Your browser does not support the PubReader view.
Go to this page to see a list of supporting browsers.
Korean Academic Society of Business Administration
[ Article ]
korean management review - Vol. 49, No. 5, pp.1111-1128
ISSN: 1226-1874 (Print)
Print publication date 31 Oct 2020
Received 15 Apr 2020 Revised 23 Jun 2020 Accepted 24 Jun 2020
DOI: https://doi.org/10.17287/kmr.2020.49.5.1111

소재·부품 중소기업의 R&D 투자가 기업의 수익성에 미치는 영향에 대한 연구

Ohsung Kwon ; Namin Park ; Minsu Kim
(First Author) Korea Institute for Industrial Economics & Trade ohsung00@kiet.re.kr
(Co-Author) Korea Institute of S&T Evaluation and Planning mariririn@kistep.re.kr
(Corresponding Author) Korea Institute of Energy Research minsu530@kier.re.kr
The Effects of R&D Investment on SME Profitability in the Materials and Components Industry


Copyright 2011 THE KOREAN ACADEMIC SOCIETY OF BUSINESS ADMINISTRATION
This is an open access article distributed under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted, distribution, and reproduction in any medium, provided the original work is properly cited.

Abstract

As protectionism in each country has been widespread and export restrictions of Japan on materials have arisen, the voices of fostering the upstream sectors in Korea are rising. In particular, the materials and components industry plays an important role in the domestic manufacturing industry. In addition, domestic small and medium-sized enterprises (SMEs) occupy a large part in terms of absolute number of companies and employment ratio. Therefore, the analysis of SMEs in the materials and components industry can foster development of the upstream sectors in Korea. In particular, this study examines the effect of R&D investment by SMEs in the materials and components industry on profitability of the firms. In the case of the products in upstream sectors, the effect of R&D innovation is relatively slow because it takes a long time to reach the consumer. Based on the empirical data of SMEs in the materials and components industry, the proportion of R&D investment in that same year has negatively affected profitability of the firm. On the other hand, R&D investment in the next year was analyzed to have a positive effect on profitability. It suggests that, in the short term, R&D investment can damage profitability of the firm, whereas it can be beneficial in the long-run. This study is expected to understand profitable opportunity in terms of the R&D investment for SMEs and related authority in the materials and components industry.

Keywords:

Materials and components industry, SME, R&D investment, profitability

References

  • Brown, M. G. and Svenson, R. A. (1998), “Measuring R&D Productivity,” Research-Technology Management, 31(4), pp.30-35. [https://doi.org/10.1080/08956308.1998.11671246]
  • Chang. H. (2016), “An Analysis on the Effect of Government Supports for the R&D of SMEs : Focused on Technical, Economic, and Social Outcomes,” Korean Society and Public Administration, 26(4), pp.195-218.
  • Chang. S. M. and Yoo. M. H. (2010), “Productivity and International Competitiveness of Parts and Material Industries in Korea,” Journal of Industrial Economics and Business, 23(2), pp.1095-1112.
  • Chun. D., Woo. C., Cho. Y., and Han. M. (2019), “The effects of R&D institutions and cooperation types on R&D efficiency in the components and materials industry,” Journal of Technology Innovation, 27(3), pp.1-26. [https://doi.org/10.14386/SIME.2019.27.3.1]
  • Chung. D. and Kim. B. (2018), “The Effects of Entrepreneurship Orientation on Product Innovation in Korean Material Component Industry: Focusing on Mediating Effects of Intellectual Capital,” Asia Pacific Journal of Small Business, 40(2), pp.91-113.
  • Cin. B. C. and Lee. E. Y. (2009), “An Empirical Analysis on Effects of R&D Expenditure on Productivity Growth in SMEs,” Journal of Korean Economy Studies, 26, pp.151-178.
  • Djellal, F., Francoz, D., Gallouj, C., Gallouj, F., and Jacquin, Y. (2003), “Revising the definition of research and development in the light of the specificities of services,” Science and Public Policy, 30(6), pp.415-429. [https://doi.org/10.3152/147154303781780227]
  • Foster, R. N. (2003), “Corporate Performance and Technological Change Through Investor’s eyes,” Research-Technology Management, 46(6), pp.36-43. [https://doi.org/10.1080/08956308.2003.11671595]
  • Hall, B. H., and Ziedonis, R. H. (2001), “The Patent Paradox Revisited: Firm Strategy and Patenting in the U. S. Semiconductor Industry, 1979-1995,” RAND Journal of Economics, 32(1), pp.101-128. [https://doi.org/10.2307/2696400]
  • Jang. S. K., Shin. Y. S., and Jung. H. (2009), “Relationship between R&D Investment, Technology Management Capability, and Firm Performance,” Korean Management Review, 38(1), pp.105-132.
  • Jeong. K., Kim. J., and Lee. S. (2017), “The effect of the level of implementation and willingness for R&D process on corporate performance,” Productivity Review, 31(3), pp.67-97. [https://doi.org/10.15843/kpapr.31.3.201709.67]
  • Jun. S., Sung. T. E., and Seo, J. H. (2016), “A Study on the Relationship between R&D Information Support Programs and SME Performances: With Focus on ICT SMEs,” Journal of Korea Technology Innovation Society, 19(1), pp.48-79.
  • Kim. K. (2017), “The Characteristics of Corporate Growth and Innovation in the Materials, Components, and Equipments Sectors of Korean Display Industrial Value Chain,” Journal of Korea Technology Innovation Society, 20(1), pp.205-238.
  • Kim. M. C. and Sung. N. I. (2012), “Regular Papers : Government R&D Subsidies and the Performance of Small and Medium Enterprises,” Asia Pacific Journal of Small Business, 34(1), pp.39-60.
  • Kim. M. S., Kim. S. J., and Nam. K. H (2012), “The Empirical Study on Relation between R&D Innovation Capability and Performance in Knowledge-Based Service Firms,” Journal of Korean Society for Quality Management, 40(4), pp.631-640. [https://doi.org/10.7469/JKSQM.2012.40.4.631]
  • Korea Federation of SMEs (2018), “SME Statistics 2018”
  • Kwon, O., Lim, S., and Lee, D. H. (2018), “Acquiring startups in the energy sector: a study of firm value and environmental policy,” Business Strategy and the Environment, 27(8), pp. 1376-1384. [https://doi.org/10.1002/bse.2187]
  • Lee. B. H., Lee. S. W., and Wi. S. A. (2014), “The Effect of Government R&D Supports on SME's Technological Innovation Performance in Korea,” Asia Pacific Journal of Business Venturing and Entrepreneurship, 9(5), pp. 157-171.
  • Lee. D. L. and Kim. M. H. (1985), “A study on the Influence of R&D Expenditure on Film’s Growth Rate - Focusing on KOSDAQ market -,” Journal of Taxation and Accounting, 3(1), pp.5-31.
  • Lee. H. S., Lee. J. S., and Park. J. (2015), “Technological Performance Analyses of SMEs Based on Type of Government R&D Support,” Journal of Korea Technology Innovation Society, 18(1), pp. 3-97.
  • Lee. S. H. and Cho. K. T. (2012), “The Study on the Effect of R&D Investment and Technology Commercialization Capabilities on Business Performance,” Journal of Technology Innovation, 20(1), pp.263-294.
  • Lee. Y. H. and Bae. J. Y. (2016), “The International Competitiveness Analysis of Materials and Components Industry of Korea : A Resource-based View,” Journal of CEO and Management Studies, 19(2), pp.25-42.
  • Lim, S., Kwon, O., and Lee, D. H. (2018), “Technology convergence in the Internet of Things (IoT) startup ecosystem: A network analysis,” Telematics and Informatics, 35(7), pp.1887-1899. [https://doi.org/10.1016/j.tele.2018.06.002]
  • Ministry of Trade, Industry and Energy (MOTIE) (2016, December 26), “The 4th basic plan for the development of materials and components” [Press release].
  • Ministry of Trade, Industry and Energy (MOTIE) (2019), Materials & Components Technology Network, Available at http://www.mctnet.org/do/Index.do
  • Ministry of Trade, Industry and Energy (MOTIE) et al. (2019, August 5), “Measures to strengthen competitiveness of materials, components and equipment to break away from the external-dependent industrial structure” [Press release].
  • Noh. M., Cho. H., and Baek. C. (2018), “Effectiveness of R&D Tax Credit for SMEs,” Journal of Korea Technology Innovation Society, 21(2), pp.663-683.
  • OECD (2013), “Expenditure on R&D,” in OECD Factbook 2013: Economic, Environmental and Social Statistics, OECD Publishing.
  • Parthasarthy, R. and Hammond, J. (2002), “Product innovation input and outcome: moderating effects of the innovation process,” Journal of Engineering and Technology Management, 19(1), pp.75-91. [https://doi.org/10.1016/S0923-4748(01)00047-9]
  • Schumpeter, J. A. (1950), Capitalism, Socialism and Democracy, third edition, Harper & Brothers, New York.
  • Shin. J. K. and Choi. Y. A. (2008), “R&D Intensity and Innovation in the SMEs - The Moderating Effects of Policy Supports -,” Korean Corporation Management Review, 26, pp.119-132.
  • Shin. J. K. and Hwang. S. J. (2008), “R&D Intensity and Technology Innovation in the SMEs : The Role of Cross Functional Cooperation and Industrial Cooperation Culture,” Journal of Industrial Economics and Business, 21(6), pp.2523-2548.
  • Tubbs, M. (2007), “The Relationship between R&D and Company Performance,” Research–Technology Management, 50(6), pp.23-30. [https://doi.org/10.1080/08956308.2007.11657470]
  • Yoon. B. S. and Heo. H. Y. (2011), “A Study on the Effects of Investment of R&D on a Company's Performances: A Korean R&D Scoreboard in 2010,” Journal of CEO and Management Studies, 14(22), pp. 109-131.

• The author Ohsung Kwon is an Associate Research Fellow at Korea Institute for Industrial Economics & Trade (KIET). He received his Ph.D. in Business and Technology Management and a BS in Mathematical Sciences from KAIST. Previously, he was an Associate Research Fellow at Korea Institute of S&T Evaluation and Planning (KISTEP). His research interests include SME and startups, innovation strategy, complex systems, and energy and IT industries.

• The author Namin Park is an Researcher at KISTEP. She received her MA in International Studies from Hanyang University and BA in Law from Sookmyung Women’s University. Currently, she is a Ph.D. student in Management at Hanyang University. Her research interests include organizational learning and knowledge-spillover.

• The author Minsu Kim is an Engineer at Korea Institute of Energy Research (KIER). He received his BS in Mechanical Engineering from KAIST. Currently, he is a graduate student in Innovation and Technology Management at KAIST.