The mechanism of innovation spill-over across sub-layers in the ICT industry

ABSTRACT

While there has been a study regarding the mechanism of innovation spillover within an information and communication technology (ICT) ecosystem, to the best of our knowledge, there has been no research on the mechanism of innovation spillover between sublayers. To fill this gap, this study aimed to disentangle the empirical question of how innovation spills over between sublayers. We classified the ICT industry into three layers, Content, Goods, and Service, and collected financial data from KISVALUE over the last 18 years (2000–2017). Stochastic frontier and meta-frontier analysis were used to estimate the annual production function of each layer and the meta-production functions that encompass each sublayer’s frontiers. Based on the efficiency calculations, we introduced two types of instrumental variables: (1) each industry’s single radical innovation and (2) the effect of an industry’s incremental innovation, then regressed the firms’ efficiency on other industries’ radical and incremental innovation. The results showed that innovation from one sublayer affects the other sublayers’ productivity gains, thus triggering other types of innovation and causing reciprocal productivity gains in the other sublayers of the ICT ecosystem. This study sheds light on the mechanism of innovation spillover across sublayers in the ICT ecosystem, and the implications of the findings are discussed.

KEYWORDS:

• ICT ecosystem
• innovation spillover
• co-evolutionary mechanism
• positive feedback
• meta-frontier analysis
• stochastic frontier analysis

Disclosure statement

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

Additional information

Funding

Changjun Lee would like to acknowledge the support by the National Research Foundation of Korea (NRF) grant funded by the Korea government (MSIT) (No. 2020R1G1A1012453), and Daeho Lee would like to acknowledge the support by the Ministry of Education of the Republic of Korea and the NRF (No. 2020S1A5A8045556, 2020R1F1A1048202).

Notes on contributors

Changjun Lee

Changjun Lee is an Assistant Professor in the Department of Media & Social Informatics at Hanyang University. Dr. Lee is interested in the social phenomenon related to ICT and Media, and also working on European Research Council project on technology evolution in regional economies. His work mainly focuses on the innovation ecosystem, technology policy, and policy evaluation.

Hosoo Cho

Hosoo Cho is a Ph.D student in economics from the Technology Management, Economics and Policy Program, Seoul National University in Korea. He received the B.S degree from Kobe University, Kobe, Japan in 2013, in electrical and electronic engineering with Korea–Japan joint government scholarship program. He received M.S. degree from Seoul National University in 2016, in electrical and computer engineering majored in Internet of Things and communication protocols. His research interests include social impact of emerging technology and ICT policy.

Daeho Lee

Daeho Lee received his B.S. degree in electrical engineering from the School of Electrical Engineering, Seoul National University, Seoul, Korea, in 2001, and his Ph.D. in economics from the Technology Management, Economics and Policy Program, Seoul National University in 2011. He is now an associate professor at the Department of Interaction Science, Sungkyunkwan University, Seoul, Korea. His research interests include the adoption of new products, government policies in the area of ICT, and consumer behavior in online.