The Impact of Exclusive Subcontracting on the Input, Behavior and Output of Innovation in Small Venture Firms: Evidence from Manufacturing Industries of Korea

Kim, KonShik

doi:10.35978/jktis.2019.06.22.3.382

Cited by 2 publications

(8 citation statements)

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“…Therefore, the patent's role as a mechanism for protecting knowledge and technology has limited effects, resulting in a low application rate of patents. However, independent venture firms have a higher proportion of R&D investments for innovation, a greater proportion of R&D staff to employees, and a higher degree of collaboration with outside organizations to absorb knowledge and experience (Kim, 2019). The knowledge generated in this innovation process can be expressed in the explicit form that contains new ideas and technologies, and this kind of knowledge is likely to be imitated and exploited when exposed to the outside world.…”

Section: Randd Subsidy Additionality and Subcontracting Regimementioning

confidence: 99%

“…Subcontracted venture firms are likely to use R&D subsidy mainly to expand and improve existing facilities and equipment because improvements in existing products and processes are more important to meet the needs and specifications of large enterprises. The importance of acquiring engineers and marketing experts for the development and launches of new products is more evident for independent venture firms (Kim, 2019). Thus, R&D subsidy for independent venture firms is more likely to be used to employ new staff than those for subcontracting venture firms.…”

Section: Randd Subsidy On Manufacturing Firms In Koreamentioning

confidence: 99%

“…That is, the additionality of public R&D subsidy measured as the cumulative growth rate of employment would be higher for independent venture firms than for subcontracting venture firms. Independent venture firms have relatively higher appropriability of innovation and can expect a higher profit rate through the development and improvement of new products than venture firms considerably subcontracted by large enterprises (Kim, 2019). The profit and performance through successful innovation can lead to increased investment for the next innovation, which increases the opportunity to achieve a relatively higher growth rate of sales revenue.…”

Section: Randd Subsidy On Manufacturing Firms In Koreamentioning

confidence: 99%

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Output additionality of R&D subsidy on manufacturing venture firms in Korea

Kim

2020

EJIM

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PurposeThe purpose of this study is to determine the extent to which R&D subsidy can affect the innovation process of manufacturing venture firms by examining the output additionality measured as both proximal indicators of innovation and distal indicators of growth. Further, the differences in output additionality between the clusters in the subcontracting regime were examined to investigate whether the effect of R&D subsidy can vary depending on subcontracting practices and structure among large enterprises and venture firms.Design/methodology/approachThis study uses survey data of the Korea Venture Business Association conducted in 2012, 2013, 2014, 2015, and 2016 respectively, which selects a random sample from venture firms by stratified random sampling method based on the industry sector, size and location for each survey year. This study analyzed the data using an endogenous treatment effects model to estimate the average treatment effect of R&D subsidy, yielding more accurate estimates than a traditional treatment effects model by controlling the unobserved endogenous components.FindingsThis research found that R&D subsidy may not facilitate the process of transformation of innovation into financial growth even though R&D subsidy can facilitate the innovation process and contribute to producing new and improved products. This research also reveals that the relationship between R&D subsidy and innovation performance for firms heavily dependent on subcontracting is generally much weaker than those for independent subcontractors. Further, the present study exhibits that public R&D subsidy for independently subcontracting venture firms is more effective for the growth in both employment and sales than those for subcontracting with large enterprises or other subcontractors.Research limitations/implicationsR&D subsidy for venture firms does not relieve the burden of liability of newness and smallness of venture firms, especially the disadvantage in market penetration and competition. In addition, venture firms subcontracting with large enterprises or other prime subcontractors tend to achieve incremental innovation with the help of the technology and competence of large companies and run stable businesses through a predetermined market.Practical implicationsR&D subsidy for venture firms does not relieve the burden of liability of newness and smallness of venture firms, especially the disadvantage in market penetration and competition. Further policy measures should be implemented so as to identify and eliminate barriers to market acceptance for new products of venture firms.Originality/valueThis research verifies that the effect of R&D subsidy may harmful to the sales growth of venture firms and the output additionality differs with the degree of dependency on subcontracting practices and structure.

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Section: Randd Subsidy Additionality and Subcontracting Regimementioning

confidence: 99%

Section: Randd Subsidy On Manufacturing Firms In Koreamentioning

confidence: 99%

Section: Randd Subsidy On Manufacturing Firms In Koreamentioning

confidence: 99%

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Output additionality of R&D subsidy on manufacturing venture firms in Korea

Kim

2020

EJIM

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“…Similarly, Italian manufacturing companies exemplify that subcontracting fosters positive growth, especially with an innovative focus (Giunta et al., 2012). Conversely, exclusive transactions with large companies impact innovation negatively for Korean SMEs, as evidenced by lower patent applications and sales growth (Kim, 2019).…”

Section: Introductionmentioning

confidence: 99%

“…exclusive transactions with large companies impact innovation negatively for Korean SMEs, as evidenced by lower patent applications and sales growth (Kim, 2019).…”

mentioning

confidence: 99%

The strength of a weak tie in the innovative performance of firms: A case of Korean high‐tech manufacturing small and medium‐sized enterprises

Hong,

Lee,

Ohm

et al. 2024

Sociology Compass

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This study explores whether the ‘strength of weak ties’ theory, derived from social network theory, can equally apply to business activities. To address this question, we conduct an empirical analysis, utilising 3‐year panel data encompassing 3881 samples of Korean small and medium‐sized enterprises (SMEs) in the high‐tech manufacturing sector. The primary objective is to examine the effects of inter‐corporate tie strength on innovative performance. The results reveal an interesting pattern in high‐tech manufacturing corporations, where the strength of a tie demonstrates an inverted U‐shaped relationship with an SME's patent achievement. Moreover, we observe that the effect of tie strength on an SME's patent achievement is positively moderated by its research and development (R&D) intensity. Furthermore, when an SME maintains weak ties within its relationship with a large corporation, its innovative performance experiences a more positive impact than in cases where no relationship with a large corporation exists, or strong ties are maintained. These findings suggest that for SMEs, maintaining an appropriate level of embeddedness with large corporations is an effective strategy for generating sustained innovative performance within an environment characterised by active technological innovation and intense competition. The principal contribution of this paper lies in the empirical validation of the theory of weak ties concerning a firm's innovative performance.

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The Impact of Exclusive Subcontracting on the Input, Behavior and Output of Innovation in Small Venture Firms: Evidence from Manufacturing Industries of Korea

Cited by 2 publications

References 0 publications

Output additionality of R&D subsidy on manufacturing venture firms in Korea

Output additionality of R&D subsidy on manufacturing venture firms in Korea

The strength of a weak tie in the innovative performance of firms: A case of Korean high‐tech manufacturing small and medium‐sized enterprises

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