• Korean small business review
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• v.31 no.4
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• pp.67-93
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• 2009

The purpose of this paper is to explore the relations between financial constraints and dividend smoothing of innovative small and medium sized enterprises(SMEs) listed on Korea Securities Market and Kosdaq Market of Korea Exchange. The innovative SMEs is defined as the firms with high level of R&D intensity which is measured by (R&D investment/total sales) ratio, according to Chauvin and Hirschey (1993). The R&D investment plays an important role as the innovative driver that can increase the future growth opportunity and profitability of the firms. Therefore, the R&D investment have large, positive, and consistent influences on the market value of the firm. In this point of view, we expect that the innovative SMEs can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. And also, we expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Aivazian et al.(2006) exert that the financial unconstrained firms with the high accessibility to capital market can adjust dividend payment faster than the financial constrained firms. We collect the sample firms among the total SMEs listed on Korea Securities Market and Kosdaq Market of Korea Exchange during the periods from January 1999 to December 2007 from the KIS Value Library database. The total number of firm-year observations of the total sample firms throughout the entire period is 5,544, the number of firm-year observations of the dividend firms is 2,919, and the number of firm-year observations of the non-dividend firms is 2,625. About 53%(or 2,919) of these total 5,544 observations involve firms that make a dividend payment. The dividend firms are divided into two groups according to the R&D intensity, such as the innovative SMEs with larger than median of R&D intensity and the noninnovative SMEs with smaller than median of R&D intensity. The number of firm-year observations of the innovative SMEs is 1,506, and the number of firm-year observations of the noninnovative SMEs is 1,413. Furthermore, the innovative SMEs are divided into two groups according to level of financial constraints, such as the financial unconstrained firms and the financial constrained firms. The number of firm-year observations of the former is 894, and the number of firm-year observations of the latter is 612. Although all available firm-year observations of the dividend firms are collected, deletions are made in the case of financial industries such as banks, securities company, insurance company, and other financial services company, because their capital structure and business style are widely different from the general manufacturing firms. The stock repurchase was involved in dividend payment because Grullon and Michaely (2002) examined the substitution hypothesis between dividends and stock repurchases. However, our data structure is an unbalanced panel data since there is no requirement that the firm-year observations data are all available for each firms during the entire periods from January 1999 to December 2007 from the KIS Value Library database. We firstly estimate the classic Lintner(1956) dividend adjustment model, where the decision to smooth dividend or to adopt a residual dividend policy depends on financial constraints measured by market accessibility. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between current payout rato and target payout ratio each year. In the Lintner model, dependent variable is the current dividend per share(DPS_t), and independent variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t). We hypothesized that firms adjust partially the gap between the current dividend per share(DPS_t) and the target payout ratio(Ω) each year, when the past dividend per share(DPS_t-1) deviate from the target payout ratio(Ω). We secondly estimate the expansion model that extend the Lintner model by including the determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory. In the expansion model, dependent variable is the current dividend per share(DPS_t), explanatory variables are the past dividend per share(DPS_t-1) and the current earnings per share(EPS_t), and control variables are the current capital expenditure ratio(CEA_t), the current leverage ratio(LEV_t), the current operating return on assets(ROA_t), the current business risk(RISK_t), the current trading volume turnover ratio(TURN_t), and the current dividend premium(DPREM_t). In these control variables, CEA_t, LEV_t, and ROA_t are the determinants suggested by the residual dividend theory and the agency theory, ROA_t and RISK_t are the determinants suggested by the dividend signaling theory, TURN_t is the determinant suggested by the transactions cost theory, and DPREM_t is the determinant suggested by the catering theory. Furthermore, we thirdly estimate the Lintner model and the expansion model by using the panel data of the financial unconstrained firms and the financial constrained firms, that are divided into two groups according to level of financial constraints. We expect that the financial unconstrained firms can adjust dividend payment faster than the financial constrained firms, because the former can finance more easily the investment funds through the market accessibility than the latter. We analyzed descriptive statistics such as mean, standard deviation, and median to delete the outliers from the panel data, conducted one way analysis of variance to check up the industry-specfic effects, and conducted difference test of firms characteristic variables between innovative SMEs and noninnovative SMEs as well as difference test of firms characteristic variables between financial unconstrained firms and financial constrained firms. We also conducted the correlation analysis and the variance inflation factors analysis to detect any multicollinearity among the independent variables. Both of the correlation coefficients and the variance inflation factors are roughly low to the extent that may be ignored the multicollinearity among the independent variables. Furthermore, we estimate both of the Lintner model and the expansion model using the panel regression analysis. We firstly test the time-specific effects and the firm-specific effects may be involved in our panel data through the Lagrange multiplier test that was proposed by Breusch and Pagan(1980), and secondly conduct Hausman test to prove that fixed effect model is fitter with our panel data than the random effect model. The main results of this study can be summarized as follows. The determinants suggested by the major theories of dividend, namely, residual dividend theory, dividend signaling theory, agency theory, catering theory, and transactions cost theory explain significantly the dividend policy of the innovative SMEs. Lintner model indicates that firms maintain stable and long run target payout ratio, and that firms adjust partially the gap between the current payout ratio and the target payout ratio each year. In the core variables of Lintner model, the past dividend per share has more effects to dividend smoothing than the current earnings per share. These results suggest that the innovative SMEs maintain stable and long run dividend policy which sustains the past dividend per share level without corporate special reasons. The main results show that dividend adjustment speed of the innovative SMEs is faster than that of the noninnovative SMEs. This means that the innovative SMEs with high level of R&D intensity can adjust dividend payment faster than the noninnovative SMEs, on the ground of their future growth opportunity and profitability. The other main results show that dividend adjustment speed of the financial unconstrained SMEs is faster than that of the financial constrained SMEs. This means that the financial unconstrained firms with high accessibility to capital market can adjust dividend payment faster than the financial constrained firms, on the ground of their financing ability of investment funds through the market accessibility. Futhermore, the other additional results show that dividend adjustment speed of the innovative SMEs classified by the Small and Medium Business Administration is faster than that of the unclassified SMEs. They are linked with various financial policies and services such as credit guaranteed service, policy fund for SMEs, venture investment fund, insurance program, and so on. In conclusion, the past dividend per share and the current earnings per share suggested by the Lintner model explain mainly dividend adjustment speed of the innovative SMEs, and also the financial constraints explain partially. Therefore, if managers can properly understand of the relations between financial constraints and dividend smoothing of innovative SMEs, they can maintain stable and long run dividend policy of the innovative SMEs through dividend smoothing. These are encouraging results for Korea government, that is, the Small and Medium Business Administration as it has implemented many policies to commit to the innovative SMEs. This paper may have a few limitations because it may be only early study about the relations between financial constraints and dividend smoothing of the innovative SMEs. Specifically, this paper may not adequately capture all of the subtle features of the innovative SMEs and the financial unconstrained SMEs. Therefore, we think that it is necessary to expand sample firms and control variables, and use more elaborate analysis methods in the future studies.

• Journal of Technology Innovation
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• v.27 no.3
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• pp.27-52
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• 2019

This research studied the determinants of private R&D investment by examining the innovation strategies of 481 small and medium enterprises (SMEs, their employee size is 5 or more and less than 300) in Busan, South Korea. The data is derived from the Technology Survey of Small and Medium Enterprises in 2001 and 2003. Three explanatory variables for the innovation strategies are the R&D portfolio, the organization (personnel) for R&D, and the strategic role of CEO for innovation. The technological levels of industries are controlled in the linear regression model. The dependent variable is the total private R&D investment of a firm in the given fiscal year. The empirical results indicate that the private R&D investment positively correlates with the complexity of the R&D portfolio, the formal organization for R&D team, and the increase of R&D personnel. The formal organization for R&D team and the number of R&D personnel are correlated with the increase of private R&D investment across the four groups in the manufacturing sector but not in the service sector. These findings suggest that the innovation policy needs to target firms who have complex R&D portfolios, the formal organization of R&D teams, and sufficient R&D personnel in order to increase the private R&D investment of SMEs in regions, with consideration of industrial characteristics.

• Information Systems Review
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• v.20 no.2
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• pp.39-62
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• 2018

Thanks to the growth of computing power and the recent development of data analytics, researchers have started to work on the data produced by users through the Internet or social media. This study is in line with these recent research trends and attempts to adopt data analytical techniques. We focus on the impact of "internal marketing" factors on firm performance, which is typically studied through survey methodologies. We looked into the job review platform Jobplanet (www.jobplanet.co.kr), which is a website where employees and former employees anonymously review companies and their management. With web crawling processes, we collected over 40K data points and performed morphological analysis to classify employees' reviews for internal marketing data. We then implemented econometric analysis to see the relationship between internal marketing and market capitalization. Contrary to the findings of extant survey studies, internal marketing is positively related to a firm's market capitalization only within a limited area. In most of the areas, the relationships are negative. Particularly, female-friendly environment and human resource development (HRD) are the areas exhibiting positive relations with market capitalization in the manufacturing industry. In the service industry, most of the areas, such as employ welfare and work-life balance, are negatively related with market capitalization. When firm size is small (or the history is short), female-friendly environment positively affect firm performance. On the contrary, when firm size is big (or the history is long), most of the internal marketing factors are either negative or insignificant. We explain the theoretical contributions and managerial implications with these results.

• Journal of the Korean Regional Science Association
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• v.31 no.1
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• pp.43-63
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• 2015

This study empirically analyzes the relationship between market structure and R&D activities. Especially, the outcome of R&D activities could be imitated or plagiarized by nearby competitors before it is protected legally through patenting, it would work as a club good and its market structure need to be defined at the geographic level of city, county or ward rather than the whole nation. According to the regression results of this study using Survey on Technology Statistics of Small- and Medium-Sized Firms, individual firms' R&D investment is more active when market structure of area(city, county, or ward)-industry(two-digit industry) is monopolistic or oligopolistic rather than competitive. However, as the variable representing market structure is redefined over a geographic scope of 16 metropolitan areas or provinces, 6 regions, or the whole nation, the relationship between market structure and R&D activities seems to become weak. Moreover, when the R&D expenditure is divided by its source, more active R&D spending in a less competitive market is observed as long as it is procured by internal fund of the firm in question.

• Journal of Internet Computing and Services
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• v.14 no.6
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• pp.95-105
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• 2013

Recently, SME's Collaboration activities have become one of a vital factor for sustaining competitive edge. This is because of the rapidly changing and competitive market environment, and also to leverage performance by overcoming obstacles of having limited internal resources. Discussing about the effects and relationships of the firm's collaboration activities and its outputs are not new. However, as ICT and various technologies have been diffused into the traditional industries, boundaries and practice capabilities within the industries are becoming ambiguous. Thus contents of the products/services and their development methods are also go and come over the industries. Although many researchers suggested the relations of SME's collaboration activities and innovation performances, most of the previous literatures are focusing on broad perspectives of firm's environmental factors rather than considering various SME's idiosyncrasy factors such as their major product and customer types at once. Therefore, the purpose of this paper is to analyze how SME(Small Medium Enterprise)'s external collaboration activities by their idiosyncrasy act as an input to types of innovation performance. In order to analyze collaboration effects in detail, we defined factors that can represent the SME's business environment - Perceived importance of using external resources, Perceived importance of external partnership, Collaboration and Collaboration levels of Major Product types, Customer types and lastly the Firm Sizes. We have also specifically divided the performance of innovation types as product innovation and process innovation based on existing research. In this study, the empirical analysis is based on Probit Regression Model to observe the correlations with the impact of each SME's business environment and their activities. For the empirical data, 497 samples were collected which, this sample data was extracted from the 'Korean Open Innovation Survey' performed by ETRI(Korean Electronics Telecommunications Research Institute) in 2010. As a result, empirical test results indicated that the impact of collaboration varies depend on the innovation types (Product and Process Innovation). The Impact of the collaboration level for the product innovation tend to be more effective when SMEs are developing for a final product, targeting on for individual customers (B2C). But on the other hand, the analysis result of the Process innovation tend to be higher than the product innovation, when SMEs are developing raw materials for their partners or to other firms targeting on for manufacturing industries(B2B). Also perceived importance of using external resources has effected to both product and process innovation performance. But Perceived importance of external partnership was statistically insignificant. Interesting finding was that the service product has negative effects on for the process innovation performance. And Relationship between size of the firms and their external collaboration activities with their performance of the innovations indicated that the bigger firms(over 100 of employees) tend to have better for both product and process innovations. Finally, implications of the results can be suggested as performance of innovation can be varied depends on firm's unique business idiosyncrasy as well as levels of external collaboration activities. The Implication of this research can be considered for firms in selecting an appropriate strategy as well as for policy makers.

• The Korean Journal of Financial Management
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• v.23 no.2
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• pp.143-170
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• 2006

We explore how stock returns and volatility have been impacted by securities market stimulating and controlling plans during the 1980-2004 period, using return analysis, event study, and BFL tests. First, we examine effectiveness of the stimulating plans for a depressed market and the controlling plans for an overheated market with respect to different firm sizes and industries as well as the whole market. KOSPI, large-sized, finance, and manufacturing company stock prices significantly rise following stimulating plans, implying that the plans are quite effective. Controlling plans also seem effective as stock prices stop rising and tend to decline following the plans. Second, we test whether securities market plans have any further impact with respect to fun sizes and industries in addition to the impact on the entire market. Only large-sized stocks show additional response to stimulating plans, while small-sized, electrical-electronic equipment, distribution, and manufacturing industries are further impacted by controlling plans. Third, the results of BFL tests show that volatility does not change around the announcement dates of stimulating and controlling plans. It appears that securities market plans have no impact on volatility. Only stock returns respond to the plans.

• Journal of Korea Technology Innovation Society
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• v.20 no.1
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• pp.62-80
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• 2017

The purpose of this paper is to explore the relationship between industrial regulations and the R&D activities of firms by analysing the case of manufacturing enterprises in Korea. The sample is gathered from the 2012 Korean Innovation Survey data of Korean Institute of Science & Technology Evaluation and Planning and merged with Korean Regulation Index data of Korean Institute of Public Administration. The Ordinary Least Square (OLS) as well as 2 Stage Least Square (2SLS) regression results show that the impact of the level of the manufacturing field's regulation on firms' R&D activities or inputs may be both positive and negative, depending on the size of the firms. The analysis results suggest that regulatory policy makers need to formulate and implement R&D programs that consider the different effects of industrial regulations on large enterprises or Small and Medium sized Enterprises (SMEs).

• Environmental and Resource Economics Review
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• v.29 no.4
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• pp.499-520
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• 2020

Input ratio of electricity to other production inputs in the Korean manufacturing sector has been higher than for the other OECD countries. In addition, electricity prices in Korea has been relatively lower than the average of OECD countries. Moreover, electricity sector is responsible for most CO2 emissions in Korea as coal and natural gas account 41.9% and 26.8% of electricity production as of 2018. Therefore, it looks inevitable to raise the electricity tariff for the manufacturing sector in Korea, but there is a concern that increase in the electricity tariff might affect small and medium enterprises (SMEs) more than large firms. This study estimates electricity demand's price and output elasticities for large firms and SMEs in steel industry by employing a time varying parameter model (Kalman filter). The analysis shows that changes in output levels regardless of firms' size affect electricity demands more significantly than do changes in electricity prices. Second, large firms have higher variances for both price and output elasticities of electricity demand. Third, large firms have higher price elasticity but lower output elasticity of electricity demand relative to SMEs. Policy implications are suggested in association with how to reduce electricity demands in the energy-intensive industry.

• Korean small business review
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• v.41 no.3
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• pp.1-22
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• 2019

The purpose of this research was to investigate the impact of the partner types (supplier, customer, competitor, research institution, more than one partner type) for SMEs on radical and incremental innovation. Another purpose was to examine how the relation varies according to the technological intensity of an industry to which the focal firm belongs. To test the hypotheses, we used the 'KIS(Korean Innovation Survey) 2014' data and the empirical analysis was done with the effective survey from 3,846 Korean SMEs. We employed STATA 14 for validity, confirmatory factor analysis, and binary logistic regression analysis. The results revealed that, when viewed the entire manufacturing SMEs, cooperation with suppliers, customers and research institutes has all been shown to have a positive effect on the radical and gradual innovations of SMEs. However, The relationship between partner type and radical innovation has been significantly different depending on the technical intensity of the industry. When cooperating with suppliers, the impact on radical innovation of SMEs was significant only in low-tech and medium-low tech industries. In contrast, when working with customers, the impact on the radical innovation of SMEs was significant only in the high-tech, medium-high tech, and medium-low tech industries, except for low tech industries. Meanwhile, although cooperation with competitors has a positive effect on radical innovation, this has been only significant in the medium-high tech industries.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.13 no.4
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• pp.211-216
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• 2018

This study was intended to analyze the effects of the selection of excellent design product by the KIDP(Korea Institute of Design Promotion) on the business performance of the company focused on the start-up with relatively low competitiveness. According to the statistics of KIDP in 2013, a design accounted for 27.53% of the factors affecting the sales of products and a design was the most important factor among the factors affecting the sales of products for the small sized company in terms of the scale of company. In addition, looking at the trend by industry in the data collected for this study, the technology-based industry showed a relatively higher growth rate than the retail industry and other industries. In this study, the author surveyed 186 companies of the companies that recognized the importance of design in difficult management conditions and received excellent design product certificate from KIDP(2013, 2014 and 2015) and empirically verified whether there was any difference in business performance between the start-ups with a business history of less than 7 years and the ongoing firms with a business history of more than 7 years. To evaluate the value of design, we used analytical method of measuring related values by comparison between groups. In addition, we also analyzed the difference in business performance(sales) between manufacturing companies, where the role of design was relatively large, and non-manufacturing companies among companies that received the excellent design product certificate. We have established a study hypothesis that the selection of excellent design product by the KIDP would have more positive effect on the business performance(sales) of the start-up compared to the ongoing firm, and conducted an empirical analysis by comparing both the year before and the year after the selected year. As a result, we found that the selection of excellent design product by the KIDP has a positive effect on the business performance of the start-up, and the selection of excellent design product has a significant effect on the difference in business performance between manufacturing and non-manufacturing companies. This study was conducted in the hope that the government actively supports the design-related policies so that the selection of excellent design product become an important indicator of the business performance of the start-up, and thus the design management will be a way to enhance the competitiveness of the start-up.