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Change of the Chinese domestic market share between Chinese and Korean firms Source: Drawn using data from the Game Industry White Book KOCCA (2008), KIPA (2003 to 2007b)
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This paper analyzes the market and technological catching-up of latecomer firms in two IT service sectors from a sectoral systems of innovation (SSI) perspective. It finds that indigenous software firms in China have selected different learning and catch-up strategies in the different technological regimes. For the online game sector where imitatio...
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... firms have also developed their own games based on a large amount of capital earned by publishing contents. Although Korean online games had occupied 70% of the Chinese market until 2004, they now only have a 20% market share (see Figure 1). Meanwhile, Chinese games have gained approximately 70% of the domestic market since 2007. ...
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Citations
... Unlike in advanced countries, where innovation is related to patents (Argente et al. 2020), R&D (Mairesse and Mohnen 2004), and established networks with academia and research institutes (Bellucci and Pennacchio 2016), innovation in developing countries is often improvement of existing products and production methods through technology acquisition (Cirera and Maloney 2017;Zanello et al. 2016). However, firms in developing countries can achieve success through imitation or incremental innovation that adapts to local specificities (Kim, Park, and Lee 2013). Moreover, the absence of minimum wage laws and collective bargaining agreements may provide firms with greater flexibility to adjust their workforce or wages in response to changes in technology or market conditions (Haltiwanger, Scarpetta, and Schweigar 2014). ...
his study explores the relationship between product and process innovation and employment growth using a dataset of 17,103 firms in 53 developing countries. Employing instrumental variable (IV) estimation, we find that product innovation plays a significant role in driving employment growth in developing countries. Meanwhile, the impact of process innovation on employment appears to be limited. Moreover, we find that the employment effects of product innovation vary substantially depending on the market structure. In particular, within the manufacturing sector, product innovation has a more pronounced positive effect on employment growth at firms with fewer competitors than at their counterparts operating in more competitive environments. Similar effects are observed in the service sector, where heterogeneity is prevalent, primarily within comparable industries such as retail and wholesale trade. These findings emphasize that employment effects innovation are not solely firm-determined but also depend on market conditions and competitors.
... However, developing countries' institutions usually lack the driving forces to use job creation impact of product innovation, while relieving their job destructing potentials. For example, they lack a workable regulatory system to protect and patent new products (Kim, Park, and Lee 2013). ...
The slow economic growth combines disappointing productivity growth in the past two decades with a continual rise of inequality in the past four decades. In the United States and European countries, a key characteristic of the evolution of inequality has been employment and wage polarization. As employment grows, wage grows in a U-shaped form in relation to skill level. The highest gains are in the upper tail, modest gains in the lower tail, and significantly smaller gains in the median. The turning of the lower tail of the wages and employment distributions is largely defined by growing wages and employment in only “service occupations” (Autor and Dorn 2013). The U-shaped evolution of labor demands and the future demographics of the rich industrial countries imply that if there is continued labor demand growth at the left side of the U, there will not be enough native-born workers willing and able to do the low-education work. Innovation is considered to have a low impact when Total Factor Productivity growth is relatively slow. Hence, automation is not likely to solve this any time soon. The technology required to replace workers in low-education service occupations is far more advanced than the current state of technology advances. On the other hand, a key policy priority for low-income countries with rapidly growing youth populations is how to provide low- and medium-level skill occupations for their youth. At the same time, the highest skilled talent in the rich industrial countries is making that job harder through automation and labor-saving technologies. Labor mobility can solve both problems by having adequate workers in high-income countries filling low-education jobs and providing jobs for the youth of low-income countries. Regardless of the effects of labor mobility on economic growth, it would address those fundamental causes and create a more equitable and better-educated society, with higher labor participation rates for women and new sources of tax revenues to address the fiscal headwind and pay for high-priority government programs.
... However, imitation can also trap firms in their current situations and prevent them from becoming innovative (Benhabib, Perla, and Tonetti 2014). Kim, Park, and Lee (2013) compiled a list of 10 major Chinese firms that published pirated games copied from Korean game developers. After imitating games for a few years, some of them were able to develop their own games, but others remained imitators. ...
This article investigates how the process of product imitation affects skill improvement for small- and medium-sized enterprises (SMEs) in developing countries. By distinguishing between sources of information inputs in the imitation process, we identify two types of product imitation—reproduction and adaptation. We argue that compared to reproduction, adaptation is more likely to enhance imitators’ skills. This is because adaptation requires imitators to use information from a variety of sources, which in turn creates more opportunities to gain knowledge and practice complex skills, such as trial-and-error and problem-solving. We find supporting empirical evidence by analyzing SMEs in nine developing countries. Our results indicate that SMEs can achieve skill improvement by imitating products. This finding also suggests that policies guiding SMEs toward adaptation and away from reproduction are likely to enhance SMEs’ long-term growth by enabling skill improvement.
... The opening of WOP can bring forth different responses from incumbents and latecomers, thereby causing changes in industrial leadership ( e.g., Kim et al., 2013;Malerba and Lee, 2020;Zhou et al., 2020). For instance, in the sectors where the characteristics of the technologies are precise, explicit, and are easily embedded in equipment, the technological WOP tends to occur. ...
This research identifies how windows of opportunity (WOP) emerge and influence the catching up process of the Chinese electric vehicle (EV) industry between 1995 and 2018 by analyzing technological, institutional, and market demand elements of the WOP. Our case study indicates that government policies play a vital role. Along with the development of Chinese EV industry, government policies evolve from initiation to consolidation and finally reposition. Meanwhile, WOP emerge but diverge in their patterns; from institutional to technological and finally to the market demand WOP. Our study further elaborates the interplay of the above-mentioned three kinds of WOP, which provide feedback to the government authorities and work jointly to facilitate the catching up of Chinese EV industry. Based on the evidence of the Chinese EV industry, we continue the discussion of the emergence and interplays of WOP during the industrial catching up in latecomer countries like China, who is eager to build an energy-saving industry. Our case study provides a fine-grained analysis of policy evolution and its role in opening the different kinds of WOP, which eventually contribute to the successful catching up of a latecomer industry. It also offers new insights for policymakers when building a sustainable system.
... The emergence of the concept "catch up" can be traced back to the works of Gerschenkron in 1962 and Abramovitz in 1986. (J.-Y. Kim, Park, & Lee, 2013Shin, 2017) which were related to comparisons between performances of western economies (J.-Y. Kim et al., 2013). In the macroeconomic level, catch up is related to analysis of capital income of the countries (particularly those far from the growth boundaries) (Malerba & Nelson, 2011). In other words, in national level, catch up means to ...
... Kim, Park, & Lee, 2013Shin, 2017) which were related to comparisons between performances of western economies (J.-Y. Kim et al., 2013). In the macroeconomic level, catch up is related to analysis of capital income of the countries (particularly those far from the growth boundaries) (Malerba & Nelson, 2011). ...
... می نشان کشورها تجربیات دهد ( Rosenberg, 1982;Freeman, 1989;Freeman and Soete, 1997 Mathews, 2006;Lee and Mathews, 2012 ) سیاست در تغییر و دولت مداخله ، اتخاذ های شده ( Guennif and Ramani, 2012;Kim et al., 2013;Lee et al., 2014 ) یا فناوری ظهور ، جدید اقتصاد ( Perez and Soete, 1988 ) چرخه تحوالت و کار و کسب های ( Mathews, 2005 Perez and Soete, 1988;Braga and Willmore, 1991 ) و تازه انگیزه همچنین واردان تالش برای بومی های ( Mytelka;1978;Katrak, 1997 Perez and Soete, 1988;Braga and Willmore, 1991;Pack and Saggi, 1997 and Willmore, 1991;Lee J, 1996;Kim, 1997;Kim, 1998Caloghitou et al., 2004 ) در . ...
Over the past half century, in order to increase the country's productive capacity; relying on natural resources, a wide range of technology transfer has been realized in the steel industry. Although their main goal was to increase production capacity, but also they had important achievements in technology upgrades and development. A historical review of the path that traversed and consideration of successful and unsuccessful experiences can provide lessons for the future. For this purpose, five waves of the development of the steel industry have been introduced through qualitative research and interviews with custodians and experts working on Iran’s steel technology transfer projects using narrative analysis. The results show that in five waves of steel industry development, different windows of opportunity have been created and various type of learning and the absorption capacity has been experienced. The historical trend in the Iran’s steel industry has shown that international cooperation, in addition to building production capacity, has led to the enhancement of technological capability that the core of the accumulation is technical-engineering companies.
... While the Chinese government was criticized for being biased against foreign businesses, their intervention was praised for circumventing a monopoly by a few foreign businesses and allowing domestic SMMEs to catch up. Proponents of this method argue that regulation can be revised once local businesses have developed their own capabilities (Kim et al., 2013). ...
Th e ubiquity of SMMEs in economies makes
it inevitable to interact with an SMME at some
point or the other. Th erefore, the role SMMEs play
in society and the impact they have on people’s
lives cannot be ignored. Th is alone makes a topic
on the well-being of SMMEs important and
relevant to everyone. However, many SMMEs are
oft en unable to withstand the harshness of the
business environment and become susceptible
to failure; prompting various stakeholders to
devise programmes aimed at preventing such
failure. Unfortunately, some of these programmes
are sometimes ineff ective or unutilised because
they do not match the needs of SMMEs they are
meant to assist. Th is study examined support
programmes available to SMMEs in Mahikeng,
to determine whether or not they match the
needs of SMMEs. Such knowledge will enhance
the formulation of suitable and, therefore, useful
programmes. A quantitative study using a
survey questionnaire was undertaken amongst
421 SMMEs. Th e study found that most of the
support programmes match the needs of SMMEs.
However, there are also programmes that can be
abandoned or modifi ed to ensure that resources
are expended only on support that is relevant to
SMMEs.
... Based on the SSI and window of opportunity thesis, many studies have examined industrial catch-up in emerging economies (Soete 1988;Freeman 1997;Freeman 1989). In addition, the business cycle, emergence of new demand, abrupt demand change (Mathews 2006;Lee and Mathews 2012), government intervention, and policy change can be opportunities for path-creating catch-up for latecomer countries (Guennif and Ramani 2012;Lee, Park, and Krishnan 2014;Kim, Park, and Lee 2013). ...
This study examines the catch-up experiences of the Chinese game industry from a neo-Schumpeterian perspective. It determines that Chinese indigenous firms succeeded in catch-up by strategically responding to favourable policy changes, such as a quota system that limited the import of overseas games and content inspection by the government. It is found that China has established its capabilities in a quite different manner than the experience of advanced countries during the dynamic catch-up process. This verdict shows that the order of capability development of late-comer countries can be different from that of advanced countries. Despite numerous studies that emphasise the role of government, we argue that, even when the market is unsegmented, if foreign knowledge is accessible, then the necessary intervention can involve little more than the protection of the initial market in the form of exclusive licensing, import restriction, not sharing R&D costs or promoting marketing activity. Despite exclusive licensing, import restriction and piracy, overseas game firms continued co-operating with China in the form of a publishing contract and IP sales due to massive market opportunities in China. This indicates that a large country with an immense domestic market can differentiate its catch-up strategies from those of small-market countries.
... In other words, only those DCs which enjoy a sufficient level of endogenous R&D and innovation capabilities would be able to fully develop their new technology's growth and employment potentialities, with particular reference to labor-friendly product innovations. By the same token, public policy and government support may be crucial in fostering technological catch-up (such is the case of China, see Kim, Park and Lee 2013). However, most DCs may lack the institutional context that can be crucial in driving the job creation impact of product innovation, while alleviating its jobdestructing potentialities. ...
... "Social capabilities" represent exactly the set of cultural, political, commercial, industrial and financial institutions which create the condition in catching-up countries to absorb and exploit the technologies developed elsewhere (Abramovitz, 1986). For example, a study conducted on Brasil, Russia, India and China (the so-called BRIC) confirmed that their institutional specificities play a major role in shaping their rapidly growing economies (Gupta et al., 2012;da Rocha, Ferreira da Silva and Carneiro, 2012;Kim, Park and Lee, 2013). ...
The aim of this paper is to provide an updated survey of the “state of the art” in entrepreneurial studies with a particular
focus on developing countries (DCs). In particular, the concept of “entrepreneurship” is critically discussed, followed by
a discussion of the institutional, macroeconomic, and microeconomic conditions that affect the entry of new firms and the
post-entry performance of newborn firms. The reviewed literature bears some policy implications for the support of the creation
new firms, such as the targeting of policy measures to prospective entrepreneurs who possess high education levels, long previous
job experience, and innovative skills. Specifically, for DCs, tailored subsidies and support should be coupled with framework
and infrastructural policies that are able to improve the business environment such that new ventures can start and grow.
