Association of SME and Government Policy Factors with the Creation of New Employment: Manufacturing Industry in Korea

Abstract

Abstract:The rise in unemployment is an important and urgent task to be tackled for the growth of economy in Korea. Although prior studies have revealed some factors leading to the creation of employment, studies simultaneously considering various factors, such as small and medium enterprises' (SMEs') basic factors, technology innovation activities, innovation capabilities, and the government policies, have been limited. This study seeks to design an integrated model that focuses on both SME and government policy factors associated with the creation of new employment. For this, we use the Korea Innovation Survey (KIS) data on 2828 firms in the manufacturing industry in Korea for 2013-2015. Using the multivariate regression model, we identified the association of SME and the government policy factors on the creation of employment. We show that sales, product innovation, organization innovation, and the support program by the government contributed to the job creation, whereas a firm's age had a negative correlation with the creation of employment. The statistical results and discussion of our findings facilitate a better understanding of the association between various SMEs' factors and the creation of employment, and therefore, should help in designing better policies and strategies for employment growth.