 대한 경영자의 기업가 지향성 및 조직구성원의 흡수역량과 조직지원인식 간의 관계를 실증적으로 검증하였다. 이를 통해 국내 중소기업의 최고경영자에게 조직구성원의 혁신행동을 더욱 효과적으로 발전시킬 수 있는 시사점을 제안하고자 하였다. 연구결과 첫째, 중소기업 최고경영자의 기업가 지향성과 조직구성원의 혁신행동 간 직접효과가 확인되었다. 둘째, 조직구성원의 흡수역량은 기업가 지향성과 혁신행동과의 관계를 매개한다는 것이 검증되었다. 셋째, 기업가 지향성과 흡수역량 간 관계는 조직구성원의 조직지원인식에의해 조절된다는 것이 확인되었고, 넷째, 기업가 지향성이 조직구성원의 흡수역량을 경유하여 혁신행동에 미치는 간접효과는 조직지원인식에 의해 조절되는 것으로 밝혀졌다. 이를 통해 최고경영자의 기업가 지향성과 조직구성원의 혁신행동 간의 메커니즘을 실증적으로 검증하여 국내 중소기업의 지속적인 혁신성과 창출의 효과적인 방안에 관한 기존 연구의 범위 확장에 기여하였고, 연구결과에 따른 이론 및 실무적 시사점, 연구의 한계점과 향후 연구과제를 제시하였다.This study verified the mechanism through which the entrepreneurial orientation(EO) of CEOs at small-and-medium enterprises(SMEs) affected the innovative behavior of organizational members, directly and indirectly through the mediation of absorptive capacity and the moderated mediation of perceived organizational behavior. While many previous studies were conducted to measure EO with the perspective of CEOs, this study was done with the perspective of organizational members. Therefore, this finding verified the relationship among EO, absorptive capacity, and perceived organizational support empirically, which could make the CEOs of SMEs which should run a business successfully with their limited resources develop the innovative behaviors of organizational members effectively. The findings confirmed the positive direct effect of the CEO’s EO on the innovative behavior of organizational members as well as the mediating effect of absorptive capacity between EO and innovative behavior. Perceived organizational support was found to moderate the relationship between EO and absorptive capacity and, also to moderate the indirect effect of EO on innovative behavior through absorptive capacity. These findings empirically verified the mechanism through which the EO of CEOs at SMEs positively influences the innovative behavior of organizational members, strengthened by absorptive behavior and perceived organizational support. The present study expands existing leadership researches and presents interesting theoretical and practical implications.

Open innovation in Korean SMEs: trends and financial performance

While open innovation has gained much attention, few studies have examined this perspective in the context of small and medium enterprises (SMEs). The motivation of this study is to fill this gap by examining SMEs' strategic approaches toward inbound open innovation and in-house R&D. Drawing on a sample of 3,175 SMEs in South Korea, we used cluster analysis to identify groups of SMEs pursuing homogenous innovation strategies. We also examined the effect of SMEs' innovation strategies on financial performance. The results of this study shed insights about how SMEs should develop innovation strategy to improve financial performance.

Open innovation in Korean SMEs: trends and financial performance

While open innovation has gained much attention, few studies have examined this perspective in the context of small and medium enterprises (SMEs). The motivation of this study is to fill this gap by examining SMEs' strategic approaches toward inbound open innovation and in-house R&D. Drawing on a sample of 3,175 SMEs in South Korea, we used cluster analysis to identify groups of SMEs pursuing homogenous innovation strategies. We also examined the effect of SMEs' innovation strategies on financial performance. The results of this study shed insights about how SMEs should develop innovation strategy to improve financial performance.

The Characteristics of SMEs Preferring Cooperative Research and Development Support from the Government: The Case of Korea

To find ways to make the government’s cooperative research and development (R&D) support policy for small and medium enterprises (SMEs) more effective, we analyzed the characteristics of SMEs that prefer such support. Through decision tree and discriminant analysis of 3300 Korean SMEs, we derived rules to distinguish between groups that prefer cooperative R&D support and those that do not. Based on the results, the important influencing factors were found to be the time required for R&D planning, prior experience in cooperation, the availability of equipment, the ratio of self-procured R&D funding, the attempts at R&D and the firm’s level of performance. The results suggested that if the policy objective is to encourage more active involvement of SMEs in cooperative R&D support programs, it is desirable to attract SMEs with less cooperative experience and not to give too much weight to past achievements when selecting beneficiaries. Furthermore, we believe that policies offering supports in the R&D planning stage and the joint utilization of equipment could be solutions to reduce the practical difficulties experienced by SMEs related to cooperative R&D.

What matters in technology leakage in small and medium enterprises: the case of Korea

ABSTRACTTechnology leakage in small and medium enterprises (SMEs) is a critical issue because while the number of main technologies in SMEs is small, these technologies are crucial to their survival. Related factors must be identified to prevent technology leakage from SMEs. In this paper, we use logistic regression to find significant factors in Korean SMEs, focusing on three aspects: characteristics of the technology, prevention strategy, and firm’s R&D characteristics. We use a survey conducted by related national institutions. According to the results of our empirical study, interaction effects among the factors of technology characteristics have highly significant effects on technology leakage. In particular, the interaction effect between the time needed to imitate the technology and the stage of business growth appears to have the highest influence on technology leakage. Based on our results, detailed strategies for preventing technology leakage are inferred in order to help SMEs prioritise their resources.

Types of foreign networks and internationalization performance of Korean SMEs

Purpose The purpose of the study is to empirically analyze how various types of foreign networks influence the internationalization performance of Korean small and medium enterprises (SMEs). The specific aim is to investigate the impact of each network type (family and friends, clients (buyers, vendors, etc.), potential buyers contacted through an Internet search for export, acquaintances from trade shows and fairs and acquaintances from government organizations) on internationalization performance outcomes, such as financial performance, financial performance satisfaction and strategic performance. Design/methodology/approach To identify influential foreign networks, multiple regression analysis was conducted. The sample consisted of 484 exporting Korean SMEs. Findings The results emphasized the role of business networks with clients in enhancing financial performance, financial performance satisfaction and strategic performance of Korean SMEs in international markets. Originality/value The research contributes to the expansion of SME internationalization literature by identifying various types of foreign networks used in international markets and revealing their differential roles on the internationalization performance of Korean SMEs.

Open Innovation Projects in SMEs as an Engine for Sustainable Growth

Most innovation activities that are inevitable for sustainable growth are coordinated via research and development (R&D) projects, which can differ widely in terms of both project and open innovation characteristics, even when conducted within the same firm. Therefore, it is important to consider the peculiarities of R&D projects when evaluating the performance of open innovation strategies, as well as to explore how the benefits and costs of open innovation are shaped by cross-level interactions. This study identifies the differences between successful and unsuccessful open innovation projects, in both firm-level and project-level terms. We focus on small and medium enterprises (SMEs), which usually lack the full set of internal resources and competences required to effectively develop, produce, and commercialize their innovations, and thus must adopt open innovation approaches more actively for sustainability. Adopting an empirical approach, we conducted a survey of 517 Korean SMEs and analyzed 241 successful and unsuccessful open innovation projects in depth. By combining measurements at the firm and project levels, this study provides new insight into the intra-organizational challenges of implementing open innovation projects, which are not only helpful to strategic decision-makers in SMEs, but also to those who make policies for them.

Strategic agility of Korean small and medium enterprises and its influence on operational and firm performance

This study explores the nature and role of agility as a strategic intent and its influence on operational and firm performance. Combining field interviews with the literature review, we develop theoretical connections between strategic agility of Korean small and medium enterprises (SMEs) and its underlying dimensions (technology capability, collaborative innovation, organizational learning, and internal alignment). Then, we propose a conceptual model for investigating the nomological network of influences among strategic agility, operational performance (responsiveness), and firm performance. Firm performance is measured as two alternative dimensions—customer retention and financial performance. Using structural equation modeling, we conduct a group of confirmatory analyses to test the empirical associations hypothesized in the structural models. The analysis results indicate that Korean SMEs’ strategic intent toward agility has a positive influence on their operational performance and customer retention, but not on financial performance. Implications of the results are discussed in detail along with theoretical contributions and future research directions.

An empirical analysis on purposes, drivers and activities of technology opportunity discovery: the case of Korean SMEs in the manufacturing sector

Technology opportunity discovery (TOD) is becoming increasingly important for identifying technology opportunities so that they can be reflected in firms' strategy planning. However, understanding of TOD practices within firms is limited, and the diversity of TOD practices has not been fully reflected in previous studies, especially from the perspective of small and medium enterprises (SMEs), which typically lack diverse technology portfolios or plentiful innovation resources, so technology opportunities have seldom been defined and analyzed. This study aims to investigate SMEs' TOD practices and to identify their characteristics. Interviews were conducted with Korean SME executives to define a conceptual TOD model for SMEs, and 104 Korean SMEs' TOD drivers and activities were surveyed focusing business drivers, business models, and information gathering. The results were then analyzed to define six technology opportunity types and to derive similarities and differences among them, which are used to understand and further support SMEs' TOD practices. The research findings are expected to enhance understanding about TOD practices and to help establish SMEs' TOD strategies.

Dynamic capabilities and new product development performance: Korean SMEs

This study analyses the dynamic capabilities and new product development performance for high-tech small and medium enterprises (SMEs) in Korea. This study reveals the resources and activities that underlie dynamic capabilities. We apply the concept of dynamic capabilities (sensing, seizing and managing threats/transforming capabilities) based primarily on the model of Teece. Based upon a literature review, resources and activities (such as organizational slack, knowledge reconstruction, and exploration) were identified as contributing to reinforce the dynamic capabilities of firms. Data were obtained from survey results collected from 241 Korean SMEs. Empirical results show that knowledge reconstruction activities that discard existing and established technological assets influence dynamic capabilities; however, organizational slack exhibits no significant relationship with dynamic capabilities. Exploration activities such as building network, exploration of external information, and academic activities show a negative influence on dynamic capabilities. Sensing capability, opportunity seizing capability and transforming capability that underlie dynamic capabilities show a positive effect on new product development performance on a collective and aggregate level versus an individual basis.

Market orientation and communication methods in international strategic alliances

This article discusses factors affecting the success of international strategic alliances, specifically market orientation and communication methods. The study empirically compares market orientation and methods of communication with strategically allied SMEs (small and medium enterprises) in countries with different cultural values (i.e., United States and Korea). The findings indicate that market orientation and communication methods in an international strategic alliance between US and Korean SMEs have distinct differences. For example, the results show that market orientation and communication methods differ according to the number of foreign partners within an alliance and the duration of an alliance. The article highlights some managerial implications that might occur due to the differences between American and Korean SMEs operating an international strategic alliance.

The Motives and Experiences of the Korean SMEs(Small and Medium Enterprises) Investment in Cambodia

The Motives and Experiences of the Korean SMEs(Small and Medium Enterprises) Investment in Cambodia

Determining factors for the adoption of e-business: the case of SMEs in Korea

This study investigates the determining factors of the successful adoption of e-business by small and medium enterprises (SMEs) in Korea using survey data. After the major determining factors were identified from the innovation adoption literature and were extracted by applying the principal component analysis to the survey data and by adding the country-specific characteristics of Korea, we conducted empirical analyses to determine the critical success factors for the adoption of e-business by Korean firms. The empirical results which are based on t-tests of the differences between adopters and non-adopters, the linear probability model, and the logit model, all suggest that the important determinants of the successful adoption of e-business by SMEs in Korea are: the CEO's knowledge of information technology (IT)/e-business, relative advantages and benefits from implementing e-business, governmental support, globalization strategy and the North Korean factor. Business size, the cost of e-business adoption and competitive pressure of the industry do not seem to play an important role in the adoption of e-business by Korean SMEs. The policy implications of this study on promoting e-business adoption by SMEs in emerging economies, such as Korea, are also discussed.

SMALL BUSINESS IN KOREA, JAPAN, AND TAIWAN

Why did Korea, Japan, and Taiwan follow distinct modernization trajectories, despite their similar histories, cultures, and positions in the international system? All three had credit-based, price-administered financial systems; yet these similarly structured systems were wielded differently to help produce widely divergent industrial structures. While small and medium enterprises (SMEs) in both Japan and Taiwan flourished as the major employers and exporters, the underdevelopment of SMEs in Korea remained unmistakable. Despite the strong growth of Korean SMEs in the 1980s, the nation still had far fewer such establishments than either Japan or Taiwan (see Table 1). This article has two aims: (1) to explain differences in financial policy toward small business among the three countries and (2) to account for similarities in the process of policy change over time. The evidence suggests that economic policymaking in East Asia is best explained not by the technocratic preferences of an elite bureaucracy, nor by the bottom-up pressures of organized interests, but by political exigencies and the choices of the regime coalition. Each ruling group had to win a competition for power with other elite policy factions and then had to build paternalistic, or patrimonial, authority in the eyes of society. These political tasks were central in shaping financial policy.