1 / 37

Korean High-Tech Industrial Cluster Policy: Centred on Daeduck Valley

Korean High-Tech Industrial Cluster Policy: Centred on Daeduck Valley October 10, 2002 Information and Communications University Sung Cheol LEE Contents High-Tech Industrial Policy in Korea Definition of High-Tech Industrial Cluster in Korea

bernad
Download Presentation

Korean High-Tech Industrial Cluster Policy: Centred on Daeduck Valley

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Korean High-Tech Industrial Cluster Policy: Centred on Daeduck Valley October 10, 2002 Information and Communications University Sung Cheol LEE

  2. Contents • High-Tech Industrial Policy in Korea • Definition of High-Tech Industrial Cluster in Korea • Problem with High-Tech Industrial Cluster Policy in Korea • Restructuring of Venture Firms in Daeduck Valley • Emergence of Daeduck Valley as Knowledge Cluster • Daeduck Valley as Knowledge Cluster • Professional Provider Service in Daeduck Valley • Knowledge Production Networks of IT Venture Firms in Daeduck Valley: ETRI- Venture Firm Relations • ETRI and Spin-off Relations: Technology Transfer • ETRI and Spin-off Relations: Collaborative Research • ETRI and Spin-off Relations: Evaluation • ETRI TBI and Start-ups Relations

  3. High-Tech Industrial Policy in Korea

  4. Definition of High-Tech Industrial Cluster • Definition • Technology-intensive intensive region in which high-tech firms in IT, semiconductor, electronics industries, research institutes and residential areas are harmonized (Castells and Hal, 1994) • Collective region of building, land and facilities in which firm, research institute and university implement collaborative research, education & training , business incubating, and production (Special Law for Supporting Industrial District)

  5. Problem with High-Tech Industrial Cluster Policy • Contradiction between Industrial Policy and Regional Policy • Industrial policy – Promotion of high-tech industry • Regional policy – Regional balanced development (E.g: Japanese industrial cluster policy) • No Evolution of Industrial Cluster Policy • Existing industrial district Vs. High-tech industrial cluster • High-tech industrial district Vs. Science industrial district • Duplication of Body for Promoting Cluster – Disintegrated Supports • MCIE – Build industrial technology cluster • MCT – Designate and plan venture cluster location • MIC - Build media valley and IT venture cluster • MST – Plan science park related to science and technology policy • Complexity and Duplication of Laws and Provisions for Promoting Cluster • Special Law for Promoting Venture Firm • Provision for Supporting Industrial Technology District • Law for the foundation of Industry and Energy Technology • Industrial Location Law

  6. Direction of High-Tech Industrial Cluster Policy • Building Industrial Cluster by Locality • Regional technology level and Regional industrial structure • Regional negotiation (Regional industrial collaboration)  Regional industrial competitiveness • Combination of Industrial Cluster Policy and Bringing-up Policy of High-Tech Firm • Cluster Plan + Firm Network Plan  Industrial Location + Technology Development & Firm Bringing-up • Differentiated Incentive • Effective Communication Channel among Government Departments (consistent and specialized policy) • Review policy implemented by other ministries • Negotiation • Establishing Unified Special Law or Provision • Consistent and total management for supporting industrial cluster and firms • Scope of incentives / Basis of evaluation for location and incentives

  7. Emergence and Crisis of Daeduck Valley as Knowledge Cluster

  8. Geography of Daeduck Valley • Daeduck Science Town • Daeduck 3rd and 4th Industrial District (Shintanzin Industrial District) • Established between 1990 and 1998 • 204 firms in mainly machinery, electronics, transportation sectors • Science Industrial District • Establishing (up to 2007) • Special Purpose Company – Daeduck Techno-Valley Co. (Local government, Hanhwa co. and Korea Development Bank) • Daejeon Expo Park • Place for public information on venture firms • Dunsan Administrative Town • Public Administrative institutes • Consulting, Financial insitutes • Yusung Tourist Zone

  9. Daeduck Valley as Knowledge Cluster (1) • Government Policy towards Digital Economy • Nurturising VFs as an alternative of ‘1997 Korean economic crisis’ • Limits of ‘Chaebol’ to cope with the dynamic world economy • Development of IT industry • One of top ten leading Countries in world IT market and production in 2000 • In terms of export, second in the world • Establishment of Deaduck Science Town • Since 1973, it was designated by MST as the Mecca of Korean science and technology by investing Won 30 trillion (about US $ 25 billion) • Since Dec. 1999, allow to establish production facilities • No. of Research institute in 2002 is 105 • Number of researcher is 10,714 (4,455 with PhD degree) • Proportion of researcher in Daejeon City is 1.6% (Average 0.5%)

  10. Daeduck Valley as Knowledge Cluster (2) • Concentration of IT Industry in Deaduck Valley Source: SMBA

  11. Daeduck Valley as Knowledge Cluster (3) • Role of the Electronics and Telecommunications Research Institute (ETRI) • Largest IT research organisation, which is funded by MIC, in Korea • Number of Employee: 1,600 (of whom 350 researcher hold PhD) • Leading to transition of Korean telecommunication manufacturers from technology users to technology generators in mobile telecommunication technology such as CDMA Role as a measure for attracting technology and knowledge intensive IT venture firms in Daeduck Valley

  12. Daeduck Valley as Knowledge Cluster (4) • Historical Contingency involved in ‘1997 Economic Crisis’ • Restructuring strategy enacted by the government for reducing the number employed in PRIs to cope with the crisis • Leads to a rapid increase in the number of spin-offs from PRIs • Number employed in the ETRI decreased 561 for two years after the crisis (1999. 11. 5 base) • Since 1997, number of spin-offs from the ETRI increased dramatically from 67 in 1997 to 220 in 2001 • 125 spin-offs from the ETRI are located in Daedcuk Valley • Majority of IT venture firms in Daeduck Valley is spin-offs from the ETRI Trends in spin-offs from the ETRI Source: www.etri.re.kr/dongmun2/index.html

  13. Crisis in Daeduck Valley • Boom and Crisis of VF in Korea • Until 2001 Rapid increase, but since 2002 Incremental decrease • Along with this trend, Daeduck Valley has experienced similar experience • From 30 in 1998 to 503 in 2001, but to 340 in August, 2002 Source: SMBA (1999, 2000, 2001, 2002)

  14. Problem with Habitat in Daeduck Valley

  15. Characteristic of Daeduck Valley as Knowledge Cluster(1) • Characteristics of Venture Firms in Daeduck Valley • Obstacle factor of commercialization

  16. Characteristic of Daeduck Valley as Knowledge Cluster(2) • Knowedge Creation centred on Relationships with Research Institutes • Lack of Production and Market Function • Lack of Network Brokerages and Coordinators Note: ‘1’ at least important, ‘5’ most important

  17. Characteristic of Daeduck Valley as IT Cluster(3) • Lack of Financial Supports in Development Stage • Average age of IT Venture Firm in Daeduck Valley: 3~ 4 years (Initial growth stage) • Financing • Guaranteed small financing sources (bank, non bank FC, TCGF) required in initial stage • Lack of large financial supports (VC) required in Development stage • Introducing large financial sources Source: The Bank of Korea, 2002

  18. Characteristic of Daeduck Valley as IT Cluster(4) • Bottleneck of Financing in Starting-up Stage

  19. Characteristic of Daeduck Valley as IT Cluster(5) • Problem with Financing for the Commercialization of Research Results in Starting-up Stage

  20. Characteristic of Daeduck Valley as IT Cluster(6) • Problem with Technology Supports from institutes

  21. Characteristic of Daeduck Valley as IT Cluster(7) • Problem with Institutional Supports from Government

  22. Venture Process and Supporting System Technology Support Financing Commercialsiation for research products (finance) Market Process Production Infra • Pre-Founding • Opportunity recognition • Forming/building a team • Preparing a business plan • Starting-up • Incorporating the company • Raising seed money • Finding an office • Development • Tech.Development • 1st fund raising • Recruiting additional human resources • Utilizing external professional services • Launching the first product • Growth • Sales & Marketing • Reaching Break even point • Raising working capital • Harvest • Harvest, IPO • Managing Post-IPO

  23. Knowledge Production Networks of Venture Firms in Daeduck Valley

  24. Source of Knowledge Production (1) • Source of Knowledge Production in Daeduck Valley

  25. Source of Knowledge Production (2) • In-House R&D • Spin-off • CEO’s Interpersonal Relationship • Spin-off • Firm Association (informal face-to-face) • Human Resource (Scouting Researchers) • Inter-firm Relations • Forward linkage (Buyer) • Growth & Harvest stage • Backward linkage (Supplier) • Growth & Harvest stage  Specialized or collaborative research contract • Firm-Research Institute Relations • Collaborative research (Firms in Growth & Harvest Stage) • Technology transfer(Firms in Starting-up Stage) • Subcontracting (Firms in Starting-up Stage)

  26. Inter-Firm Relations (1) • Knowledge Source in Inter-firm Relations • Products and production technology • CEO’s interpersonal relationships in starting-up stage • Relations with buyers in development and growth & Harvest stage • Market, Finance, Management information • CEO’s interpersonal relationships in all stages • CTO’s interpersonal relationships in all stages • Importance of Tacit knowledge in Daeduck Valley • Importance of inter-firm relations as a source of tacit knowledge • Weak transformation from tacit to explicit knowledge in inter-firm relations (rare collaborative research)

  27. Inter-Firm Relations (2) – Policy Implications • Inter-firm Network Facilitating Agent • Lack of central network agent • Firm Association • Building information DB for Future technology, products market stats, foreign technology trends and technology which other firms possess • Role as a Brokerage in contracting collaborative research between firms • Government • Support marketing • Role as a supporter for commercialization of research products by inviting buyers of large firms

  28. Firm-Research Institute Relations (1) • Knowledge Source in Firm-Research Institute Relations • Collaborative research – (46%) • Technology transfer – (27%) • Research subcontracting – (27%) • Firm-Research Institute Network Facilitating Agent • Collaborative research – CEO’s interpersonal relationships (48%) • Technology transfer – CEO’s interpersonal relationships (63%) • Research subcontracting – CEO’s interpersonal relationships (52%)  Lack of central network agent

  29. Firm-Research Institute Relations (2)- Technology Transfer • Case of Technology Transfer: ETRI- Ensoltek co. • ETRI • In accordance with government policy to improve the competitiveness of IT industry through the commercialisation of source code and factor technology, ETRI has transferred technology into venture firm with low charge • Esoltek Co. • Developing ‘System Solution of Bio-information Analysis’ by applying IT to BT, which is the infra of Bio-informatics • CEO was a researcher of Unix/Rinux team in ETRI for 18 years • Spin off in 2000

  30. Firm-Research Institute Relations (3)- Technology Transfer • Technology Transfer Process : ETRI- Ensoltek Co. Case Spin off (Transfer of TK related to Linux software system) ETRI Linux Team ETRI Technology Transfer Team Ensol Tek Co. Plan of technology transfer (Technology of cluster management software system) Consideration of technology transfer Opening session of technology transfer (Externalisation of knowledge) Request of firm technology evaluation Application for technology transfer Selection of technology transfer firm Technology evaluation Technology transfer (Combination of received and possessed knowledge) Commercialisation: E-Café (Internalisation of Knowledge)

  31. Firm-Research Institute Relations (4)- Collaborative Research • Case of “Interactive Rich Media” Collaborative Research

  32. Firm-Research Institute Relations (5)- Collaborative Research • Geographical Scope of “Interactive Rich Media” Collaborative Research • Trans-local level • Foundation of ETRI is based on the technology spillover and commercialisation of IT in national level, rather than Daeduck Valley • Nonetheless, ETRI spin-offs in Daeduck Valley have more chance to participate in collaborative research • Geographical proximity leads firm to obtain knowledge from the ETRI through frequent face-to-face contacts and interaction • Effect of spin-off based on the TK of ETRI make more possible to be selected as collaborative research firm, as spin-offs could have technology required by ETRI

  33. Firm-Research Institute Relations (6)- Collaborative Research • Knowledge production of spin-offs in Daeduck Valley is based on networks of its own technology capability, the function of ETRI research team as a coordinator and technology evaluator and the function of ETRI technology transfer team as a brokerage and instructor • Knowledge spillover in Daeduck Valley is depended on technology ETRI intend • To facilitate spin-offs-ETRI relations spontaneously, there is a need to build some institutes which are able to share information on the technology and knowledge of spin-offs and ETRI • Expansion of EVA (ETRI Venture Association) function as a coordinator and brokerage • Build the DB of technology information on the recent R&D and human resource of ETRI • Build the DB of technology information on firms in EVA and provide firm information • Provide Venture Capital with information on the R&D of firms in EVA for financing capital required in the commercialisation of products

  34. ETRI TBI and Start-ups Relations (1) • Characteristics of TBI in Daeduck Valley • Proportion of firm located in TBI in Daeduck Valley is 66% • Proportion of firm registered in SMBA among firm located in TBI is 33%  Beyond start-up stage • Knowledge and technology intensive firm is located in TBI of PRIs and University • Changing Role of PRI TBI in Daeduck Valley • Provide firm with the space for starting up in low cost • Role as a coordinator and brokerage between the mother research institute of TBI and firm located in TBI for the knowledge production and commercialisation of firms in TBI

  35. ETRI TBI and Start-ups Relations (2) • Case of ETRI TBI • Position of firms in ETRI TBI is an indicator of public confidence in IT • 37.5% of ETRI TBI firms have HQ and research centre in other places • Pre-start-up stage 12.5%, while commercialization stage 71% • Research relationships with ETRI is 71% Research Activity of firms in ETRI TBI Note: 1. Total number of start-ups in ETRI TBI existed in web site is 24 2. Figure is based on multiple choice responded by each start-up on research relationships

  36. ETRI TBI and Start-ups Relations (3) • Role of ETRI TBI • Provide firms in ETRI TBI with more opportunities to have research collaborative with ETRI research teams through hosting research seminars presented by ETRI (Externalisation of knowledge) • Technology supports by connecting ETRI research team for technology instruction  Brokerage function for the New EK of firms • Provide consulting related to law, tax and marketing for the commercialisation of R&D results by connecting consultants • Although ETRI TBI has not played a direct role for the knowledge production of firms, but played a important role as a brokerage in facilitating relationships between ETRI and firms in ETRI TBI for technology development and knowledge production

  37. Restructuring of Venture Firms in Daeduck Valley (2) • Further Direction in Daeduck Valley • Building knowledge production network based on commercialisation to increase the competitiveness of venture firms in Daeduck Valley • Building the infrastructure for knowledge production (technology and financial support system) • Establishing network brokers and coordinators • Complementing the function of network brokers and coordinators  Re-emergence of venture boom and increase in firm competitiveness in Daeduck Valley

More Related