• KDI Journal of Economic Policy
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• v.13 no.4
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• pp.91-116
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• 1991

Market liberalization progressing simultaneously with high and rapidly rising domestic wages has created an adverse business environment for domestic firms. Korean firms are losing their international competitiveness in comparison to firms from LDC(Less Developed Countries) in low-tech industries. In high-tech industries, domestic firms without government protection (which is impossible due to the liberalization policy and the current international status of the Korean economy) are in a disadvantaged position relative to firms from advanced countries. This paper examines the division of roles between the private sector and the government in order to achieve a successful structural adjustment, which has become the impending industrial policy issue caused by high domestic wages, on the one hand, and the opening of domestic markets, on the other. The micro foundation of the economy-wide structural adjustment is actually the restructuring of business portfolios at the firm level. The firm-level business restructuring means that firms in low-value-added businesses or with declining market niches establish new major businesses in higher value-added segments or growing market niches. The adjustment of the business structure at the firm level can only be accomplished by accumulating firm-specific managerial assets necessary to establish a new business structure. This can be done through learning-by-doing in the whole system of management, including research and development, manufacturing, and marketing. Therefore, the voluntary cooperation among the people in the company is essential for making the cost of the learning process lower than that at the competing companies. Hence, firms that attempt to restructure their major businesses need to induce corporate-wide participation through innovations in organization and management, encourage innovative corporate culture, and maintain cooperative labor unions. Policy discussions on structural adjustments usually regard firms as a black box behind a few macro variables. But in reality, firm activities are not flows of materials but relationships among human resources. The growth potential of companies are embodied in the human resources of the firm; the balance of interest among stockholders, managers, and workers of the company' brings the accumulation of the company's core competencies. Therefore, policymakers and economists shoud change their old concept of the firm as a technological black box which produces a marketable commodities. Firms should be regarded as coalitions of interest groups such as stockholders, managers, and workers. Consequently the discussion on the structural adjustment both at the macroeconomic level and the firm level should be based on this new paradigm of understanding firms. The government's role in reducing the cost of structural adjustment and supporting should the creation of new industries emphasize the following: First, government must promote the competition in domestic markets by revising laws related to antitrust policy, bankruptcy, and the promotion of small and medium-sized companies. General consensus on the limitations of government intervention and the merit of deregulation should be sought among policymakers and people in the business world. In the age of internationalization, nation-specific competitive advantages cannot be exclusively in favor of domestic firms. The international competitiveness of a domestic firm derives from the firm-specific core competencies which can be accumulated by internal investment and organization of the firm. Second, government must build up a solid infrastructure of production factors including capital, technology, manpower, and information. Structural adjustment often entails bankruptcies and partial waste of resources. However, it is desirable for the government not to try to sustain marginal businesses, but to support the diversification or restructuring of businesses by assisting in factor creation. Institutional support for venture businesses needs to be improved, especially in the financing system since many investment projects in venture businesses are highly risky, even though they are very promising. The proportion of low-value added production processes and declining industries should be reduced by promoting foreign direct investment and factory automation. Moreover, one cannot over-emphasize the importance of future-oriented labor policies to be based on the new paradigm of understanding firm activities. The old laws and instititutions related to labor unions need to be reformed. Third, government must improve the regimes related to money, banking, and the tax system to change business practices dependent on government protection or undesirable in view of the evolution of the Korean economy as a whole. To prevent rational business decisions from contradicting to the interest of the economy as a whole, government should influence the business environment, not the business itself.

• Journal of the Korean Geographical Society
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• v.28 no.2
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• pp.148-162
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• 1993

There is much speculation that modern capi-talist society is undergoing fundamental and qualitative chnge towards flexible specialization. The purpose of this study is to examine this hypothesis. This paper focusses on: the idea of flexible specialization; the significance of this transition; industrial district; and the implicati-ons of this new production system for Korean industrial space. Main arguments of this study are as follows: First, as all different groups of researchers apply the idea of flexible specialization according to their own specifications, the current debate on this topic is not much fruitful. Not surpri-singly, the concept of flexible specialization has overlapped with subocontracting. This intergration of subcontracting into flexible specialization systems, however, is inappropriate because the two concepts have different historical contexts. The other cause of this controversy is its inherent weekness, conceptual ambiguity. Thus, today's flexibility becomes tomorrow's rigidity. Secondly, transition towards flexible speciali-zation has only been partially achieved even in advanced capitalist countries. The application of dualistic explanatory framework, such as rigidity versus flexibiity, mass production versus small-lot multi-product production, and de-skilling versus re-skilling, has resulted in great exaggeration of the transformation, from Fordism to post-Fordism. There is no intermediary part between two places. Considering that the workers allocated to the Fordist mass production assembly line are not as large as one might imagine, the shift from mass to flexible production has only limited implications for the transformation of capitalist economy. Thirdly, 'industrial district' contorversy has contributed to highlighting the importance of small firms and areas as production space. The agglomeration of small firms in specific areas is common in Korea, but it is quite different from the industrial district based on flexible specialization. The Korean phenomenon stems from close interactions with its major parent firm rather than interactions between flexible, specialized, autonomous and technology-intensive smll firms. Most Korean subcontractors are still low-skilled, labour-intensive, and heavily dependent on their mojor parent firms. Thus, the assertion that the Seoul Metropolitan Area adopts flexible specialization has no base. Fourthly, the main concern of flexible speciali zation is small firms. However, the corporate organization that needs product diversification and technological specialization is oligopolistic large corporations typified by multinational corporations. It is because of this that most of these organizations are adoptiong Fordist mass production methods. The problem of product diversification will be resolved naturally if economic internationalization progresses further. What is more important for business success is the quality and price competitiveness of firms rather than product diversification. Lastly, in order to dispel further misunderst-anding on this issue, it is imparative that the conceptual ambiguity is resolved most urgently. This study recommends adoption of more speci-fied and direct terminology (such as, factory automation, computer design, out-sourcing, the exploitation of part-time labor, job redesign) rather than that of ideological ones (such as, Taylorism, Fordism, neo-Taylorism, neo-Fordism, post-fordism, flexible specialization, peripheral post-Fordism). As the debates on this topic just started, we still have long way to go until consensus is reached.

• Journal of the Korea Academia-Industrial cooperation Society
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• v.14 no.8
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• pp.3691-3695
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• 2013

This study focuses on the internalization process of service sector, especially on the foreign market entry modes of Korean healthcare industry. The paper examined the effects of country and firm specific factors, and strategic elements of the industry on the selection of foreign market entry modes by using multiple regression analysis. The findings indicate that firms' global experience and documented strategic assets have significant effects on the high control organizational types in the selection of entry mode while the other determinants including size of the firm were found to be less significance. This study provides the academic implications to the subject of the internationalization of Asian service industry and the practical reference to this highly specialized soft service sector.

• Journal of Korea Port Economic Association
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• v.31 no.2
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• pp.69-83
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• 2015

This study proposes effective overseas market entry strategies that could allow Korean logistics companies to develop international capabilities and become global firms by adapting to environmental changes in global logistics. First, it reviews the overseas networks of Korean international freight forwarders and the recent trends in the global logistics market. Then, it surveys the conditions of two groups of freight forwarders, namely partnerships and subsidiaries, which are categorized according to type of entry into foreign markets. These companies' networks are concentrated in East and Southeast Asia regardless of network type. As a result, the ability for partnerships to network is higher than that of subsidiaries. However, subsidiaries are small in number and located in various regions because of their initial stage, which is why their businesses depend on the price competitiveness of the parent company. The satisfaction and performance of subsidiaries are both generally low according to the presented findings. In addition, the successful strategies of international freight forwarders include following operations, specializing their logistics services, building collaborations among small and medium-sized companies, recruiting and training professional human resources in international logistics, and entering markets together with their customers. Overall, this study highlights the importance of measuring and evaluating objectively the level and performance of overseas networking through a survey about the internationalization of Korean freight forwarder companies. To conclude, this study is considered to contribute to raising their global competitiveness by suggesting strategies derived from the survey findings and SWOT analysis.

• KDI Journal of Economic Policy
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• v.13 no.1
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• pp.35-63
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• 1991

Currently, Korea's banking industry holds a sizable amount of non-performing loans which stem from the government-led bailout of many troubled firms in the 1980s. Although this burden was somewhat relieved with the aid of banks' recapitalization in the booming securities market between 1986-88, the insolvent credits still resulted in low profitability in the banking sector and have been detrimental to the progress of financial liberalization and internationalization. This paper surveys the corporate bailout experiences of major advanced countries and Korea in the past and derives a rationale for readjustment measures against non-performing loans, in which rescue plans depend on the nature of the financial system. Considering the features of Korea's financial system and the banking sector's recent performance, it discusses possible means of liquidation in keeping with the rationale. The conflict of interests among parties involved in non-performing loans is widely known as one of the major constraints in writing off the loans. Specifically, in the case of Korea, the government's excessive intervention in allocating credits has preempted the legitimate role of the banking sector, which now only passively manages its past loans, and has implicitly confused private with public risk. This paper argues that to minimize the incidence of insolvent loan readjustment, the government's role should be reduced and that the correspondent banks should be more active in the liquidation process, through the market mechanism, reflecting their access to detailed information on the troubled firms. One solution is that banks, after classifying the insolvent loans by the lateness or possibility of repayment, would swap the relatively sound loans for preferred stock and gradually write off the bad ones by expanding the banks' retained earnings and revaluing the banks' assets. Specifically, the debt-equity swap can benefit both creditors and debtors in the sense that it raises the liquidity and profitability of bank assets and strengthens the debtor's financial structure by easing the debt service burden. Such a creditor-led or market-led solution improves the financial strength and autonomy of the banking sector, thereby fostering more efficient resource allocation and risk sharing.

• Asia-Pacific Journal of Business Venturing and Entrepreneurship
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• v.7 no.3
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• pp.1-16
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• 2012

Under the international business circumstance, global supply chain management is considered a vital strategic challenge to small and medium-sized enterprises(SMEs) suffering from deficient resources and capabilities to exploit overseas markets comparing with large corporations. That is because they can expand their business domains into overseas markets by establishing strategic alliances with global supply chain partners. Although a wide range of previous researches have emphasized the cooperative networks in the chain, most are ignoring the importance of developing relational characteristics such as trust and reciprocity with the partners. Besides, verifying the relational factors influencing firms' export performances, some studies proposed different and inconsistent factors. According to the social capital theory, which is the social quality and networks facilitating close cooperation of inter-individual and inter-organization, provides the integrated view to identify the relational characteristics in the aspects of network, trust and reciprocal norm. Meanwhile, a number of researchers shows that global entrepreneurship is the internal and intangible resource necessary to promote SMEs' internationalization. Upon closer examination, however, they cannot explain clearly its influencing mechanism in the inter-firm cooperative relationships. This study is to verify the effect of social capital accumulated within global supply chain on SMEs' qualitative and quantitative export performance. In addition, we shed new light on global entrepreneurship expected to be concerned with the formation of social capital and the enhancement of export performances. For this purpose, the questionnaires, developed through literature review, were collected from 192 Korean SMEs affiliated in Korean Medium Industries Association and Global Chief Executive Officer's Club focusing on their memberships' international business. As a result of multi-regression analysis, the social capital - network, trust and reciprocal norm shared with global supply chain partner - as well as global entrepreneurship - innovativeness, proactiveness and risk-taking - have positive effect on SMEs' export performances. Also global entrepreneurship affects positively social capital which has mediating effect partially in the relationship between global entrepreneurship and performances. These results means that there is a structural process - global entrepreneurship(input), social capital(output), and export performances(outcome). In other words, a firm should consistently invest in and develop the social capital with global supply chain partners in order to achieve common goals, establish strategic collaborations and obtain long-term export performances. Furthermore, it is required to foster the global entrepreneurship in an organization so as to build up the social capital. More detailed practical issues and discussion are made in the conclusion.