The role of cooperative R&D in innovation performance of SMEs: evidence from South Korean materials, parts, and equipment firms

ABSTRACT

Can cooperative R&D between SMEs and other organisations enhance innovation performance? This study utilises a mixed-methods approach to examine the impact of voluntary cooperative R&D and gain an improved understanding of the mechanisms that facilitate innovation outcomes. The analysis uses a firm-level secondary dataset from South Korea’s M-P-E industry for the period between 2005 and 2020, as well as in-depth expert interviews. The findings indicate that collaboration between SMEs, universities, and government research institutes (GRI)s positively impacts innovation performance. The expert interviews confirm that partnerships with academic institutions and research organisations help bridge the gap between creating key innovations and their commercialisation. The results also show that government R&D support facilitated collaborations between suppliers and buyers, which in turn led to improved innovation outcomes. This implies that providing R&D subsidies to SMEs could be a useful strategy for governments seeking to bolster their technological innovation. Policy implications are further discussed in the conclusion.

KEYWORDS:

• Small and medium-sized enterprises (SMEs)
• materials, part, and equipment (M-P-E) industry
• cooperative R&D innovation performance
• South Korea
• mixed methods

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 Since the establishment of diplomatic relations between Korea and Japan in 1965, there has been a steady increase in trade activities between the two countries (Nam & Lee, 2000). However, Korea’s trade deficit toward Japan has increased continuously over this time. As of 2020, Korea’s trade deficit with Japan stands at $20.92 billion, with a significant portion of this deficit attributable to the materials and components industry, amounting to $15.52 billion (Ministry of Trade, Industry and Energy, 2021).

2 Of the 931 items that Korea and Japan both produce, Japan holds over 50% of the global market share on 309 (National Assembly Budget Office, 2020).

3 Even if Korea reduced its reliance on Japan through Version 1.0 Strategy, it was insufficient to lead to a rise in the GVC, as it only focused on the 100 items related to Japan (National Assembly Budget Office, 2020). Therefore, Version 2.0 Strategy was introduced in 2020 to support 338 global items, including the 100 items in Version 1.0.

4 Available at Value-search, https://www.nicevse.com/vse/main.html (Accessed: January 26, 2024).

5 Non-listed companies are required to have an external audit if they meet two or more of the following four criteria from the previous fiscal year: total assets exceeding 12 billion KRW, total liabilities exceeding 7 billion KRW, annual sales exceeding 10 billion KRW, and more than 100 full-time employees.

Additional information

Funding

This study was supported by Ministry of Education of Republic of Korea and National Research Foundation of Korea (BK21FOUR Toward Empathic Innovation: Through Platform Governance Education & Research Programs: #4120240114838).

Notes on contributors

Minjung Kim

Minjung Kim is a doctoral student at Sungkyunkwan University. She earned her Master's degree in Public Administration from the School of Governance at Sungkyunkwan University and worked as a researcher at the Science and Technology Policy Institute. Her main research interests are in the analysis and evaluation of science and technology policy, innovation policy, and regulatory policy.

Yeon Soo Han

Yeon Soo Han obtained her Bachelor's degree in Public Policy from Sungkyunkwan University in 2022 and her Master's degree from the School of Governance at Sungkyunkwan University in 2024. Her primary areas of interest are the analysis and evaluation of social policies related to welfare, labor, and education.

Rosa Minhyo Cho

Rosa Minhyo Cho is a professor in the Department of Public Administration, School of Governance, at Sungkyunkwan University. She obtained her Master's degree in Public Policy from Georgetown University, McCourt School of Public Policy in 2001 and her Doctorate in Public Policy from the University of Chicago, The Harris School of Public Policy in 2006. Her primary research areas include the analysis and evaluation of various social policies such as education, welfare, immigration, and criminal justice.