KOREA:Absorptive Capacity

Catch-up strategy

Reverse engineering

History

Chaebol

Government

Education

Chosun Dynasty(1392~1909)

Japanese Occupation(1909~1945)

Korean Civil War(1950~1953)

Korean Government

1. Warm and healthy Seed-bed Defending the inflow of foreign product in terms of tariffs and tax promoting GRI and Joint R&D - market failure, Basic science

2. Why some governments are successful and others not – transparent, ethically just Culture of a society Size of the country

Catching up is considered as a question of relative speed in a race along a fixed track, and technology is understood as a cumulative unidirectional (Perez, 1988)

The idea of leaf-flogging is that some latecomers may b able to leap-frogOlder vintages of technology, bypass heavy investment in previous Technology system, and catch-up with advanced countries (Hobday, 1995)

Why can certain industries achieve a remarkable catching-up or leapfrogging and continue to have a good prospects for the near future, whereas other industries face serious difficulties after certain amount of catching-up ?

Technological capabilities are explained in terms of the function of both technological effort and the existing knowledge base

Short-term market share catch-up is possible without building technological capabilities

The D-RAM. automobiles, and CDMA industries – long sustained increase in market shareCnonsumer electronics and personal computer industries experienced a sudden loss in market shares after a long period of increase

Level of technological capabilities - duplicative imitation, creative imitation, and innovation (Kim, 1997) - low-tech part development, high-tech part development, product design, and finally product concept creationThe case for Korean company’s reverse engineering - assembly production of imported parts, low to high tech part development, existing product design, new product concept creation

Technological Regimes• Fluidity of Technologi-cal Trajectory• Frequency of Innova-tion• Access to External Knowledge Base

Sources for CompetitiveAdvantages

• Cost edge

• Differentiation

• First mover advantage

Expected change for Product Development

Expected change for Market Success

Strategies & Poli-cies• Firm Strategies • Role of the Government

R & D EffortR & D EffortR & D Out-come & New Knowledge

Market Success

Available knowledge & Resources

Model of technological and market catch-up (Lee & Lim, 2001)

Technological regime is defined by the combination of technological opportunities, appropriability of innovations, cumulativeness of technical advances, and the property of knowledge base

Cumulativeness of technical advance = frequency of innovationThe predictability of technological trajectory = Fluidity of technical trajectoryThe access can come in diverse forms including informal learning, licensing, FDI, strategic alliance, co-development, and so on

Path of the Forerunner : Stage A Stage B Stage C Stage D

Path-Following Catch-up : Stage A Stage B Stage C Stage D

Path-skipping Catch-up : Stage A ------------- Stage C Stage D

(leap-frogging I)

Path-Creating Catch-up : Stage A Stage B Stage C’ Stage D’

Three patterns of technological catch-up (Lee & Lim, 2001). Notes : In stage C, the two technologies, C and C’, represent competing technologies

1) Stage skipping catching-up Automobile and D-RAM industry - Low frequency of innovation and more predictable technological trajectory - easy access to external knowledge base

D-RAM industry - High frequency of innovation and more predictable technological trajectory - Collaboration with GRI

2) Path creating catching-up CDMA industry - High frequency of innovation and high fluidity of technological trajectory - Korean R&D consortium with Qualcom, not endogeneous

3) Path following catching-up Consumer electronics and PC - High frequency of innovation and high fluidity of technological trajectory