This study addresses public sector intermediaries and their role in facilitating
innovation in Small and Medium Sized Enterprises (SMEs) in South Korea. The
primary aim is to understand and address the informational and relational barriers
that SMEs face during the innovation process and how these are resolved through
interaction. Although the government has been implementing SME support policies
for several decades, the Korean National Innovation System (KNIS) has been
characterised with six words: ‘strong large firms, weak small firms’. Korean
Government policies for R&D have not been effective in enhancing the economic
performance and innovative capabilities of SMEs and the ‘low level of
competitiveness’ of SMEs obstructs knowledge interaction between firms. Policies
directed at SMEs mainly focus on direct support and do not reflect the interactive
nature of the innovation process. This mismatch between policy and desired
outcomes has led this study to go beyond examining the informational and relational
constraints. It analyses the factors influencing successful (or less successful)
innovation and asks whether public intermediaries have provided an effective
mechanism in resolving innovation barriers (i.e. system failures).
Yet, there has been a lack of research into public intermediaries and SMEs within the
National Innovation Systems (NIS) framework. The NIS approach is a loosely
configured framework and the intermediary literature is fragmented and has rarely
been integrated with the NIS literature. Research has tended to focus on specific
functions of private intermediaries and far less on the public intermediaries, which
have been playing a crucial role in facilitating innovation in Korean industry for
several decades. The central focus of this study is on the knowledge interaction
process between public intermediaries and SMEs occurring at multiple levels of
interaction in the Korean NIS. This study therefore attempts to integrate the NIS
concept and the intermediary approach to provide a robust way to explore the
knowledge interaction process at meso- and micro-levels. Four functions of the
intermediary are constructed to explore how they might influence SME innovation:
knowledge facilitation, learning facilitation, knowledge enabling and managing
interfaces.
Through in-depth analysis of five case studies encompassing firms in mechatronics
and IT, this study explicates the knowledge interaction process and influential factors
of successful innovation. The analysis addresses a series of issues that the generic
NIS concept cannot fully explain: (1) knowledge interaction at meso- and microlevels;
(2) multiplicity of relationships and their evolving nature; (3) the role of
public intermediaries in a specific cultural context; and (4) the heterogeneity of
SMEs with their pre-existing resources and routines. Sociological perspectives
especially provide insights for investigating not only the dynamic nature of
interactions but also micro-level factors that determine successful interactions and
innovation that are largely neglected in both NIS and intermediary studies; e.g.
productive combination of competing rationalities, social learning, and the
importance of reflexive individuals. Focusing on a modulated NIS concept for public
sector intermediaries and SMEs in a Korean context, the study opens the ‘black box’
of knowledge interaction and learning that resolves the barriers, shapes the
successful innovation environment and hence strengthens the innovation system.
The findings have implications for policy, including the need to establish new policy
measures aimed not simply at achieving a set goal but rather at facilitating the
interaction process with a long-term view. The study recommends that public
intermediaries need to focus on monitoring activities that integrate and support the
knowledge interaction process by facilitating ‘associativeness’ among actors.
Furthermore, the heterogeneity of the local contexts and SMEs in the innovation
process need to be taken into account in designing the programmes, moving away
from one-size-fits-all type services