High-Tech Firms and Economic Growth of Korea

Korea came a long way from the poverty-stricken agrarian economy after Korean War into a newly industrialized one for the past 50 years. As a result of exerting great efforts in furthering technological development, Korea has achieved remarkable technological advances in the high-tech industry. In doing so, the Korean high-tech firms have adapted strategies which sustained remarkable patterns of growth and innovation to turbulent global markets.

The Korean economy has thrived on high-tech firms. Although the Korean government regarded technological development as an engine for economic growth and its role was significant in technological innovation, high-tech firms led efforts to push high tech products such as semiconductor as the major items of exports in their business.

Chaebols were the major forces behind Korean industrialization. They hired top-notch college graduates, advanced technological capacities across subsidiaries, and globalized R&D activities. However, the concentration of economic power in the hands of a few chosen chaebols by the government stifled the healthy growth of SMEs. The Asian crisis seems to have catalyzed industrial restructuring in Korea to a certain extent. Well-trained scientists and engineers who had been either laid off by chaebols or decided to spin-off started technology-based firms.

Korea has seized the opportunity by anticipating and profiting since the early digital age. The Korean high tech firms foresaw the big swing from analog to digital and invested heavily on digital technology. Previously, the Korean high-tech firms tended to focus on near-term applications. However, they now produce new generations of digital products and are strong in the main sectors of the digital revolution such as semiconductors, telecommunications equipments and leading-edge consumer electronics.

The Korean high tech firms still face tremendous challenges ahead to stay competitive in the global marketplace. Although Korea has made remarkable technical progress, a level of basic technology and operating software still lags behind technology leaders. The applied technology strategy Korean firms have employed requires great degree of tactical flexibility when exploiting new market. Can Korean firms stay competitive by overcoming their weaknesses and meeting new challenges? Now that their exports are dwindling due to a worldwide economic down, how can they sustain their growth?