The Korean Economy: From Moderate to Pioneering Innovation

Although the total commitment to success which guided rehabilitation from the war contributed to industrial and military development and to the establishment of the conglomerates, at the same time it created a parallel business culture of fear of failure resulting in moderate innovation. The conglomerates traditionally inclined towards low-medium risk technology projects. They chiefly specialized in the creation of innovation-based large production lines for complex products, and less in the actual development of innovative components and pioneering technologies.
In recent years, it appears as if Korea is aspiring to prepare for a transition from moderate innovation to groundbreaking innovation. This trend is reflected in a young generation of innovators who are striving to establish innovative start-up companies, and in the parallel initial signs of proposals to finance independent innovation. Additionally, the conglomerates themselves are becoming pioneers in different sectors. For example, Samsung was a pioneer in the field of 3D NAND Flash Memory[1] and, together with LG, is at the innovation forefront in the area of OLED screens.[2]
At the same time, there is a general realization that notwithstanding the significant contribution of the conglomerates to the economy, the typical size and scope of their operation creates an economic centralization and dependency which places stability at risk. This situation was clearly illustrated by the Asian financial crisis in 1997 when fourteen Korean corporations collapsed, causing heavy damage. Subsequently, the government began diverting resources towards small and medium-sized companies that until then struggled to compete with the large conglomerates, and to promote start-up ventures. Just recently, newly-elected President Moon Jae-in transformed the Korean Authority for Small and Medium-Sized Businesses from an Auxiliary Unit to an independent government ministry.[3]

  • The characterization and comparison of cultures in different countries may be inclined towards generalization. Any error on our part regarding cultural nuances in Israel and Korea is unintentional.