Structure and Functions of Social Capital in the Regional Innovation Cluster: Korean Cases

Mi-Ae Jung Science and Technology Policy Institute, Korea

3.1_Cluster Dynamic Research, Implications on Cluster Performance and Business Competitiveness

What is Social Capital?

Bouridieu(1986)

─ Aggregate of the actual or potential resources which are obtained from a durable network of more or less institutionalized relationships of mutual acquaintance and recognition

Coleman(1988)

─ Functions that facilitate social structure and specific actions of its agents

─ Productive parts that work together to achieve particular goals that seem to be impossible without the resources

Putnam, Leonardi, and Nanetti(1994)

─ Characteristics of social organizations that facilitate conciliation and cooperation for reciprocal benefits such as networks, norms

Thomas(2000)

─ Abstract intangible capital that allows members of a society to form a mutual aid system to attain a common goal

Social capital is the intangible asset embedded in the social relations, which has a productive role in social/economic performance

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Social Capital at the Firm Level

Social capital can be found in the social relations of members of a firm, between the members of a business, and between the firm and the external actors

Source: Westlund(2006), p.52

Class Contents

Related to

Production

Activities - Social capital lies in relationships between factor providers, customers of goods, and a business

Related to

Markets

-Social capital is engaged in relationships between consumers and businesses, not for

exchanging information, but to boost “confidence” in business and arouse “positive expectation

for goods” - Social capital can be activated by consumers’ awareness through brands or trademarks that repr

esent a corporation, making it possible to commercialize, with activities such as trademark licen

sing trading

Related to

Local

Environment

-Social capital lies in regional corporations or R&D centers that are easily accessible due to a

short distance; they are not directly related to production activities, though. In addition, social

capital can be found in relationships with a policy-making body on the location environment,

and relationships between a civic organization and a citizen in that area -Social capital can be formed by relationships that a corporation establishes for profit making,

however, when the corporation selects the location, it will evaluate whether the social capital

can be used potentially in that area. In other words, the corporation prefers an area that provides

a friendly atmosphere for business activities, knowledge or information, and culture

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Why is Social capital important in the innovation cluster?

The innovation process is an interaction process between innovation actors and various knowledge sources

─ requires communication and cooperation through social relations (Asheim and Gertler, 2005; Kline and Rosenberg, 1986)

In order to develop a cluster into an innovation cluster, the environment for collective learning through knowledge exchange is essential(Capello, 1999)

Korea has encouraged regional innovation through governmental support for regional institutions and clusters for STI since early 2000

─ A policy model of Korean regional innovation is to form regional institutions like a techno park sponsored by a central and local government, and to develop the geographical cluster with an adjacent industrial complex

─ It is designed with an expectation that physical integration and linkage will realize functional connections

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Why is Social capital important in the innovation cluster?(2)

The facilities and institutions constructed through Korea’s regional innovation policy have limitations

─ In acting as a structural foundation of a regional innovation ecosystem; and in contributing to a region’s economy

Spontaneity-based cooperation and reformed network effect are needed, and studies on functions of social capital and dynamics should be conducted to understand the conditions for innovation cluster

Social capital serves as a space for collective learning (Ionescu, 2005)

Social capital allows knowledge and resources to be distributed without much cost, and plays a role in drawing synergy effects, resulting in contributing to dynamic efficiency (Jeong, et al. 2005)

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Approach to the Social Capital

Aspects of Social Capital

─ Micro vs. Macro perspective

• Micro-perspective: To explain performance deviation of personal or individual agents, to focus on whether it has an edge in collecting resources or knowledge over other agents

• Macro-perspective: To explain a difference or performance deviation of the aggregation of individual agents (social group), to focus on culture or social characteristics involved in organizations

─ Structure vs. Cognitive vs. Productive attribute

• Structural attribute: Objective social structure that is observable from the outside

• Cognitive attribute: Subjectively-recognized values or beliefs

• Operative/Productive attribute: Resources obtained from a social substructure, or operation state

Structural Aspect Cognitive Aspect Operative/Productive

Aspect

Macro-perspective (group level)

Ex. governance, rules Ex. sense of community, mutual

trust, norm of reciprocity Ex. collective behavior

Micro-perspective (individual level)

Ex. network, meetings Ex. credibility(reputation) Ex. information and resource

access/exchange

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Research Framework

Approach to structural, cognitive, operative/productive aspect of social capital at a micro-/ macro-level

Study the state of firm’s social capital and region-wide social capital as a business environment and micro-macro dynamics

Firm-level Innovation Capability

Firm-level Knowledge Capital

Firm-level Social Capital

Regional-level Social Capital

Innovation Cluster

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Research Framework(2)

(1) Pre-investigation

─ Focal point: Understanding of the boundary and history of the cluster; key agents in the cluster development history; decision making contents of the cluster and governance (policy)

(2) Macro-perspective approach

─ Focusing on social capital in macro-perspective, survey through interviews with main agents

(3) Micro-perspective approach (firm survey)

─ Focusing on social capital in micro-perspective, questionnaire targeting firms

(4) Comprehensive analysis

Structural

Social capital

Cognitive

Social capital

Firm innovation and growth

Micro-level innovation

Region-wide

Social capital

Productive

Social capital

Policy

Regional innovation

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Case 1: Gwangju Photonics Industry Cluster

Background

─ The photonics industry produces and sells a variety of advanced goods by using properties of light.

─ As a regional economy based on the auto industry was on the verge of collapsing due to the financial crisis of 1997, university professors in the region formed a research community where they researcherd emerging industries of the future

─ With the launch of the Kim Dae-jung government, on the basis of political support, plans to support the photonics industry were adopted

University

Business supporting

institute Research institute

Hi-tech Science

Complex

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Case 2: Wonju Medical Industry Cluster

Background

─ Wonju, which has a weak industrial foundation, searched for a development model to overcome the image of itself as a military city

• Yonsei University Wonju Campus opened the Department of Medical Electronics for the first time in Korea in 1979; as departments of biomedical engineering were opened at other universities in the metropolitan area, which raised crisis awareness as a local university, Wonju Campus and Wonju-city sought development strategy at a local government level.

─ Failing to get support for a regional innovation project from government in 1997, Wonju-city and the Medical Engineering Institute played a key role in establishing a medical device business incubator, which was the beginning of the cluster development

Business supporting /research institute

• (재)강원Technopark • (재)강원지역사업평가원 • 강원 바이오∙메디칼 펀드조합 • 기술신용보증기금 • 한방의료기기산업진흥센터 • 의료기기개발촉진센터 • 연세대학교 세브란스기독병원 • 의료기기임상시험센터 • 연세의료공학연구원 • 프라운호퍼 공동연구센터 • 한국산업기술시험원 • 한국산업단지공단

University

• 강원대학교 • 강릉원주대학교 • 관동대학교 • 상지대학교 • 상지영서대학 • 송호대학 • 연세대학교 • 한국폴리텍Ⅲ대학 • 한라대학교 • 한림대학교 • 경동대학교

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Results and Implications

Path 1 A purposeful network toward

regional innovation

evolve as innovation communities, drawing resources from local/regional/central government

accelerate institutionalization through establishing STI supporting organizations and space for business; developing network and cluster policy

nourishing entrepreneurship and collaboration culture

Structural

Social

capital

Cognitive

Social

capital

Firm

innovation

and growth

Micro-level innovation

Macro-level

Social capital

Productive

Social

capital

Regional innovation

Path 1 Path 2

Path 3

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Path 2 & Path 3 stimulating entrepreneurships

start-ups develop new linkages and new success cases of collaboration and new value sources

* Structural equation modelling analysis with firm survey results would be conducted to confirm the paths between social capital and firm performance

Results and Implications(2)

Policy Implications

─ Innovation community is very essential for cluster development;

─ Generating and fostering more innovation communities should be the focal point for innovation cluster policy

─ Need to expand and improve social capitals

• Rate of respondents with high value of various social capital aspects (e.g. who are satisfied with current network formation, trust fully each other) are less than 50%

─ Need to enable positive social capital

• Indicators of productive social capital shows it is less than structural and cognitive social capital

─ Need to monitor and encourage positive collective actions for cluster development and promote as region-wide culture and norms

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Thank You miaejung@stepi.re.kr