Theory, Evidence and Implications
Edited by Phillip H. Phan, Sankaran Venkataraman and S. Ramakrishna Velamuri
Chapter 7: Policy Intervention in the Development of the Korean Venture Capital Industry
1 Seungwha (Andy) Chung, Young Keun Choi, Jiman Lee, Sunju Park and Hyun-Han Shin INTRODUCTION Many governments around the world actively design and implement policy initiatives to promote small businesses as they are an important source of the national income and employment. The public policy for entrepreneurial companies with technological orientation is a diﬀerentiated part of those policy initiatives. The success of entrepreneurial companies is deﬁned more by uncertain market forces once they start up with unproven technological ideas. Generally speaking, the serious application of competitive market mechanisms to start-up companies is the best way to promote innovative activities among private companies. However, governments of developing countries trying to catch up with technological advancement have a legitimate incentive to seriously consider socioeconomic externalities of sponsoring entrepreneurial companies. Thus they often intervene in the market for corporate creation and development. From the late 1990s the Korean economy in general shifted its focus from traditional heavy industries to the information and telecommunications industry as a strategic policy sector. Faced with the unexpected ﬁnancial crisis that started in late 1997, the economy accelerated industrial restructuring processes toward the new economy, supporting the rise of high technology ventures. The purpose of this study is to review the Korean government’s unique policy drivers for promoting venture related industries under changing economic environments, to evaluate their eﬀects on the development of entrepreneurial capabilities at a societal level, and also to draw out new propositions by comparing the pattern the Korean venture industry has...
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