The Korean Economic Forum
Principle of Innovative Growth and Start-up Finance --Econ 101 of Innovative Growth and Effective Ecosystem for Start-up Finance--
Chong Ook Rhee (Seoul Women’s University), Chi Seung Song (Wonkwang University) and Sang-Joon Kim (Ewha Womans University)Year 2018Vol. 11No. 3
In the experience of developed countries, the driving force of growth in thelow-growth era is entrepreneurial innovation. In the low-growth period, theUnited States, Germany, and Japan also increased their R&D/GDP ratios andimplemented growth and job creation through innovation.The success of a country's innovation growth model requires a consensus onthe meaning of innovation. In Korean innovation, there is no government(administrative, legislative, judicial) role to determine the environment ofinnovation, and hence no mention of their responsibilities and obligations foremployees, workers, labor unions, NGOs including entrepreneurs to drive threetypes of innovation - social innovation, technological innovation and publicinnovation.While the role of existing conglomerates in Korea’s innovation is beingexcluded and misunderstood, large corporations can play a leading role in theinnovation of venture companies and SMEs. In 2017, the allocation ratio ofeconomic value distribution of Samsung Electronics accounted for 77.1% to2,436 suppliers, and that of Hyundai Motor Company for 76.15% to first-tier480 firms which is connected with the second-tier 5,020 suppliers, The largestshare of economic value resulting from the innovation generated byentrepreneurs and workers in large corporations is distributed to their suppliers.As Schumpeter emphasized the role of economic circulation, newcombination, and finance as the three elements of economic development,innovation can be better promoted through communication and cooperationamong government - enterprise –employee-finance, not conflicts among them.In Korea, it is necessary to accumulate and share innovation knowledgecorresponding to Econ 101 based on the widely known research results oninnovation found by economists and business scholars.Ideological conflicts between entrepreneurs and workers and betweenentrepreneurs and society are expressed, and efforts to promote favorableenvironments to create entrepreneurial innovations are not easy. To driveinnovation nationally, government has to resolve conlicts and needs to stimulatecommunication among start-up executives as well as existing large companies’and SMEs’.In order to get out of the low growth of Korean economy, it is necessary topursue economic innovative activities led by technological innovators such asventure companies as well as innovation of big firms.