Impact of Korean pro-market reforms on firm innovation strategies

ABSTRACT

This paper investigates how market-oriented reforms affect firm incentives to innovate. We utilise the market reforms enacted in Korea following the Asian Financial Crisis of 1997 as an empirical setting to show why an institution-based view is crucial to understanding the factors that incentivize firms to innovate. Additionally, we draw on the competitive strategy literature to investigate how market reforms – combined with industry competition and firm-specific factors – affect innovation-related investments. Our findings suggest that market reforms positively influence both innovation input and output, but these associations are contingent on firm-specific factors.

KEYWORDS:

• Institution theory
• market reform
• R&D investment
• technological exploration and exploitation

Disclosure statement

No potential conflict of interest was reported by the authors.

Notes on contributors

KwangWook Gang received the B.A. degree in business administration from Chung-Ang University, Seoul, South Korea; the M.A. degree in IT business from the Korea Advanced Institute of Science and Technology, Daejeon, South Korea; and the Ph.D. degree in strategic management from Rensselaer Polytechnic Institute, Troy, NY, USA. He is currently working as an Assistant Professor with the Franklin P. Perdue School of Business, Salisbury University, MD, USA. His research interests include a firm’s entrepreneurial activities and technological strategies in the context of the industry evolution, especially disruptive technology. Also, he is interested in studying a firm’s product strategy, a firm’s growth and corporate governance in emerging economies. His research has been published in Technology Analysis and Strategic Management, IEEE Transactions on Engineering Management, and other peer-reviewed journals.

Byungchul Choi is assistant professor of strategic management at Hankuk University of Foreign Studies (Seoul, Korea). He received his PhD in management from Rensselaer Polytechnic Institute (NY, USA). His research focuses on determinants of innovation strategy, institutionalising breakthrough innovation, and financing innovation. His research has been published in Organization Science.

Additional information

Funding

This work was supported by the 2018 Hankuk University of Foreign Studies Research Fund [grant number 20181169001].