The role of user firms in industrial innovation : the case of machine tools in Japan and Korea.
The purpose of this thesis is to explore how and by what paths a developing economy
like Korea builds a competitive and innovative capital goods sector. The enquiry focuses
on the role of user firms in shaping the dynamics of machine tools innovation. It develops
the hypotheses that the users, on the one hand, create a basis for the specialised suppliers
to embark on a dynamic path to innovation through investment activities and on the
other, they become involved directly in the development and commercialisation of
machine tools; and that such user activities have a positive impact on the building up of
competitive advantage not only for users themselves but for specialised suppliers.
In order to confinn the hypotheses, this thesis carries out empirical investigations
into Japan and Korea. It analyses quantitative data at the industry level with some firm-specific
information for the Japanese case, while it analyses the results of a field survey
for the Korean case. The results show that the users in both countries, represented by car
makers, appear to have involved themselves in the technological and entrepreneurial
entry into machine tools along with making active investments. In consequence, they
made a considerable contribution to machine tools innovation, increasing the competitive
advantage for the machine tool sector as well as user sectors in both countries.
This thesis also attempts to apply the hypotheses to an international-level analysis.
It develops the notion that the international differences in the investment of local user
sectors explain the international asymmetries of machine tools innovation, bringing the
consequence of the differences in the competitiveness of the machine tool sector as well
as its user sectors. Cross-country analyses are conducted in order to test the notion. The
results reveal that the intercountry variations in the investment performance in national
user sectors are closely associated with the international gaps in machine tools
innovation, which in tum significantly explain the variations of the export performance
between countries in both the machine tool sector and its user sectors.
These theoretical and empirical analyses produce many useful policy implications
for developing the capital goods sector of Korea as well as other developing countries.
They also contribute to the understanding of the dynamic process of industrial innovation
and so to the development of innovation theory. In addition, the study yields an insight
into why Japan has succeeded in a large area of user sectors and the machine tool sector
over a short period of time.