The Path to Development and Macroeconomic Stability in Korea
Chapter 13: Catch-up and path-creating by SMEs: from OEM to OBM
AbstractChapter 13 investigates how through the transformation of latecomer small- and medium-sized enterprises (SMEs) in emerging economies from dependent or subcontracting original equipment manufacturing (OEM) firms into independent or original brand manufacturing (OBM) firms it is possible to achieve a significant catch-up in terms of share of regional or global markets. Given that SMEs are rarely able to make such a transition, we elaborate this dynamic process by performing case studies on eight Korean SMEs. These SMEs created their own paths instead of following their forerunners. These paths are neither entirely new nor take the form of leapfrogging, but are characterized by new combinations of existing paths. We identify several risk factors, such as counterattacks and intellectual property lawsuits, that latecomer SMEs face from incumbent SMEs. In addition, we emphasize the importance of cultivating firm-specific knowledge by engaging in a continuing process of trial-and-error-type in-house experiments.
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