• Korean small business review
• /
• v.31 no.2
• /
• pp.103-120
• /
• 2009

As business incubation centers (BICs) have been operating for more than 10 years in Korea, many early stage startups tend to use the services provided by the incubating centers. BICs in Korea have accumulated the knowledge and experience in the past ten years and their services have been considerably improved. The business incubating service has three facets : (1) business infrastructure service, (2) direct service, and (3) indirect service. The mission of BICs is to provide the early stage entrepreneurs with the incubating service in a limited period time to help them grow strong enough to survive the fierce competition after graduating from the incubation. However, the incubating services sometimes fail to foster the independence of new startup companies, and raise the dependence of many companies on BICs. Thus, the dependence on BICs is a very important factor to understand the survival of the incubated startup companies after graduation from BICs. The purpose of this study is to identify the main factors that influence the firm's dependence on BICs and to characterize the relationships among the identified factors. The business incubating service is a core construct of this study. It includes various activities and resources, such as offering the physical facilities, legal service, and connecting them with outside organizations. These services are extensive and take various forms. They are provided by BICs directly or indirectly. Past studies have identified various incubating services and classify them in different ways. Based on the past studies, we classify the business incubating service into three categories as mentioned above : (1) business infrastructure support, (2) direct support, and (3) networking support. The business infrastructure support is to provide the essential resources to start the business, such as physical facilities. The direct support is to offer the business resources available in the BICs, such as human, technical, and administrational resources. Finally, the indirect service was to support the resource in the outside of business incubation center. Dependence is generally defined as the degree to which a client firm needs the resources provided by the service provider in order to achieve its goals. Dependence is generated when a firm recognizes the benefits of interacting with its counterpart. Hence, the more positive outcomes a firm derives from its relationship with the partner, the more dependent on the partner the firm must inevitably become. In business incubating, as a resident firm is incubated in longer period, we can predict that her dependence on BICs would be stronger. In order to foster the independence of the incubated firms, BICs have to be able to manipulate the provision of their services to control the firms' dependence on BICs. Based on the above discussion, the research model for relationships between dependence and its affecting factors was developed. We surveyed the companies residing in BICs to test our research model. The instrument of our study was modified, in part, on the basis of previous relevant studies. For the purposes of testing reliability and validity, preliminary testing was conducted with firms that were residing in BICs and incubated by the BICs in the region of Gwangju and Jeonnam. The questionnaire was modified in accordance with the pre-test feedback. We mailed to all of the firms that had been incubated by the BICs with the help of business incubating managers of each BIC. The survey was conducted over a three week period. Gifts (of approximately ₩10,000 value) were offered to all actively participating respondents. The incubating period was reported by the business incubating managers, and it was transformed using natural logarithms. A total of 180 firms participated in the survey. However, we excluded 4 cases due to a lack of consistency using reversed items in the answers of the companies, and 176 cases were used for the analysis. We acknowledge that 176 samples may not be sufficient to conduct regression analyses with 5 research variables in our study. Each variable was measured through multiple items. We conducted an exploratory factor analysis to assess their unidimensionality. In an effort to test the construct validity of the instruments, a principal component factor analysis was conducted with Varimax rotation. The items correspond well to each singular factor, demonstrating a high degree of convergent validity. As the factor loadings for a variable (or factor) are higher than the factor loadings for the other variables, the instrument's discriminant validity is shown to be clear. Each factor was extracted as expected, which explained 70.97, 66.321, and 52.97 percent, respectively, of the total variance each with eigen values greater than 1.000. The internal consistency reliability of the variables was evaluated by computing Cronbach's alphas. The Cronbach's alpha values of the variables, which ranged from 0.717 to 0.950, were all securely over 0.700, which is satisfactory. The reliability and validity of the research variables are all, therefore, considered acceptable. The effects of dependence were assessed using a regression analysis. The Pearson correlations were calculated for the variables, measured by interval or ratio scales. Potential multicollinearity among the antecedents was evaluated prior to the multiple regression analysis, as some of the variables were significantly correlated with others (e.g., direct service and indirect service). Although several variables show the evidence of significant correlations, their tolerance values range between 0.334 and 0.613, thereby demonstrating that multicollinearity is not a likely threat to the parameter estimates. Checking some basic assumptions for the regression analyses, we decided to conduct multiple regression analyses and moderated regression analyses to test the given hypotheses. The results of the regression analyses indicate that the regression model is significant at p < 0.001 (F = 44.260), and that the predictors of the research model explain 42.6 percent of the total variance. Hypotheses 1, 2, and 3 address the relationships between the dependence of the incubated firms and the business incubating services. Business infrastructure service, direct service, and indirect service are all significantly related with dependence (β = 0.300, p < 0.001; β = 0.230, p < 0.001; β = 0.226, p < 0.001), thus supporting Hypotheses 1, 2, and 3. When the incubating period is the moderator and dependence is the dependent variable, the addition of the interaction terms with the antecedents to the regression equation yielded a significant increase in R2 (F change = 2.789, p < 0.05). In particular, direct service and indirect service exert different effects on dependence. Hence, the results support Hypotheses 5 and 6. This study provides several strategies and specific calls to action for BICs, based on our empirical findings. Business infrastructure service has more effect on the firm's dependence than the other two services. The introduction of an additional high charge rate for a graduated but allowed to stay in the BIC is a basic and legitimate condition for the BIC to control the firm's dependence. We detected the differential effects of direct and indirect services on the firm's dependence. The firms with long incubating period are more sensitive to indirect service positively, and more sensitive to direct service negatively, when assessing their levels of dependence. This implies that BICs must develop a strategy on the basis of a firm's incubating period. Last but not least, it would be valuable to discover other important variables that influence the firm's dependence in the future studies. Moreover, future studies to explain the independence of startup companies in BICs would also be valuable.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.16 no.2
• /
• pp.51-78
• /
• 2021

Followed by 'start-up', the theme of 'scale-up' has been considered as an important agenda in both corporate and policy spheres. In particular, although it is a term commonly used in industry and policy fields, even a conceptual definition has not been achieved from the academic perspective. "Corporate Growth" in the academic aspect and "Business Growth" in the practical management field have different understandings (Achtenhagen et al., 2010). Previous research on corporate growth has not departed from Penrose(1959)'s "Firm as a bundle of resources" and "the role of managers". Based on the theory and background of economics, existing research has mainly examined factors that contribute to firms' growth and their growth patterns. Comparatively, we lack knowledge on the firms' growth with a focus on 'annual revenue growth rate'. In the early stage of the firms, they tend to exhibit a high growth rate as it started with a lower level of annual revenue. However, when the firms reach annual revenue of more than 100 billion KRW, a threshold to be classified as a 'middle-standing enterprise' by Korean standards, they are unlikely to reach a high level of revenue growth rate. In our study, we used our sample of 333 companies (6.7% out of 5,000 'fastest-growing' companies) which reached 15% of the compound annual growth rate in the last three years with more than USD 100 million. It shows that sustaining 'high-growth' above a certain firm size is difficult. The study focuses on firms with annual revenue of more than $100 billion (approximately 120 billion KRW) from the 'Inc. 2020 fast-growing companies 5,000' list. The companies have been categorized into 1) Fast-growing companies (revenue CAGR 15%~40% between 2016 and 2019), 2) Hyper-growing companies (40%~99.9%), and 3) Super-growing (100% or more) with in-depth analysis of each group's characteristics. Also, the relationship between the revenue growth rate, individual company's strategy choice (market orientation, generic strategy, growth strategy, pioneer strategy), industry/market environment, and firm age is investigated with a quantitative approach. Through conducting the study, it aims to provide a reference to the 'Hyper-Growing Model' that combines the paths and factors of growth strategies. For policymakers, our study intends to provide a reference to which factors or environmental variables should be considered for 'optimal effective combinations' to promote firms' growth.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.17 no.4
• /
• pp.1-16
• /
• 2022

This paper studies the impact of regulatory approaches on innovation and entrepreneurship. As technological progress and environmental changes avail new business opportunities to innovative startups, many governments find it difficult to regulate new and unprecedented businesses promoted by the innovative firms. In order to provide academic and practitional implications on the regulatory design with which to support innovation and entrepreneurship, this paper aims to review classical theories on the demand and supply of regulation as well as empirical research on the impact of regulation on market entry and incentives for innovation. Based on the findings, this paper discusses the recent controversies around the regulatory approaches on new businesses pursued by startups, which are as known as the "positive regulatory approach" vs. "negative regulatory approaches" among practitioners and policy makers in Korea. This paper claims that the Korean context provides an useful opportunity to investigate how the ongoing transition of the once "fast follower" economy into a pacesetter one changes the nature of businesses pursued by firms, investors, and related market players and, accordingly, calls for the changes in the way the government intervenes in markets to regulate businesses of firms. By doing so, this paper sheds light on the role of the government in establishing an entrepreneurial ecosystem where innovative ideas of startups can be tested and nurtured.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.18 no.6
• /
• pp.159-172
• /
• 2023

This study aims to empirically investigate the relative effects of business-to-business (vs. business-to-consumer) business model innovation (BMI) on innovation performance. The research examines the impact of three key components of BMI: 1. value creation, 2. value proposition, and 3. value capture, on innovation performance. The 2022 Entrepreneurship Survey data by the Korean Entrepreneurship Foundation was used to analyze 2,879 companies. An exploratory data analysis (EDA) including various categories such as industry, firm, CEO, and technology chracteristics was conducted to show the latest startup status in Korea. The results show that value creation of B2B (vs. B2C) firms has a more positive and significant impact on innovation performance. Whereas, value proposition of B2C (vs. B2B) firms was found to have a more positive and significant effect on innovation performance. Interestingly, value capture did not show any effects for either type of firms. Additionally, the study employed seemingly unrelated regression (SUR) analysis for robustness checks. These findings provide important insights about the relative effects of B2B-BMI (vs. B2C-BMI).

• Knowledge Management Research
• /
• v.24 no.2
• /
• pp.87-115
• /
• 2023

This study aims to examine the causal relationships between sales and employment for public technology-based startups. Although there is a limit to statistical generalization due to the poor understanding of the actual conditions of public technology start-up companies, these companies were analyzed by classifying them into high-growth companise, potential growth companies, and other companies. In order to understand the causal relationship, and to estimate the time required to be effective, panel vector autoregression was applied. As a result, the performance creation mechanism was identified as government supoort and private investment was mutually causal with employment, sales did not cause employment, and employment caused sales. In other words, it was found that employment plays an mediator role in public technology based startups' performance mechanism. In addition, private investment had the effect of improving employment and sales in the short time than governments support, and showed that firms with high employment can attract government support and private investment. This study are academically meaningful in that they empirically revealed the process of performance creation, whereas previous studies had only shown whether there was an effect on performance. It also has a policy contribution by suggesting the need for effective policy promotion by considering the 'employment' factor, such as human resource support, as more important.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.19 no.3
• /
• pp.155-172
• /
• 2024

The COVID-19 pandemic not only posed an enormous human crisis, but also had a profound impact on firms' survival. Social distancing and global lockdown measures designed to protect human lives have paradoxically impaired the business environment. As a result, firms that sought to gain competitive advantage by leveraging external resources were cut off from the external world and faced unexpected challenges. Under these circumstances, researches were conducted in the early stage of the pandemic to explore how certain firms survived while others fell, but they were limited to re-examining business performance using traditional financial factors. However, this study aims to investigate the role of entrepreneurs' competency in crisis situations from the Resource-Based View (RBV), as such competency plays an important role in improving business performance and subsequently the probability of startups' survival. Specifically, we evaluated the performance as of end of 2019 of 1,127 startups evaluated by the Korea Technology Finance Corporation (KOTEC), which provides policy financing based on technology assessment, in 2016. We then conducted an empirical study to determine the mediating role of business performance in the relationship between entrepreneurial competencies and firm survival by verifying how many of the sample firms were still in operation at the end of June 2023, when the Korean government declared COVID-19 as an endemic. For this purpose, we defined technological, financial, and marketing competencies as the sub-factors of entrepreneurial competency, and sales growth rate and employment growth rate as the sub-factors of business performance. The results of the empirical analysis showed that technological and financial competencies of the entrepreneur had a positive impact on both business performance and firm survival, and that sales growth rate and employment growth rate mediated the relationship between technological competence and firm survival. However, the positive influence of entrepreneurs' financial competence of the survival of startups was only evident through the growth of employment. This study is the first study in South Korea to define the survival factors of startups in the context of the COVID-19 pandemic, and is expected to contribute to the theoretical and practical discussions on the importance of entrepreneurs' competency as a firms' survival factor based on RVB.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
• /
• v.13 no.4
• /
• pp.1-12
• /
• 2018

During few decades, Korean economy has been growing with heavy and manufacturing industries. However, the economy meets limitations of growth rate, and employment rate. The Korean government has been trying to overcome these limitations using development of venture businesses and re-organization of industrial ecosystem. These efforts make high survival rate of recent venture companies. There are previous researches about relation between characteristics of entrepreneur and managerial performance, there are several limitations. Firstly, most of papers were based on survey with specific region or industry. Secondly, related researches were carried out with unable to distinguish among firm's survival periods. This paper uses the '2017 Survey of Korea Venture Firms' data that is approved by the Korean government. This data includes whole industries and survival periods. The aim of this research is finding the effect of characteristics of entrepreneur on managerial performance of venture firms by different survival periods using data envelopment analysis (DEA). If entrepreneur has doctoral degree, the firm's managerial performance is lower than bachelor degree. In addition, over 10 years of working career, and joint-venture have positive effect on firm's performance. This paper can provide valuable information to venture related policy makers and investment decision makers.

• Journal of the Korea Academia-Industrial cooperation Society
• /
• v.17 no.2
• /
• pp.272-281
• /
• 2016

The effective exploitation of resources is critical for startup firms with insufficient resources to compete with well-resourced large firms. The direction and consistency of the resource input should be retained to utilize resources effectively, which will lead to a necessity for a fit between the strength in resources and the strategy of a firm. This study suggests hypotheses and verifies them empirically based on the logic that the attribute of resources in which a firm with a core competence decides the type of strategy and the formulated strategy presents the direction of the resource input, which enables the effective utilization of resources and facilitates high performance. According to the statistical results, the R&D capability affects the innovative differentiation strategy, marketing capability affects marketing differentiation strategy, and financial and production capability affects low cost strategy, in which the efficacy of the strategy depends on the attribute of resources. In addition, the R&D capability and marketing capability adversely affect the low cost strategy and the production capability negatively affects the innovative differentiation strategy, which implies that the exclusive choice of a strategy by the strength in resources results in improved performance. These results show that the fit between the resource and strategy is an essential cause of high performance in venture businesses.

• Journal of the Korean Operations Research and Management Science Society
• /
• v.41 no.2
• /
• pp.81-100
• /
• 2016

Much effort has been exerted to analyze online texts and understand how empirical results can help improve sales performance. In this research, we aim to extend this stream of research by decomposing online texts based on text sources, namely, companies and consumers. To be specific, we investigate how online texts driven by companies differ from those generated by consumers, and the extent to which both types of online texts have different effects on online sales. We obtained sales data from one of the biggest game publishers and merged them with online texts provided by companies using news articles and those created by consumers in user communities. The empirical analyses yield the following findings. Word visualization and topic analyses show that firms and consumers generate different contexts. Specifically, companies spread word to promote their own events whereas consumers produce online words to share winning strategies. Moreover, online sales are influenced by consumer-generated community topics whereas firm-driven topics in news articles have little to no effect. These findings suggest that companies should focus more on online texts generated by consumers rather than spreading their own words. Moreover, online sales strategies should take advantage of specific topics that have been proven to increase online sales. In particular, these findings give startup companies and small business owners in variety of industries the advantage when they use the online channel for distribution and as a marketing platform.

• Korea Trade Review
• /
• v.48 no.1
• /
• pp.83-126
• /
• 2023

The revenue histogram of venture businesses is shifting from bell-shaped normal distribution to power-law distribution, which implies that the fitness landscape of the venture businesses ecosystem is changing to be more rugged terrain. We argue that the firm should adopt both exploitation (fast follower) and exploration (or first mover) strategies not to get stuck in local maxima in the rugged fitness landscape from the complex system perspective. By designing and performing agent-based modeling simulation experiments which consist of three types of agents (new technologies, entrepreneurs, and consumers), we demonstrated that the ambidexterity strategy showed the highest performance score in three of four different environment except 'Fast Widening' case where the exploitation strategy showed the highest performance score under low technology appropriation and fast disruptive technology development speed. By investigating the financial and other statistics of 617 top venture businesses who have earned 100B won or higher annual revenue, we concluded that 82% and 9% of firms are bent on the exploitation and exploration strategy.