Effects of Innovation Cluster and Type of Core Technology on Firms’ Economic Performance

  • Eunil Park Korea Civil Engineering and Building Technology
  • Kyeongsik Yoo Korea Advanced Institute of Science and Technology (KAIST); Daejeon Technopark
  • Sang Jib Kwon Dongguk University
  • Jay Ohm Korea Advanced Institute of Science and Technology (KAIST)
  • Hyun Joon Chang Korea Advanced Institute of Science and Technology (KAIST)
Keywords: Daedeok Innopolis, economic performance, new job creation, South Korea, technology type

Abstract

Cluster theory is considered one of the most well-known industrial strategies. Following the success attained by several clusters in developed countries in the global manufacturing and information technology market, a number of emerging nations have attempted to build up industry-specific clusters. Numerous clusters have been formed across the world. However, most researchers focus on developed nations rather than developing ones when empirically analyzing the impact of clusters on firms’ economic performance based on core-technology type of firms. Therefore, this study aims to investigate the effects of innovation clusters and core-technology type (namely, information technology, biotechnology, nanotechnology, and medical technology) on the economic performance of firms in one of South Korean innovation clusters. A widely employed statistical method, a series of factorial analyses of variance, is used to analyze sample data on firms located in Daejeon Daedeok Innopolis, the biggest cluster in South Korea. The results show a notable clustering effect on firms’ economic performance and new job creation. In addition, the type of core technology significantly affects the intensity of the cluster’s effect on new job creation and economic performance of the firms. Finally, this study presents implications for both academia and industries.

Author Biographies

Eunil Park, Korea Civil Engineering and Building Technology
Dr. Eunil Park is a research specialist at Global Cooperation Division in Construction Industrial Innovation Center, Korea Institute of Civil Engineering and Building Technology (KICT). He received his B. E. in 2010 and M. Sc. in 2012, both from Sungkyunkwan University (SKKU). In addition, he received his Ph. D. in 2016 from Korea Advanced Institute of Science and Technology (KAIST). His research investigates the social, industrial and psychological effects of managerial technologies, management activities and human-technology interactions with an emphasis on sustainability, online communication, construction, energy and mobile technologies. He has published academic articles in outlets that include Energy Policy, Computers in Human Behavior, Sustainable Development, Renewable Energy, and so on. Before joining KICT, he was a researcher in ASTA Inc., University Jaume-I and SKKU.
Kyeongsik Yoo, Korea Advanced Institute of Science and Technology (KAIST); Daejeon Technopark
Mr. Kyeongsik Yoo is a Ph.D. candidate in Innovation and Technology Management, KAIST. He also serves as a senior researcher in Daejeon Technopark. His research aims to investigate the effects of organizational innovation and national R&D programs on industrial performance and efficiency.
Sang Jib Kwon, Dongguk University
Prof. Sang Jib Kwon is an assistant professor in the Department of Business Administration, Dongguk University. His research aims to investigate the effects of organizational innovation and personnel group management on work performance and efficiency.
Jay Ohm, Korea Advanced Institute of Science and Technology (KAIST)
Prof. Jay Ohm is a Professor of the School of Innovation and Technology Management at KAIST. He received his MS from MIT in Operations Research and a PhD from the Northwestern University in Managerial Economics and Decision Sciences. Before joining KAIST, he was an industry practitioner in the areas of technology commercialization, business analysis and consulting for many key companies, including AT&T Bell Laboratories, AT&T, Lucent, IBM, Sprint and US Federal Government. He is intensely interested not only in teaching and researching, but also working on initiatives that would benefit Korean companies competing in a new global environment.
Hyun Joon Chang, Korea Advanced Institute of Science and Technology (KAIST)
Prof. Hyun Joon Chang is a Professor of the School of Innovation and Technology Management at KAIST. He received his MA from Illinois State University in Economics and a PhD from the Cornell University in Economics. Before joining KAIST, he worked in many key institutes, including Korea Development Institute (KDI) and Korea Energy Economics Institute (KEEI).

References

Arikan, A. 2009. Interfirm Knowledge Exchanges and the Knowledge Creation Capability of Clusters. Academy of Management Review 34: 658-676.

Audretsch, D. B. & Thurik, A. R. 2001. What’s New about the New Economy? Sources of Growth in the Managed and Entrepreneurial Economies. Industrial and Corporate Change 10: 267-315.

Beaudry, C. & Breschi, S. 2003. Are Firms in Clusters Really More Innovative?. Economics of Innovation and New Technology 12: 325-342.

Boschma, R. A. 2005. Proximity and Innovation: a Critical Assessment. Regional Studies 39: 61-74.

Brenner, T. 2004. Industrial clusters. Existence, emergence and evolution. Routledge, London, UK.

Casper, C. & Karamanos, A. 2003. Commercializing Science in Europe: The Cambridge Biotechnology Cluster. European Planning Studies 11: 805-822.

Chen, S. & Choi, C. J. 2004. Creating a knowledge-based city: the example of Hsinchu Science Park. Journal of Knowledge Management 8: 73-82.

Feng, Z. H. A. O. 2005. Innovation: the Core for Structure Optimization and Industrial Upgrading. Finance & Trade Economics 10: 1-18.

Freeman, C. 1997. The Economics of Industrial Innovation (3rd ed.). MIT Press, Cambridge, MA.

Furman, J., Porter, M. E. & Stern, S. 2002. The Determinants of National Innovative Capacity. Research Policy 31: 899-933.

Gibbs, R. M. & Bernat. G. A. 1998. Rural Industry Clusters Raise Local Earnings. Rural Development Perspectives 12: 18-25.

Gordon, I. & McCann, P. 2000. Industrial Clusters: Complexes, Agglomeration and/or Social Networks?. Urban Studies 37: 513–532.

Hansen, G. S. & Warnerfelt, B. 1989. Determinants of firm performance: The relative importance of economic and organizational factors. Strategic Management Journal 10: 399-411.

Kenney, M. 2000. Understanding Silicon Valley: The Anatomy of an Entrepreneurial Region. Stanford University Press, Stanford, MA.

Kim, J. D. 2011. A Study on a Regional Innovation System by Analyzing Innovative Activities of Entrepreneurs, Journal of the Korean Regional Science Association 27: 87-110.

Klepper, S. 2010. The Origin and Growth of Industry Clusters: The Making of Silicon Valley and Detroit. Journal of Urban Economics 67: 15-32.

Korsching, P. F. & Borich, T. O. 1997. Facilitating Cluster Communities: Lessons from the Iowa Experience. Community Development Journal 32: 342-353.

Kwon, O. H. 2004. A Study on the Institutional Supporting System for Forming Industrial Cluster in Large Area. Journal of the Economic Geographical Society of Korea 7: 315-328.

Kwon, S. J., Park, E., & Kim, K. J. 2014. What Drives Successful Social Networking Services? A Comparative Analysis of User Acceptance of Facebook and Twitter. The Social Science Journal 51: 534-544.

Kwon, S. J., Park, E., Ohm, J., & Yoo, K. 2015. Innovation Activities and Creation of New Employment: An Empirical Assessment of South Korea’s Manufacturing Industry. Social Science Information. Internet accessed on 16 July 2015: http://ssi.sagepub.com/content/early/2015/04/28/0539018415580190.abstract

Lai, H. & Shyu, J. Z. 2005. A Comparison of Innovation Capacity at Science Parks across the Taiwan Strait: the Case of Zhangjiang High-Tech Park and Hsinchu Science-based Industrial Park. Technovation 25: 805-813.

Lee, S. & Lee, K. 2008. A Comparative Study of Innovative Cluster on Gumi and Changwon National Industrial Complexes. Journal of The Korean Regional Development Association 20: 1-27.

Lin, C., Tung, C. & Huang, C. 2006. Elucidating the Industrial Cluster Effect from a System Dynamics Perspective, Technovation 26: 473-482.

Lundvall, B. A., Joseph, K. J., Chaminade, C. & Vang, J. 2009. Handbook of Innovation Systems and Developing Countries: Building Domestic Capabilities in a Global Setting. Edward Elgar, Cheltenham, UK.

Lundvall, B. A., Patarapong, I. & Vang, J. 2006. Asia’s Innovation Systems in Transition. Edward Elgar, Cheltenham, UK.

Malmberg, A. & Maskell P. 2006. Localized Learning Revisited. Growth and Change 37: 1-18.

Marais, L. 2011. Local Economic Development and Partnerships: Critical Reflections from South Africa. Community Development Journal 46: 49-62.

Meng, Q. & Li, M. 2002. New Economy and ICT development in China. Information Economics and Policy 14: 275-295.

Mortensen, D. T. & Pissarides, C. A. 1994. Job Creation and Job Destruction in the Theory of Unemployment. Review of Economic Studies 61: 397-415.

Neumark, D. 2013. Spurring Job Creation in Response to Severe Recessions: Reconsidering Hiring Credits. Journal of Policy analysis and Management 32: 142-171.

Nishimura, J. & Okamuro, H. 2011. R&D Productivity and the Organization of Cluster Policy: an Empirical Evaluation of the Industrial Cluster Project in Japan. The Journal of Technology Transfer 36: 117-144.

Park, E., Kwon, S. J., Kim, H., Ohm, J. & Chang, H. J. 2014. What is the Right R&D Strategy for Overcoming the Difficulties of the South Korean IT Industry?. Information Technology for Development 20: 339-352.

Park, S. O. & Chung, D. C. 2012. Evolution of Industrial Cluster and Policy: The Case of Gumi City, Korea. Journal of the Korean Geographical Society 47: 226-244.

Park, Y. W., Amano, T. & Moon, G. 2012. Benchmarking Open and Cluster Innovation: Case of Korea. Benchmarking: An International Journal 19: 517-531.

Pietrobelli, C. & Rabellotti, R. 2011. Global Value Chains Meet Innovation Systems: Are There Learning Opportunities for Developing Countries?. World Development 39: 1261-1269.

Pinch, S. & Henry, N. 1999. Paul Krugman’s Geographical Economics, Industrial Clustering and the British Motor Sport Industry. Regional Studies 33: 815-827.

Pinto, P. M. & Timmons, J. F. 2005. The Political Determinants of Economic Performance Political Competition and the Sources of Growth. Comparative Political Studies 38: 26-50.

Porter, M. E. & Stern, S. 2001. Innovation: Location Matters. MIT Sloan Management Review 42: 28-36.

Porter, M. E. 1998. Clusters and the New Economics of Competition. Harvard Business Review 76: 77-91.

Porter, M. E. 2000. Location, Competition, and Economic Development: Local Clusters in a Global Economy. Economic Development Quarterly 14: 15-34.

Porter, M. E. 1990. The Competitive Advantage of Nations. Harvard Business Review 68: 73-93.

Rosenfeld, S. A. 1997. Bringing Business Clusters into the Mainstream of Economic Development. European Planning Studies 5: 3-23.

Salvador, E., Mariotti I. & Conicella, F. 2013. Science Park or Innovation Cluster?: Similarities and Differences in Physical and Virtual Firms’ Agglomeration Phenomena. International Journal of Entrepreneurial Behaviour & Research 19: 656-674.

Smirnova, Y. V. 2012. Innovation Infrastructure as a Vital Element of National Innovation System: Case of Kazakhstan. In Proceedings of the 10th GlOBELICS International Conference. pp. 1-20.

Sohn, D. & Kenney, M. 2007. Universities, Clusters, and Innovation Systems: The Case of Seoul, Korea. World Development 35: 991-1004.

Trigari, A. 2009. Equilibrium Unemployment, Job Flows, and Inflation Dynamics. Journal of Money, Credit and Banking 41: 1-33.

Wheaton, W. C. & Lewis, M. J. 2002. Urban Wages and Labor Market Agglomeration. Journal of Urban Economics 51: 542-562.

Wong, P. K., Ho, Y. P. & Autio, E. 2005. Entrepreneurship, Innovation and Economic Growth: Evidence from GEM data. Small Business Economics 24: 335-350.

Yoo, K., Park, E., Kim, H., Ohm, J., Yang, T., Kim, K. J., Chang, H. J. & del Pobil, A. P. 2014. Optimized Renewable and Sustainable Electricity Generation Systems for Ulleungdo Island in South Korea. Sustainability 6: 7883-7893.

Yu, J. & Jackson, R. 2011. Regional Innovation Clusters: A Critical Review. Growth and Change 42: 111-124.

Published
2016-07-10
Issue
Vol 4 No 2 (2016)
Section
Industrial Engineering