Asia’s Innovation Systems in Transition
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Asia’s Innovation Systems in Transition

Edited by Bengt-Åke Lundvall, Patarapong Intarakumnerd and Jan Vang

The success of Asian economies (first Japan, then Taiwan, South Korea, Singapore, Hong Kong and, more recently, China and India) has made it tempting to look for ‘an Asian model of development’. However, the strength of Asian development lies less in strategies that reproduce successful national systems of innovation and more in the capacity for institutional change to open up new development trajectories with greater emphasis on knowledge and learning. The select group of contributors demonstrate that although there are important differences among Asian countries in terms of institutional set-ups supporting innovation, government policies and industrial structures, they share common transitional processes to cope with the globalizing learning economy.
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Chapter 8: Performance and Sources of Industrial Innovation in Korea's Innovation System

Kong-Rae Lee


8. Performance and sources of industrial innovation in Korea’s innovation system Kong-Rae Lee INTRODUCTION Nine years have passed since Korea experienced the economic crisis in 1997. Korea’s industry still maintained competitive advantage in international markets in spite of economic adversity imposed by a crisis-ridden financial environment. Advantage has been possible due to the continuous innovations within firms introducing new products and services. Korean firms have striven to strengthen the technological capability that enables them to improve the quality of products and innovate new products and processes. Those firms that gained competitive advantage have showed advancements in their technological capabilities. A study of firm-level innovation reported that Korean firms showed aggressive learning activities in order to catch up with advanced technologies and create new products and services in industries after the 1997 economic crisis (World Bank, 2002). It was also found that Korean firms currently put emphasis on manufacturing, process innovation and system integration. At the same time, they are eagerly attempting to move ‘upstream’ toward research and development and ‘down-stream’ towards distribution, marketing and brand-value development which usually require considerable investment. This shift indicates that there has been a transition of the Korean economy from a simple manufacturing-led economy to a more knowledgeintensive and service-intensive economy. It also implies that the technological development of Korea’s industry is evolving from an imitation stage to an innovation stage. In this transition period, creative learning of technological knowledge is essential for firms wishing to move further upstream from their base in manufacturing towards...

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