From Catching Up to Convergence of the Latecomer Firms: Comparing Behavior and Innovation Systems of Firms in Korea and the US

Abstract

This paper addresses the issue of catching and convergence at the level of firms, and investigates whether Korean firms tend to converge toward mature firms represented by the US firms in terms of their behavior and performance as well as firm-level innovations systems. It conducts regression analyses of several behavior and performance variables, using the data of the Korean and US firms during the 1990s, the 2000s, and 2010s. It finds some evidence of convergence, such that Korean firms become more profitability- rather than growth-oriented, borrowing and investing less, and thus being less indebted. However, they have not changed much in terms of their behavior toward firm values and dividend tendencies. Further analyses, using the patent-derived, innovation system variables, also confirm some aspects of convergence, compared with the early results, for which self-citations become significant and positive for firm values; furthermore, the variable of cycle time of technology is no longer significant for profitability, which is consistent with the results from the US firms. Meanwhile, changes in corporate governance associated with the rise of foreign shareholder are also shown to have resulted in higher profitability but insignificant change in firm values. An emerging conclusion is an ongoing but partially completed process of convergence.

Innovation–Development Detours for Latecomers

“…If we investigate the trend of key innovation system variables of Korean firms since the 1990s and later, we can notice a clear-cut trend of continued catching up and even convergence, which is well presented in Im and Lee (2021). First, the average number of patents We can discuss the regression results as reported in Im and Lee (2021) on the impacts of the CTT and self-citations on the two measures of firm profitability (return on assets and return on sales). The variable of the CTT is noteworthy and important.…”

“…Finally, the match between the micro and macro dimensions of innovation will be discussed with reference to the changes in the corporate innovation systems of Korean firms. Korean firms used to behave like typical catching-up firms (e.g., firms that prioritize growth over profitability, borrow and invest heavily, and specialize in short-cycle technologies); however, Korean firms have undergone radical changes in their behavioral patterns, which shows that their behaviors are converging with those of mature firms in advanced economies such as the United States (Im & Lee, 2021). They now prioritize profitability and dividend payments over sales growth and re-investment; they are also moving into long CTT-based sectors, such as bio-medicals.…”

Framework for Measuring Process Innovation Performance at Indonesian State-Owned Companies

“…Tersine and Riggs [103] devised several stages in the application of the Delphi method: (1) the delivery of the first questionnaire; (2) the provision of additional questionnaires; and (3) the improvement process by considering the weighting factors of the individual panelists. Hsu and Sandford [104] described the process of running the Delphi method in four rounds: (1) the panelists receive open-ended Diffusion is a process by which innovation is communicated within a system. Diffusion is an important activity that considers how process innovation results in systemic change (affecting other entities).…”

“…Tersine and Riggs [103] devised several stages in the application of the Delphi method: (1) the delivery of the first questionnaire; (2) the provision of additional questionnaires; and (3) the improvement process by considering the weighting factors of the individual panelists. Hsu and Sandford [104] described the process of running the Delphi method in four rounds: (1) the panelists receive open-ended questions and the answers are summarized by the researcher; (2) panelists are asked to review the summary of answers from the first round and then rank the answers according to the individual priorities of the panelists, while the researcher identifies agreements and disagreements among the panelists; (3) panelists are given the results of identification from the previous round and then asked to revise the assessment or determine reasons outside the consensus if there is a discrepancy in opinion with the summary results of the previous round; (4) panelists are given the results of the consensus and are shown the minority opinion. The opportunity to make a final change in judgment may also be given in this round.…”

“…Innovation is a business activity carried out by a company in its development efforts by creating added value in its business processes [1]. A company has a differentiating competence to face global competition with other competitors with added value.…”