Journal of Scientific & Industrial Research Vol . 60, M arch 200 I , pp 1 86- 1 96

Technological Innovation Survey of Manufacturing Firms:

The Case of Korea

Yong-Tae Park* Department of Industrial Engineeringffechnology and Management Program,

School of Engineering Seoul National University (SNU), San 56- I , Shill im-Dong,

Kwanak-Gu Seoul 1 5 1 -742, Korea,

and lin-Gyu lang and Moon-Seob Yun**

Science and Technology Policy Institute (STEPI) Indicator/Statistics Analysis Team,

395-70, Sindaebang-Dong, Dongjak-Gu Seoul 1 56-0 1 0, Korea

Initiated as a primitive report on public research in early 1 960s, R&D survey of Korea has been augmented and elaborated over the last few decades, to cover such diverse features as R&D expenditure, workforce, patents and technological balance of payments. However, as private sector took the leading role in the national innovation system, vis-a-vis public sector, the needs for an innovation survey have became increasingly urgent. This paper presents the report of the first national i nnovation survey of Korea in an abridged form. The survey i nvestigated the characteristics of innovative firms in terms of indicators of industrial innovation. The results have been briefly presented and important determinants of different kind of innovation have been dis­cussed. Although the survey signities a considerable departure from the conventional R&D survey, it is only exploratory in nature and by and large incomplete. Additional efforts are required to accommodate both customized needs of developing countries and international compatibility with foreign surveys.

Introduction In general, science and technology (S&T) systems

of developing countries go through an evolutionary process of expansion and divergence in line with in­dustrial advancement . To i l lustrate, mult i-s tage schemes such as imitation-internalization-generation stages' or elementary-intermediate-advanced stages2 have been proposed. Applying these schemes to the technological chronology of Korea, the decade of 1 970s is entitled as imitation!elementary stage, 1 980s as internalization! intermediary stage and from I 990s to present as generation! advanced stage ' .

The trajectory can also be delineated by the inter­active and supplementary relationship between public and private research. Generally public research domi­nates national R&D at the initial stage of industrial­ization which is gradually replaced by private sector as the industrial base reaches critical mass. From I 960s through 1 970s, public sector, especially the govern­ment-funded research institutes (GRIs) broke new

* Tel : 82-2-880-8358; Fax: 82-2-889-8560; E-mai l: parkyt @cybernet.snu.ac.kr

** Tel : 82-2-3284- 1 868; E-mail: jgjang@stepi.re.kr; E-mail : msyun@stepi.re.kr

grounds and constructed skeleton of the national R&D system. In 1 980s, private firms embarked on indig­enous R&D and soon overtook the public research. The registration of private research institutes (PRls) was unparalleled in history, it took l O y to reach 1 000 of such PRIs, another four years to reach 2000 and in just two more years to reach the 3000 mark. Korea is now an extreme case, where private firms account for a lion's share, around 80 per cent, of gross R&D fund­mg.

The national S&T survey system of Korea has also expanded accordingly. Initiated as a primitive report on public research institutes in early I 960s, R&D sur­vey was augmented and elaborated to be approved as national statistics under statistics law in 1 982. Items and terms were added or redefined based on Uf\j"ESCO Recommendations) in early 1 980s but recently revised in accordance with OECD Frascati Manual4• The cov­erage includes R&D expenditure, R&D workforce, patents and technological balance of payments.

As private sector took the leading role in national system, the innovative performance of manufacturing firms was reckoned as endogenous and indispensable variables for industrial competitiveness, the impera­tive need for a large-scale innovation survey arose. To

I

t

PARK & YUN : TECHNOLOGICAL INNOVATION SURVEY OF MANUFACTURING FIRMS 1 87

Process Preliminary Input Output

Sector

Technology S &T R&D Patents Education

Workforce Forecasting Survey S urvey

Survey

Research A� �� �� " �, �,

M anufacturing Innovation Survey

l Economy

Market & Trade Survey

Figure I - National survey systems of Korea

this end, the Korea Science and Technology Policy Institute (STEP!), under the Ministry of Science and Technology (MOST), carried out the first national in­novation survey in 1 996. The undertaking was monu­mental in that it constructed, albeit incomplete, the holistic structure of national survey system by inlay­ing the building block between R&D survey and macro economy survey (Figure I )

This paper is the summarized report of the survey. The material presented here represents only a part of the large-scale survey. The survey design in terms of key indicators, experimental factors and data col lec­tion process is portrayed first. The analysis of selec­tive findings is presented next. Finally, some policy implications and future research issues are discussed.

Survey Design - Departure from R&D Survey

Definition of Innovation

The first, and the most important departure of inno­vation survey from the R&D survey, is due to the defi­nition of innovation. R&D-related proxy measures, typically patents or publ ications, may demonstrate positive correlation with economic outcomes and managerial figures but not necessarily guarantee cau­sality. In developing key definitions and indicators, some fundamental clauses from the Oslo Manual of OECD were invoked which set out to standardize the collection process of innovation data5. Technological innovations were defined as significant improvements

in business performance attributable to technologically new products introduced and/or technologically new processes implemented. To put it more specifically:

• Product innovation - Both radical innovation, denoting new products with different properties, and incremental innovation, denoting existing products with enhanced performance

• Process innovation - New or improved produc­tion methods due to changes either in hardware, software, or both

• Innovative firm - Firm that achieved at least one of either product or process innovation (both) during the reference period

Indicators for Innovation Input

Conventional R&D input includes only the intra­mural expenditure that is directly invested in R&D ac­tivities. However, the term innovation input is more broadly defined, representing total expenditure, both intramural and extramural, on all the technological activities, both disembodied and embodied, that have been carried out during the reference period. In a simi­lar vein, innovation intensity is defined as the ratio of innovation input to total sales whereas R&D intensity is defined as the ratio of R&D input to total sales. It should be pointed out that expenditure is incurred ir­respective of innovative success:

• R&D expenditure - The term comprises both intramural R&D expenditure and extramural expenditures for contracted-out R&D

1 88 J SCI IND RES VOL 60 MARCH 200 1

Input Domain of R&D Survey Output

• Intramural

•

•

R&D Expenditure

Extramural R&D Expenditure Non-R&D Expenditure

• •

Patents & Publications

• Manufacturing

ProducVProcess Inn°Ttions

+ Business

Performance Performance Factor improvement Cost reduction

• •

Sales proportion Export proportion

Domain of Innovation Survey

Figure 2- Comparison of R&D survey and innovation survey

• Expenditure for disembodied technology -The term comprises the acquisition cost involv­ing patents, know-how and other industrial properties with technological contents

• Expenditure for embodied technology - The term comprises the purchase cost of new ma­chinery and equipment, not for capacity expan­sion, but for technological innovations

• Expenditure for engineering- The item com­prises such start-up costs as trial production, tooling up and organizational development

• Expenditure for marketing - The item com­prises the commercialization expenditure for market research and launch advertising

• Expenditure for training - The item comprises training costs for production and marketing personnel for enhancing quality or understand­ing characteristics of a new product.

Indicators for Innovation Performance

The term innovation performance is of paramount importance in innovation survey. The use of conven­tional measures, l ike patents is subject to serious limi­tations, as it may provide an incomplete or even mis­leading picture of innovation systems. Therefore, in­stead of such proxy measures, more direct and practi­cal measures are required in innovation survey. Amongst others, the fol lowing four indicators were applied to measure the innovation output:

• Sales proportion of innovative products - The term denotes the share of sales due to product

and/or process innovations at the end of the ref­erence period

• Export proportion of innovative products -The term denotes the share of exports due to product and/or process innovations at the end of the reference period

• Changes in factor composition - The term · indicates changes in proportion of production factors such as labor, capital, material and en­ergy during the reference period

• Reduction in production cost- The term mea­sures the reduction in production cost due to process innovations during the reference period.

Figure 2 illustrates the comparison between an R&D survey and an innovation survey.

Key Experimental Factors The following factors, each stratified into multiple

levels, were adopted to examine characteristics of firms. The first three factors are rather generic but the last two factors require some additional explanation. In outward-oriented developing economies, like Ko­rea, export intensity and foreign capital composition may exert a critical impact on the technological per­formance, and, in tum on the managerial performance of firms. Thus, these terms were incorporated to gauge the effect of country-specific firm structure.

• Size of firms - Size of firms was represented by the number of employees

PARK & YUN : TECHNOLOGICAL I NNOVATION SURVEY OF MANUFACTURING FIRMS 1 89

• Innovation intensity of firms - The ratio of innovation expenditure to total sales

• Industrial classification of firms - Firms were restricted to manufacturing sector and classi­fied into 75 categories based on the Korea Stan­dard Industry Classification (KSIC)

• Export-intensity offirms - The proportion of export to total sales

• Foreign capital-intensity offirms - The pro­portion of foreign capital to total capital.

Supplementary Factors In addition, the fol lowing questions were asked to

obtain supplementary information. Depending on the characteristics of factors, numeric, nominal or ordinal scales were used for measurement:

• Allocation of expenditure - Composition of expenditure among innovative activities, mea­sured as percentage of the total

• Aims of innovation - Main purposes to con­duct innovative activities, measured on Likert scale, from 1 (-not important) to 5 (-very important)

• Hamperingfactors - Obstacles or barriers to innovation, measured on \ -5 Likert scale as given above

• Financing of innovation expenditure - Com­position of fund sources, measured as percent­age of the total

• Sources of innovation idea and information -

Location of innovation ideas and information, measured on \ -5 Likert scale as given earlier

• Foreign partners of technology import - Dis­tribution of technology import sources, mea­sured as binary value, \ (-yes) and 0 (-no).

Process of Survey In principle, the target population of survey included

all Korean firms with more than ten employees which belong to manufacturing sector in KSIC. Practically, however, all of larger firms with more than 300 em­ployees, were directly consulted and a stratified sam­pling process was applied to the rest of the population where firms were grouped into four non-overlapping strata in terms of employment level, less than 20, 20-49, 50-99 and 1 00-299. Then, assuming 90 per cent confidence level, sample size of each stratum was cal­culated and random samples were obtained. Survey was conducted by mail which was then fol lowed up, if necessary, with clarifications by telephone or inter­views. The response .rate was approximately 65 per cent.

Table 1 - Overall statistics of i nnovativeness

Factor

Number of firms Sales Employment

Selected Findings

Innovative firms, per cent

49.2 69.3 67.6

Overall Propensity of Innovation

Non-innovative tirms, per cent

50.8 30.7 32.4

Of the total , 49.2 per cent firms achieved one or two innovations during the refrence period which rep­resented 69.3 per cent, on sales basis, and 67.6 per cent on the employment basis (Table 1 ) . Specifically, 37.4 per cent firms reported redical product innova­tion, 37.5 per cent incremental product innovation, and 32.6 per cent, the process innovation.

The performance was correlated with firm size and innovation intensity. As expected, larger firms were more innovative relative to small and medium-sized firms (SMEs). Further, growing industries with h igher innovation-intensity tended to be more innovative than the traditional manufacturing sectors with lower in­tensity. The average innovation intensity of innova­tive firms was 3 .65 per cent, considerably higher than the average R&D intensity of 1 .44 per cent. Precision instruments (8.44 per cent) and telecommunication (5 . 1 per cent) exhibited the highest intensity while petro­leum refining (0.72 per cent) and food/beverage ( 1 .1 per cent) showed the lowest intensities of innovation.

Indigenous R&D was the primary, albeit not in­dispensable, determinant of innovation in that 75.8 per cent innovative firms conducted R&D activities whereas 77.8 per cent non-innovative firms did not have the in-house R&D facility (Figure 3). R&D ex­penditure, however, was only 39.5 per cent of total innovation expenditure. The finding implied that suc­cessful innovations hinge not only on R&D capability but also on marketing or management efforts. Innova­tive products, either new or improved, account for 6 1 .5 per cent of total sales as wel l as of total exports.

Factor-wise Analysis of Innovating Firms

Firm size The hypothesis that the propensity to innovate was

related to firm size, was supported by analysis of vari­ance (ANOVA). As given in Table 2, 73 per cent of large firms with more than 300 employees reported innovative performance while only 40 per cent of small firms with less than 20 employees were innovative. It

1 90 1 SCI IND RES VOL 60 M ARCH 200 1

Category I : 37.3per cent Category 1/ : 1 I .9per cent

Innovative - R&D Innovative - non-R&D

Category Ill : I I .3per cent Category I V : 39.5per cent

Non-innovative - R&D Non-innovative - non-R&D

Figure3 - Overal l Relationship between I nnovativeness and R&D Activities

Table 2 - A NOVA of tirm-size

Group Number Ratio of Statistics of employees i nnovative

firms

< 20 0.40

I I 20-49 0.6 1

III 50-99 0.67 F = 53.8

IV 1 00-299 0.68 (p < 0.00 1 )

V > 300 0.73

is noteworthy that the ratio showed a sharp increase as the number of employees exceeded 20 and then a steady but incremental increase afterwards. It may imply that there is a critical mass for obtaining inno­vative capability in terms of firm size. It provided an important policy issue of enhancing the innovative capabil ity of small firms.

Firm structure

Two major factors, export intensity and foreign capi­tal composition were employed to examine the impact of country-specific firm structure and both the factors were significant (Table 3 and 4, respectively) . The export-intensity, showed a reverse V-shape curve with respect to innovativeness. The explanation is rather straightforward. On the one hand, majority of export­oriented firms in developing countries stick to manu­facturing OEM products or labor-intensive goods. Thus, such firms recognized little incentive to inno­vate. On the other hand, firms with low export inten­sity, focussed on domestic market where external pres­sure to innovate was relatively insignificant. There­fore, balanced firms in-between, producing own-brand­name products and facing both global and domestic competition, appeared as the most innovative.

The composition of foreign capital also exercised a considerable impact, demonstrating another reverse V-shape curve. The performance of foreign-dominated firms was relatively low is because foreign firms, es­pecially the multi-nationals, made inroads into devel­oping countries only for marketing or mere assembly

Group

I I I I I I V V

Group

I I I III

Table3 - ANOVA of export-intensity

Export Ratio of Statistics intensity, i nnovative percent firms

0 0.43 < 20 0.72 F = 1 49. 1 , 20-39 0.78 (p < O.OO I ) 40-79 0.68 > 80 0.48

Table 4 - ANOVA of foreign capital-intensity

Foreign capital Ratio of Statistics ratio, per cent innovation firms < 1 0 0.49 F = 8.4, 1 0-49 0.68

> 50 0.48 (p < 0.00 1 )

operations. For firms whose foreign ownership was marginal, the performance was disappointingly low since as their market was confined to domestic do­mains. However, with a balanced corporate gover­nance foreign capital might induce technology import and, at the same time, domestic capital may motivate technology internalization, together leading to a higher performance.

Sales proportion of innovative products In innovative firms, sales of new or improved prod­

ucts account for 6 1 .5 per cent of total sales. The radi­cal product innovation, launch of new product, ac­counted for 40.4 per cent of total sales while the in­cremental product innovation, improvement of exist­ing product, accounted the remainder 59.6 per cent of sales. Table 5 displays the comparison between large firms and SMEs for sales proportion of innovative products.

Although incremental innovations were more fre­quent� irrespective of firm size, small firms exhibited relatively high ratio of radical innovations while large firms showed higher ratio of incremental innovations,

PARK & YUN : TECHNOLOGICAL INNOVATION SURVEY OF MANUFACTURING FIRMS 1 9 1

Table 5 - Sales proportion o f product innovation

Sales, per cent Large firms SMEs

Industry New Existing New Existing product (A), product (B), NB Product (A), product (B), NB

Food, Beverage

Textile, Leather

Cooking, Refining

Chemicals

Rubber, Plastic

Metals

Metal-working

Machinery

Computers

Electrical appl iances

Telecommunications

Precision instruments

Motor vehicles

Other transport

Average

Total

per cent

20.8

22.6

1 8 .2

1 5 .4

9.5

7.7

1 1 .0

1 0.3

35.9

1 8 .5

3 1 .6

55.6

55.0

24.7

24.2

following an expected trend. Small firms are charac­terized by low-volume and low-variety and, thus, ad­dition of new products may exert a significant posi­tive effect. However, as the sales volume and product variety increased with firm size, the impact of indi­vidual items might decrease and the collective improve­ment of existing products becomes more important. There were wide sectoral differences. Largely, the labor-intensive or process-oriented sectors exhibit rela­tively a higher ratio of incremental innovations while the capital- or technology-intensive sectors showed the opposite trend. However, rubber/plastic and metals, in the former category, were an exception in that, n iche­seeking small firms tended to prefer to pursue product innovation in a mature market. In case of motor ve­hicles and other transport in the latter category, small firms preferred incremental innovations as they lack technology and capital capability to achieve radical innovations.

Supplementary Information • ALLocatioll of innovation expellditure - Overall, intramu­ral R&D turned out to be the primary attractant of ex­penditure, accounting for 39.5 per cent of total inno­vation expenditure. There appeared, however, a sharp

per cent per cent per cent

32.2 0.65 1 1 .3 33.5 0.34

45.2 0.50 29.7 38.6 0.77

59.5 0.3 1 8.0 36.7 0.22

27.2 0.57 1 9. 1 28.0 0.68

58.0 0. 1 6 29. 1 26.9 1 .08

60.9 0. 1 3 20.6 38.2 0.54

38.8 0.28 26.0 36. 1 0.72

33.9 0.30 23.5 37.4 0.63

36.2 0.99 47.2 25.2 1 .87

23.8 0.78 24. 1 33.3 0.72

4 1 . 1 0.77 32.0 34.3 0.93

34.0 1 .64 43.0 3 1 .9 1 .35

36.3 1 .52 30.5 29.3 1 .04

1 3 . 1 1 .89 20. 1 57.3 0.35

37.8 0.70 26.2 34.0 0.77

6 1 .5

contrast between large firms and SMEs. Internal R&D was the dominating receptor in large firms while the production facilities became the major source of ex­penditure in SMEs. The fact impl ied that SMEs fo­cussed more on downstream innovations where devel­opment activities and production functions were closed coupled. Similar pattern was found in traditional sec­tors such as textile and wood that emphasized process innovations, rather than product innovations. It is also noteworthy that emerging sectors, like telecommuni­cations, spent a considerable amount to external tech­nology acquisition, as compared to that on internal R&D (Table 6).

• A ims of innovatioll

Measured on the Likert scale, there appeared a ten­dency of large firms to put more importance on each of the l isted aims, indicating that large firms, mostly multi-product and multi-technology, pursued a wide range of objectives simultaneously, whereas SMEs concentrated on a selective set of aims. The interpre­tation was supported by the finding that, large firms took more i nterest i n extending product range and shortening the production cycle.

1 92 J SCI IND RES VOL 60 MARCH 2001

Table 6--Allocation of i nnovation expenditure among activities

Innovative Activities Large firms, SMEs, Average,

per cent per cent per cent

Internal R&D 50.6 26.2 39.5

Investment on new production faci li ties 1 8.3 40.9 28.6

Engineering(prototype, pi lot plant, ctc.} 1 5 .9 1 5 .0 1 5 .5

External technology acquisition 8 .3 3 .3 6.0

Marketing 2.8 4.9 3 .8

Training 1 .5 3.4 2.4

Other activities 2.7 6.3 4.3

Table 7-Aims of I nnovation

Objective

To enhance quality

To expand market share

To capture new domestic market

To extend current product range

To shorten production cycle

To replace old products

To save material cost

To save labor cost

To improve working conditions

To enhance production flexibility

To meet regulations

To reduce environmental damage

To introduce new product range

To save energy cost

To capture new foreign markct

Regardless of firm size, quality improvement was considered the most important aim of innovation. Fur­thermore, firms emphasized to expand the existing market or capture new domestic market rather than exploiting foreign markets. The phenomenon might reveal that the Korean firms were sti l l adopting a pas­sive approach. From the sector-specific view, as ex­pected, traditional sectors such as textile and rubber! plastic put a high priority to reduction in labor cost. The process-oriented sectors, like refining and chemi­cals, attempted to reduce environmental damage and meet governmental regulations through technological innovations (Table 7).

Overal l Large firms SMEs

4. 1 5 4.25 4. 1 3

3.93 4.04 3 .91

3 .82 3.90 3 .80

3.55 3 .71 3.5 1

3.52 3 .6 1 3 .50

3.52 3.58 3.5 1

3.44 3.60 3.40

3.40 3.49 3 .38

3 .36 3.43 3 .35

3 . 1 9 3 . 14 3 .20

3 .04 3.37 2.97

3.00 3.35 2.93

2.84 3.00 2. 8 1

2.82 3 .01 2.78

2.65 2.85 2.60

Hampering factors - Most firms rated the lack of skilled personnel as the most serious obstacle to inno­vation, which had long been pointed out as the critical problem of the Korean national systems of innovation. Further, in contrast to large firms, SMEs mentioned financial constraints and information deficiency as major impediment to innovation. It is noteworthy that the excessive degree of competition was rated as the second serious barrier to innovation. The response, together with the weak base of appropriability system, lead to the conclusion that firms may be less innova­tive, especially in the developing countries, if returns to innovation were marginal and outputs of innova­tion were loosely protected (Table 8).

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PARK & YUN : TECHNOLOGICAL INNOVATION SURVEY OF M ANUFACTURING FIRMS 1 93

Table 8-lnnovation hampering factors

Hampering Factor Overall Large firms SMEs

Lack of capable personnel 3.44 3 .20 3.49

Excessive degree of competition 3.26 3 .22 3 .27

Lack of access to information 3.20 3.03 3.23

Lack of appropriate sources of finance 3. 1 5 2.83 3.2 1

Pay-off period of innovation too long 3 . 1 0 2.95 3. 1 3

Lack of appropriability system 3. 1 0 3 .00 3. 1 2

Innovation expenditure too high 2.93 2.7 1 2.97

Lack of opportunities for cooperation 2.89 2.78 2.9 1

Government regulations 2.6 1 2.64 2.60

Lack of commercialization capability 2.57 2.56 2.57

Organizational resistance to change 2.3 1 2.39 2.29

Lack of commitment of top management 2.02 2. 1 3 2.00

Table 9-Sources of finance for innovative activities

Internal Firm size source,

per cent Commercial Policy loans loans

Large firms 62.5 1 7 .5 2.7

SMEs 45.2 23.2 9.4

Average 54.5 20.2 5.8

Source offinancing - On the whole, more than 54.5 per cent, of total expenditure was financed by internal funds. However, a clear distinction was witnessed be­tween large firms and SMEs. It was evident that large firms were better off in self-financing while SMEs re­sorted more heavily to external sources. It accords with the general postulation that there is a funding gap be­tween large firms and SMEs. Out of diverse sources of external fund, bank loans, either commercial or policy loans, constituted the biggest component. Fur­ther, governmental supportive schemes, such as pref­erential loans, public fund and subsidy, were by and large directed to supporting SMEs. That the contribu­tion of venture capital remained minimal was not sur­prising. Venture capitals , particularly in advanced countries, aim remedy deficiencies in traditional fi­nancial institutions and to nurture technology-based

Externals source, per cent

Venture Government R&D Others

capital fund subsidy

0.7 1 .7 4.6 1 0.3

1 .5 8.5 4.2 7.9

1 . 1 4.9 4.4 9.2

firms. However, the financial market of developing countries is yet too primitive and fragile to effectively induce high-risk investments in innovative enterprises (Table 9) .

Sources of innovation idea and information The 5-point Lickert scale rating revealed that both large firms and SMEs considered in-house R&D as the most impor­tant source of innovation. The recognition was more conspicuous among large firms, as compared to SMEs. Small firms regarded marketing and production de­partments as almost equally important source of inno­vative ideas. In addition, firms of all sizes attached a high priority to clients and customer. However, the relationship with suppliers, either material or equip­ment, was rated as less important. It highlights the weak

1 94 J SCI IND RES VOL 60 MARCH 200 1

Table 1 0 - Sources of Innovation Ideas and Information

Source of idea and information

Internal R&D department

Clients and customers

Internal marketing department

Internal production department

Competitors

Fairs, exhibitions

Suppliers of materials/components

Patent disclosures

Suppliers of machine/equipment

Public research institutes

Universities

R&D consortia of firms

base of user-supplier network which was considered the critical trauma of the Korean systems of innova­tion. S imilarly, the cooperative linkages with public institutes and universities appeared marginal . The re­sult is an another source of disappointment to policy makers who actively endeavored to stimulate network­ing between academicians and the practitioners. It is also worth noticing that firms of all sizes have little recourse to intermediary agents, l ike consulting firms and service providers, to obtain information on tech­nology. The government strove to install information providers and advisory agents, especially for SMEs, but the efforts were not appreciated by private firms (Table 1 0) .

Modes a/technology import/outsourcing - The firms were asked merely to count the number of outsourced technologies during the reference period. The most remarkable fact was due to the high degree of concen­tration in terms of foreign partners . The so-called triad, USA, Japan and Europe, formed an almost exclusive domain of partnership. In fact, the pressing need to diversify foreign sources had been emphasized repeat­edly in Korea but the chronic and structural disparity remained yet to be improved. S imple modes such as licensing-in or technical al liance turned out the most prevalent modes of acquisition. The capital-embodied transfer of technology, attained through the purchase of equipment, appeared another major channel of tech­nology import. On the contrary, more sophisticated modes like contract-outs and take-overs were not ac­tively exploited. The human-embodied mobility of foreign technology was also sluggish (Table I I ) .

Overall Large firms SMEs

3.86 4.03 3.83

3.78 3.70 3.79

3.5 1 3.43 3 .52

3.40 3.39 3 .40

3 .25 3 .46 3 .20

3.03 3. 1 2 3 .0 1

2.92 2.93 2.9 1

2.79 3.28 3 .70

2.66 2.78 2.64

2.47 2.54 2.46

2. 1 1 2.34 2.06

1 .90 2.06 1 .86

Conclusions For the last three decades, S&T survey system of

Korea has been augmented and elaborated according to the cumulative expansion of innovative capabi l i ­ties. As far as the innovation survey is concerned, how­ever, it was still at the primitive stage without formal standards to follow or benchmarking references to borrow. Neither manifest framework of survey design nor definitive set of analytical questions were readi ly available. Some of the international guidelines were suggestive at the most, far from sufficient to reflect customized needs of developing countries. Nonethe­less, the importance of innovation survey became clear as it enabled the investigation of the otherwise black box of economic growth and industrial sophistication more thoroughly and robustly, vis-a-vis traditional vehicles such as R&D survey or growth accounting analysis. The innovation survey of Korea, in that re­gard, was exploratory and seminal . Korean innova­tions and industry is in the midst of a learning process towards a promising avenue of future development.

In retrospect, the survey has been percei ved as a useful practice. With due regard to the technical con­straints, the output was sufficiently fruitful. It provided some valuable information on the nature of innova­tive activities of private firms that could not be ob­tained through any R&D survey conducted earlier. However, the following issues emerged that deserve in-depth discussions for future improvements. First, to what extent to depart from the conventional R&D survey? The survey pointed to a tradeoff between radi­cal discrepancy and gradual modification. The task

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PARK & YUN : TECHNOLOGICAL INNOVATION SURVEY OF MANUFACTURING FIRMS 1 95

Education Technology S&T R&D Patents Workforce

Forecasting Survey Survey Survey

Research

Manufacturing Innovation Survey Technology

Industry Assessment

Society Public Understanding Survey

Figure 4 - Complete Structure of National S&T Survey System

Table I I -Modes and foreign partners of technology acquisition

Mode of acquisition

Korea Japan USA

Licensing-in 1 42 249 1 6 1

R&D contracting-out 483 64 48

Use of consulting service 1 54 66 38

Take-over (M&A) 5 I 7 1 2

Purchase o f equipment 4 1 6 377 2 1 4

Technical alliance 368 268 1 22

Recruitment of engineers 280 59 38

then is to determine the optimal degree of departure, taking the consistency and compatibility into account. Second, how to incorporate country-specific factors and constraints into the survey framework? The no­tion of national systems6 or technology systems7 of innovation is particularly relevant in developing coun­tries and thus customized indicators are requ ired to identify idiosyncratic features of developing countries. Simultaneously, however, these indicators need to be standardized for the international compatibility. Third, some technical deficiencies are to be resolved. The majority of factors were measured either on nominal or in ordinal scales, making parametric and quantita­tive analysis intractable. It is necessary to develop al­ternative interval or ratio scales that are more ame­nable to statistical analyses and further more system­atic interpretations. Fourth, indicators of process in­novation need to be included. As compared to product innovation, the performance of process inl lovation,

Partners

East Total

Europe Russia China Asia

Others

1 3 I I I 3 3 1 9 726

24 1 2 4 3 1 4 652

2 1 2 1 2 295

5 2 2 3 I I 63

208 5 3 8 1 2 1 249

1 0 1 8 9 9 I S 900

24 IS 9 9 1 0 444

such as reduction in production cost or improvement of factor composition, is more difficult to measure. Even then, it is an essential element of innovation sur­vey. Fifth, international comparative studies are nec­essary. Some information on the findings of similar surveys carried out elsewhere is availablex. 1 3 but the indicators are far from compatible and consistent to draw meaningful and reliable findings. Clearly, there is a need of more active international forums to ex­change views and experiences in this regard.

With the innovation survey, first step has been taken to in laying the building block between R&D survey and macro-economy survey. However, it sti l l has a long way to go to complete the national S&T survey sys­tem of Korea. In particular, the linkage between tech­nology and society is lacking. The survey of public understanding of S&T, for instance, is cal /ed for. Technology assessment (TA) is another missing link (Figure 4).

1 96 J SCI IND RES VOL 60 MARCH 200 1

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About the auther Yong-Tae Park is aJaculty member at the Department oj Industrial Engineering of Seoul National Univeristy( SNU).

BeJore joining SNU, he worked at the Korea Science and Technology Policy Institutes(STEPI) where he served as

principal research fellow and advisor 10 minista lin-Gyu lang and Moon-Seob Yun, both pril1cipai research

Jellows oj STEPI, have long been involved in innovation research and have taken charge of R&D survey and

innovation survey of Korea.