• Journal of Korea Trade
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• v.24 no.6
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• pp.135-156
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• 2020

Purpose - This study investigates whether the internationalization process of traditional industry firms can be categorized as born global, early internationalization, or gradual internationalization, and examines what factors promote internationalization in traditional industries using a case study of two firms, one each in China and Korea. Design/methodology - This study elects to use case study methodology to determine the "how" and "why" of internationalization process of traditional industry firms. Taking into consideration that factors that impact the internationalization process of firms are diverse and unclear in terms of causality, this study utilizes exploratory case study methodology. This research performs a comparative two-case study of two firms in traditional industries, one each in China and Korea, to examine similarities and differences of study subjects in order to improve the validity and suitability of research results. Findings - The findings of this research are as follows: First, traditional industries are more likely go through early and rapid internationalization rather than being born global; born globals are far more likely to appear in high tech industries. Second, the internationalization process of companies that go through early and rapid internationalization differs from what is indicated by traditional internationalization theories, and are not limited by factors like psychological distance and lack of experiential knowledge. Third, international entrepreneurship, international market orientation, and imitation and learning are important internal driving factors for early and rapid internationalization. Fourth, conditions within the domestic market, policy support from the government, and pilot effect from industry leaders are external driving factors for early and rapid internationalization. Originality/value - This study shows that the internationalization process of traditional industry firms is more likely to be early and rapid internationalization rather than being born global and suggests answers to why this may be the case. In addition, through an examination of case studies, it reveals that the internationalization process of traditional industry firms that undergo early and rapid internationalization is different from traditional internationalization theory, in that they are not limited by the lack of psychological proximity and empirical knowledge, and are driven by international entrepreneurship, international market orientation, imitation and learning, competitive pressure within the domestic market, government's policy support, and the pilot effect of industry leaders. Therefore, this study contributes to literature by expanding the scope of application of born global theory to traditional industries, making born global theory more generalizable and identifying driving factors to internationalization of traditional industry firms.

• Journal of Korea Trade
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• v.24 no.2
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• pp.31-52
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• 2020

Purpose - This study mainly investigates two potential legal regimes expected to govern the use of electronic bills of lading: the Rotterdam Rules (2009) and the UNCITRAL Model Law on Electronic Transferable Records (2017). Widespread use of electronic bills of lading has been unsuccessful partly due to the absence of a uniform legal regime and protracted uncertainties. This paper aims to carry out an assessment of the possibilities where either of two potential legal regimes could provide certainty to the effect and validity of the use of electronic bills of lading, and contribute to the facilitation of electronically transferring the rights to goods carried by sea. Design/methodology - This paper first introduces two legal instruments and the relevance to electronic bills of lading. Since neither of these legal instruments has yet entered into force, the following section looks into the ratification or enactment possibilities based on a literature review and track records of the past legal regimes of the same kind. Assessment of the different adoption possibilities further requires comparative work of the two legal instruments, which will be based on an analysis of relevant provisions and a literature review. The literature review on the Rotterdam Rules delves into various studies and data produced since the UNCITRAL's adoption in 2009. The literature review on the UNCITRAL Model Law on Electronic Transferable Records heavily relies on UNCITRAL working group documents from 2011 to 2017 together with the final explanatory note. Findings - The main findings can be summarized as follows. Application of the Rotterdam Rules would negate the role of the UNCITRAL Model Law on Electronic Transferable Records assisting in the implementation of the Rotterdam Rules due to some conflicting issues. Enactment of the UNCITRAL Model Law alone can sufficiently provide a higher level of certainty in the use and effect of electronic bills of lading so long as lawmakers and parties are aware of some issues with the application. What concerns potential users most is the extension of the status quo, where neither of the legal instruments have any effect. It is necessary to take a number of alternatives into consideration, such as promotion of standard clauses and confirmation by a court ruling. Originality/value - Existing studies focus either on the Rotterdam Rules or on the UNCITRAL Model Law, but not both. Not many papers have yet dealt with the Model Law, which was adopted by UNCITRAL only 2 years ago, particularly in the context of a potential legal regime for electronic bills of lading. This paper attempts to introduce the differences between the two legal instruments in regulating the use of electronic bills of lading while providing an assessment of the various possibilities for which parties involved in international trade can be better prepared for the changing legal environment.

• Journal of Korea Trade
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• v.24 no.6
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• pp.19-36
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• 2020

Purpose - This paper analyzes how to interpret the legal view of the precedents to the UK Insurance Act 2015, comparing it to the UK Marine Insurance Act (MIA) 1906 with a focus on the relationship between the duty of uberrimae fidei and the duty of disclosure. Furthermore, this study focuses on the judgment of the Korean Supreme Court in a case, that examined whether the legal nature of the duty of disclosure or duty of uberrimae fidei in insurance law can be considered as a matter related to the insurer's liability when the applicable terms of English law are incorporated under the insurance contract. Design/methodology - This paper belongs to the field of explanatory legal study, which aims to explain and test whether the choice of law is linked to the conditions that occur in the reality of judicial practice. The approach that is used toward this problem is the legal analytical normative approach. The juridical approach involves studying and examining theories, concepts, legal doctrines and legislation that are related to the problem. Findings - Regarding the requirements and effects of breach of the duty of disclosure, if English law and the Korean Commercial Act are handled differently from each other and Korean law is recognized as the applicable law outside of the insurer's liability, it may be whether the insurer's immunity under English law is contrary to s.633 of the Korean Commercial Act. In considering the breach of the duty of disclosure as a matter of the insurer's liability, even if English law is applied as a governing law, the question of how to interpret the agreement of the governing law in this case may also be raised in the interpretation of Korean International Private Law in relation to the applicable law that applies to the rest of the matter, excluding the matters of liability. Originality/value - According to the Korean Supreme Court judgement under the governing law of the MIA 1906, the basis for recognizing the assured's pre-and post-contractual duty of disclosure is separate, and the only important matters to be notified by the assured after the conclusion of the insurance contract are those that are "relevant" and "material circumstances" that are "relevant" to the matter in question after the conclusion of the insurance contract.

• Journal of Korea Trade
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• v.25 no.3
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• pp.21-47
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• 2021

Purpose - Offshoring has emerged as one of the major trends in international trade and has become one of the strategies for achieving competitiveness in the global market. In spite of this, the expected gains of offshoring can be offset by hidden costs and risks, such as those associated with the COVID-19 pandemic, the trade war between the USA and China, and the ongoing trade dispute between Korea and Japan. To obviate such business failure and prevent critical business blunders, offshoring strategies that efficiently consider both risk elements and potential wealth creation are urgently need. The first purpose of this study is to contribute to the development of more advanced offshoring strategies to help host countries select the best locations to manage supply chain risks and create unique value. The second purpose is to specifically analyze the current status of Korea and provide Korean companies with implications to be considered when deciding whether to offshore or re-shore. Design/methodology - A Network DEA model was applied to measure the comparative location efficiency of national competencies for offshoring strategy from perspectives of wealth creation opportunities (profitability and marketability) and supply chain risk management. The location efficiencies are compared among a total 70 countries selected from the Global Competitiveness Index (GCI) and globally attractive locations outlined by Kearney (2017). For the secondary analysis of efficiency, a t-test examining the nature of competitive advantage and the level of sophistication in production processes was implemented in three divisions. We then analyzed differences in offshoring performance in terms of the identified national traits. Moreover, Tobit regression analysis is conducted to investigate the correlation between value-added business activities and each divisional efficiency, seeking to determine how each degree of value-added business activity influences the increase in offshoring productivity. Findings - Regarding overall location efficiency for offshoring performance, only the USA and Italy were identified as being efficient as host countries for offshoring, under circumstances of advanced development, such as productivity and risk management. Korea ranks 13th among 70 countries. The determinants of national competitiveness depend on national traits (the nature of competitive advantage and business sophistication). Countries with labor/resource advantages and labor-intensive industries are more competitive in terms of marketability than others. In contrast, countries with strong technology-intensive industries benefit offshoring companies, particularly in the technology sector, with the added advantage of supply chain risk management. As the perception of a value chain is broader in a country, it can achieve both production sophistication and competitive advantages such as marketability and SCRM. Originality/value - Existing studies focus on offshoring effectiveness from a company perspective. This paper contributes to comparing country efficiency in producing core competencies related to an offshoring strategy and also segments countries into three performance-based considerations associated with the global offshoring market. It also details Korea's position as an offshoring location according to national efficiency and competency.

• Journal of Korea Trade
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• v.23 no.8
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• pp.110-131
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• 2019

Purpose - This paper investigates the implications for facilitating trade in the products of Industry 4.0. To identify the issues caused by the conflicts of policy objectives such as applying the tariff concession under the ITA and imposing the export control, by exploring the case of classification of drones. Design/methodology - We adopted a single case study method to gain a deeper understanding of the complex and multifaceted issues of Customs classification in the context of facilitating trade in the products of Industry 4.0. This study employs the case of drones to explore how these issues of Customs classification affect trade facilitation. We ensured the internal validity of the study by confirming the pattern of the results with the existing theories. Findings - Our main findings can be summarised as follows: the intrinsic nature of the products that converge several technologies causes issues in the classification. The inconsistency in product classification delays customs clearance by hindering the Customs risk-management system that pinpoints products subject to controls. To address the issues, therefore, we proposed fundamental reforms of Customs to empower themselves with management roles. Facilitating trade in the products of Industry 4.0 requires more enhanced Customs capability. Therefore, the reforms should include comprehensive capacity-building activities, such as changes in staff-trainings, promotion system, organisation and culture. Customs also need roles in robust designing of cooperative systems to compensate for the lacks of controls and to ensure concrete risk management for expedited Customs procedures. As well, by equipping the Single Window of Customs with crucial control functions of other ministries, Customs need to support the cooperation. The role of harmonising various preaudits of other ministries with its own is another essential role that ensures predictability of clearance procedure. Originality/value - There are scanty studies in the field of knowledge about what obstacles exist and what solution is available in the course of transforming to 'Industry 4.0'. In filling out the gap of knowledge, this paper is of academic significance in that it applies the research theory on trade facilitation for the specific cases of classification of the product of Industry 4.0 to verify its effectiveness and to extend the subject of the studies to the scope of Industry 4.0. It also has practical significance in that the results have provided implications for reforms of Customs procedures to facilitate trade in the products of Industry 4.0.

• Journal of Korea Trade
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• v.26 no.2
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• pp.45-64
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• 2022

Purpose - This paper examines South Korea's potential status as a carbon leakage country, and the level of risk posed by the Korean emissions trading scheme (ETS) for Korean industries. The economic effects of border carbon adjustments (BCAs) to protect energy-intensive Korean industries in the process of achieving the carbon reduction target by 2030 through the Korean ETS are also analyzed. Design/methodology - First, using the Korean Input-Output (IO) table, this paper calculates the balance of emissions embodied in trade (BEET) and the pollution terms of trade (PTT) to determine Korean industries' carbon leakage status. Analyses of the risk level posed by carbon reduction policy implementation in international trade are conducted for some sectors by applying the EU criteria. Second, using a computable general equilibrium (CGE) model, three BCA scenarios, exemption regulations (EXE), reimbursement (REB), and tariff reduction (TAR) to protect the energy-intensive industries under the Korean ETS are addressed. Compared to the baseline scenario of achieving carbon reduction targets by 2030, the effects of BCAs on welfare, carbon leakage, outputs, and trading are analyzed. Findings - As Korea's industrial structure has been transitioning from a carbon importing to a carbon leaking country. The results indicate that some industrial sectors could face the risk of losing international competitiveness due to the Korean ETS. South Korea's industries are basically exposed to risk of carbon leakage because most industries have a trade intensity higher than 30%. This could be interpreted as disproving vulnerability to carbon leakage. Although the petroleum and coal sector is not in carbon leakage, according to BEET and PTT, the Korean ETS exposes this sector to a high risk of carbon leakage. Non-metallic minerals and iron and steel sectors are also exposed to a high risk of carbon leakage due to the increased burden of carbon reduction costs embodied in the Korean ETS, despite relatively low levels of trade intensity. BCAs are demonstrated to have an influential role in protecting energy-intensive industries while achieving the carbon reduction target by 2030. The EXE scenario has the greatest impact on mitigation of welfare losses and carbon leakage, and the TAF scenario causes a disturbance in the international trade market because of the pricing adjustment system. In reality, the EXE scenario, which implies completely exempting energy-intensive industries, could be difficult to implement due to various practical constraints, such as equity and reduction targets and other industries; therefore, the REB scenario presents the most realistic approach and appears to have an effect that could compensate for the burden of economic activities and emissions regulations in these industries. Originality/value - This paper confirms the vulnerability of the Korean industrial the risk of carbon leakage, demonstrating that some industrial sectors could be exposed to losing international competitiveness by implementing carbon reduction policies such as the Korean ETS. The contribution of this paper is the identification of proposed approaches to protect Korean industries in the process of achieving the 2030 reduction target by analyzing the effects of BCA scenarios using a CGE model.

• Journal of Korea Trade
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• v.26 no.1
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• pp.81-98
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• 2022

Purpose - This study aims to compare the requirements under the United Nations Convention on Contract for the International Sales of Goods (CISG) and the Korean Civil Act (KCA) regarding the buyer's right to require the delivery of substitute goods. The buyer's right to demand substitute delivery not only protect them from the seller's breach of contract but also preserves the contractual bond between the parties by providing an opportunity for sellers to protect their goodwill and circumvent the extreme remedy of avoidance. However, as substitute delivery entails additional efforts and costs for return and re-shipment, this right should not be allowed in every case of defect. Additionally, unlike the CISG, the KCA contains no specific provision related to the requirements for claiming substitute delivery. Therefore, it would be meaningful to examine and compare what requirements should be fulfilled before the buyer exercises the right in relation to non-conforming goods under the CISG and the KCA. Design/methodology - We conducted a comparative study of the requirements under the CISG and the KCA regarding the buyer's right to require delivery of substitute goods given a seller's delivery of non-conforming goods. Additionally, we referred to the opinions from the CISG Advisory Council, the draft of the KCA amendment, and related precedents, mainly focusing on the existence and severity of defects, reasonableness, and timely notice and requests as the major requirements for substitute delivery. Findings - The results of this study can be summarized as follows: First, the CISG provides more detailed requirements about the right to require delivery of substitute goods; by contrast, the KCA does not stipulate any such requirement. Thus, specific requirements for substitute delivery should be included when amending the KCA. Second, the CISG attempts to minimize overlapping and conflict with other remedies by specifying detailed requirements for the delivery of substitutes. Third, both the CISG and KCA require reasonableness for substitute delivery. Originality/value - Although there are no explicit legal requirements for substitute delivery under the KCA, there has been relatively little discussion of this issue to date. Therefore, the findings of our study can guide future revisions of the KCA to fill this loophole. Moreover, the recently released CISG Advisory Council opinion that clarifies the continuing confusion and debate, can help distinguish which remedy is suitable for a particular case. It may provide practical advice for businesspeople in international trade as well as legal implications for the future development of the KCA.

• Asia-Pacific Journal of Business
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• v.12 no.3
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• pp.51-69
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• 2021

Purpose - Based on literature studies of movie reviews and movie ratings, this study raised two research questions on the contents of online word of mouth and the number of movie screens as mediator variables. Research question 1 wanted to figure out which topics of word groups had a positive or negative impact on movie ratings. Research question 2 tried to identify the role of the number of movie screens between movie ratings and box office outcomes. Design/methodology/approach - Through R program, this study collected about 82,000 movie reviews and movie ratings posted on Naver's movie website to examine the role of online word of mouths and movie screen counts in 10 movies that were considered commercially unsuccessful with fewer than 2 million viewers despite securing about 1,000 movie screens. To confirm research question 1, topic modeling, a text mining technique, was conducted on movie reviews. In addition, this study linked the movie ratings posted on Naver with information of KOBIS by date, to identify the research question 2. Findings - Through topic modeling, 5 topics were identified. Topics found in this study were largely organized into two groups, the content of the movie (topic 1, 2, 3) and the evaluation of the movie (topics 4, 5). When analyzing the relationship between movie reviews and movie ratings with 5 mediators identified in topic modeling to probe research question 1, the topic word groups related to topic 2, 3 and 5 appeared having a negative effect on the netizen's movie ratings. In addition, by connecting two secondary data by date, analysis for research question 2 was implemented. The outcomes showed that the causal relationship between movie ratings and audience numbers was mediated by the number of movie screens. Research implications or Originality - The results suggested that the information presented in text format was harder to quantify than the information provided in scores, but if content information could be digitalized through text mining techniques, it could become variable and be analyzed to identify causality with other variables. The outcomes in research question 2 showed that movie ratings had a direct impact on the number of viewers, but also had indirect effects through changes in the number of movie screens. An interesting point is that the direct effect of movie ratings on the number of viewers is found in most American films released in Korea.

• Journal of Korea Trade
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• v.27 no.3
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• pp.21-42
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• 2023

Purpose - This paper investigates the trade effect of the Korea-China Free Trade Agreement (KCFTA) which coincides with political conflicts between the two countries due to the deployment of the Terminal High Altitude Area Defense (THAAD) in Korea. The two events occurred in the same year and both are likely to affect trade between two countries but in opposite directions. Therefore, it is crucial to distinguish between the trade effects from the KCFTA event and those from the THAAD event to evaluate the true FTA effects. However, this would be difficult when using only annual data. Accordingly, ex post studies to examine the trade effects of KCFTA are lacking in trustworthiness while many ex ante studies that conjecture the positive trade effects neglect the THAAD deployment impact. This paper aims to fill that gap. Design/methodology - Given that the KCFTA and THAAD events occurred in the same year but in different months, we use the monthly data from 2000 to 2019 of Korea's exports to bracket this period. We employ the difference-in-difference (DID) method within a gravity equation specification that uses hi-dimensional fixed effects to address various endogeneity issues and seasonal effects. We identify the net impact of KCFTA ratification from these two near-simultaneous events to quantify the effects of trade liberalization between these two countries. Findings - After isolating the THAAD effects on trade, the analysis creates a positive and statistically significant coefficient estimate of the KCFTA impact. In contrast, failing to isolate the THAAD effect produced a negative and statistically significant coefficient estimate of the KCFTA impact. Our results indicate that KCFTA independently increased Korea's exports to China by 10.2%, but that this increase was fully mitigated by the THAAD event. Further, our results verify that unobserved heterogeneity and multilateral resistance are technically difficult to account for in those estimations as that rely solely upon annual data, as this type of data are inadequate to control for the potential for endogeneity. Originality/value - This paper is one of the first studies to carefully evaluate the net trade effects of the KCFTA on Korea's largest trading partner while isolating the impact of simultaneously occurred political events that may influence trade in opposing directions. Our findings indicate that the lack of prior evidence of positive trade effects of the KCFTA when using annual data may be attributed to a failure to identify the impact of each event separately. This analysis supports using the correct modeling specification to avoid misleading conclusions when evaluating any important international trade policy.

• Journal of Korea Trade
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• v.26 no.4
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• pp.1-22
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• 2022

Purpose - This paper empirically investigates the effect of a rise in the global value chain (GVC) on the industry-level efficiency of resource allocation (based on plant-level inefficiency measures) in Korea, with a focus on various channels through which a rise in the GVC can increase competition among firms and thus induce resources to be allocated more efficiently across firms. Design/methodology - We empirically investigate the relationship between the industry-specific importance of GVC and the industry-level allocative inefficiency that is measured as the dispersion of the plant-level marginal revenue of capital (MRK) as in Hsieh and Klenow's (2009) influential model. We compute MRK dispersion for industries sorted by various characteristics that are closely related to firm/industry sensitivity to the GVC. In other words, we compute the average industry-level MRK dispersion for industries sorted by industry-specific importance of GVC and compute the difference between the two groups of industries (higher vs. lower than the median GVC); we also calculate the difference between industries sorted by industry-specific export (import) intensity. This is our difference-in-difference estimate of the MRK dispersion associated with the GVC for the export (import)-intensive industry versus the non-export (non-import)-intensive industry. This difference-in-difference estimate of the MRK dispersion conditional vs. unconditional on firm-level productivity is then calculated further (triple-difference estimate). Findings - A rise in GVC is associated with a decrease in the MRK dispersion in the export-intensive industry compared to the non-export-intensive industry. The same is true for industries that rely heavily on imports versus those that do not (i.e., import intensive vs. non-intensive). Furthermore, the reduction in the MRK dispersion in the export-intensive industry associated with an increase in the GVC is disproportionately greater for high-productivity firms. In contrast, the negative relationship between GVC and MRK dispersion in the import-intensive industry is disproportionately smaller for high-productivity firms. Originality/value - Existing studies focus on the relationship between GVC and aggregate output, exports, and imports at the country level. We investigate detailed firm/industry-level mechanisms that determine the relationship between GVC, trade, and productivity. Using the plant-level data in South Korea, we investigate how GVC is related to the cross-firm MRK dispersion, an important measure of allocative inefficiency, based on Hsieh and Klenow's (2009) influential economic theory. This is the first study to provide plant-level evidence of how GVC affects MRK dispersion. Furthermore, we examine how the relationship between GVC and MRK-dispersion varies across export intensity, import intensity, and firm-level productivity, providing insight into how GVC can affect firms' exposure to competition in the global market differently depending on market conditions and thus generate trade-related productivity gains.