• Korean small business review
• /
• v.41 no.2
• /
• pp.25-50
• /
• 2019

Although Korean government has implemented size-dependent policy, so called "the designation of SMEs-suitable industry", promoting SMEs growth, our understanding in the effectiveness of the policy is limited. We investigate the effect of the policy on SMEs performance in food product and beverages industry, which accounts for the majority in the SMEs-suitable industry. From the perspective of sales, profitability, and R&D intensity, which is regarded as indigenous effort for growth, we find the heterogeneity in the effectiveness of the policy across the sub-sectors in the industry. However, overall the policy does not significantly contribute to the growth of sales, profitability, and facilitation of R&D activity for indigenous innovative efforts of SMEs. Our study advances the theoretical discussion on the effect of the policy with the disaggregated level of analysis, i.e, sub-sector level. Our findings also contribute to the resolution of social and political conflicts between pros and cons of the policy. Our study suggests that policy makers should develop more sophisticated policy that incorporate the specific characteristics of individual sub-sectors. They also need to invest more resources in enhancing the effectiveness of the policy and accelerating SMEs innovative efforts.