Patterns of strategic change and technological learning in the Korean small and medium enterprises

Abstract

This study attempts to explore the evolution paths of Korean Small and Medium Enterprises (SMEs') strategies and their technological learning processes. Several different evolution paths are identified based on a dynamic strategic group analysis of 115 SMEs' strategy in the Korean electronic parts industry for the period of 1990-1995. Further, in-depth case analyses on technological learning processes in 5 firms are undertaken. Major findings of this study can be summarized as follows: 1) There are three dominant evolution paths in SMEs' strategy. First path indicates the evolution from a subcontractor or petty imitator group into an innovator group by accumulating technological capabilities. Second, some firms move from a subcontractor group into a market focus or generalizer group by simply adding product lines. Third path involves firms which evolve from a subcontractor group into a production focus group. 2) An in-depth case analysis shows those who succeeded in technological learning are managed by CEOs with strong technological expertise and strategic vision. They have made an effort to establish management practices to support innovation, such as employee educational program and performance-based reward system. The successful firms also aggressively pursue diverse external linkages with outside technology sources to learn product and process technologies. Finally, this study discusses several implications of the findings for the theoretical development and strategic management of small firms in Korea.