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A Study on the Korea Business Ecosystem(I)

Author Park, Moonsoo et al Date Page
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South Korea’s economy is at an inflection point, and many believe that the choice of actions today will determine the future of our industries as the course of the economy wavers between stagnation and re-growth. It is highly likely that our nation will rapidly fall behind at the threshold of joining the developed nations if it fails to embrace the industrial transformation brought about by the Fourth Industrial Revolution, resting on its past success of industrialization. However, accelerated economic polarization due to income disparities between classes and the rising gaps in firm growths, and the limited effectiveness of `follower’ business ecosystem, once playing a pivotal role in the growth and success of our economy, increasingly pose a significant obstacle to continued growth in the face of structural transformation.

 

Thus, this study explains that polarization of the economy and the limitations of the current `follower’ business ecosystem are the factors hindering sustained economic growth, and emphasize that the transition of existing business ecosystem will be the fundamental solution. In particular, we observe the problems of the Korean business ecosystem, where large enterprises and small and medium-sized firms(SMEs) take the form of vertically stratified production structure under ‘hierarchical network structure,’ and explore the possibility of shifting towards innovative ecosystem proposed by Iansti & Levien(2004), in which firms rely on each other to grow through competitive and cooperative interactions.

 

Therefore, this study first examines the current state of the business ecosystem in South Korea in chapter 2, by describing the distribution of firms and highlighting the five features of the Korean business ecosystem. In chapter 3 and 4, social network analysis method is used to analyze the structure of the transaction networks between firms in 14 industries. We identify and visualize the characteristics and types of the transaction relations from purchase and sales perspectives for firms within the transaction network, and review the ecosystem environment that Korean business ecosystem should pursue. Lastly, based on the analyses, chapter 5 suggests the policy implications for our economy in order to achieve a healthy and sustainable business ecosystem.