Experience from Korean Technoparks.

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Evolution of Technoparks: an instance towards Regional
Boost for Developing Countries: Experience from Korean
Technoparks.
Dr. Jaehoon Rhee*, A S M Enamul Hassan** and Rumilya Saitova***
Abstract. This paper explores an instance of regional development through
Technological Park for developing countries, resultant from Korean
Technoparks, more specifically a case of Gyeongbuk Technopark, which
Korean Government has selected four times as the best institution. For
nationwide balanced development through innovative decentralization, Korean
government commenced a new scheme. To sketch it successfully, the
government designated 8 existing and 8 additional technoparks as networking
hubs of regional innovation agencies and Gyeongbuk Technopark is standing
as flourishing one amid them. Since then, its major characteristics have
changed drastically to act as a catalyst for provincial economic expansion or
revitalization. In fact, it stimulates and manages conventional 3 helix nature of
Science Park that flows knowledge based atmosphere accompanied by
universities, governments and industries. It facilitates the creation and growth
of innovation-based companies through incubation and spin-off processes; and
provides other value-added services together with high quality space and
amenities. Taking it as a replica, we delve some verdicts; those are focused to
impose in developing countries. By committing it, developing countries can
raise regional economic boost, which might lead them a total countrywide
development in a segment basis. Accordingly, it will open a vast panorama of
employment and creation of new jobs both in scientific organizations and in
ancillary services at the same time and will persuade the research activities.
Last but not least, Science parks may lead developing countries to
strengthening the national economies and to an increased attractiveness of the
regional science bases to foreign investments.
Field of research: Management of small Business
1. Introduction
Stipulating the modern pioneering and knowledge based society, which puts a caring
role in economic enhancement for regional networking, is one of the most garrulous
concerns in today‟s globalized world. To meet this global demand, most countries
have focused on an important industrial policy and that sets off with generating
_______________
* Professor and Dr. Jaehoon Rhee, School of Management, Yeungnam University, (712-749) 214-1
Dae-Dong, Gyeongsan, South Korea. Email: [email protected]
** A S M Enamul Hassan, School of Management, Yeungnam University, (712-749) 214-1 Dae-Dong,
Gyeongsan, South Korea. Email : [email protected]
*** Rumilya Saitova, School of Management, Yeungnam University, (712-749) 214-1 Dae-Dong,
Gyeongsan, South Korea. Email: [email protected]
investment on science parks. It usually clogged with universities for sharing the better
research enmities coming from both teachers and students. A science park is "a
planned development of high tech enterprises in an attractive physical environment
with close links to a university" (Matthias, 1986, p. 23). It seems to be the most
celebrated and proactive mechanism for setting up an infrastructure in which the
interaction between university and industry might be forged and strengthened
(Goddard et al., 1994; Bell, 1993). Science parks have usually been examined as a
tool of regional development policy. In this respect, several studies have focused on
the aspects of parks related to regional economic impact like creation of small
technology-based firms, generation of new jobs, and the revitalization of the local
economy are topics that have received intensive examination by researchers. Science
parks are established primarily to serve as a seedbed and enclave for technology, play
the role of incubator, and act as a catalyst for regional economic development or
revitalization (Felsenstein, 1994). Some states have also hoped that science parks will
(a) raise the level of technological sophistication of local industries, through the
promotion of industrial R&D; (b) attract foreign investments, especially in higher valueadded activities; and (c) accelerate the transition from a labor-intensive economy to a
knowledge-intensive economy (Koh et al., 2005). The Korean government has also
instituted various research complex projects to upgrade the R&D base; however, at
times of inauguration few of them have turned out to be time-consuming and underperforming because of social and economic conditions have not been conducive. Yet,
to overcome the drawbacks and depending on the optimistic views and repeated
success of Silicon Valley, take the lead of both Taiwan and Singapore, which have
been particularly keen to invest in new science parks in an attempt to enhance
economic competitiveness, the Korean government also has introduced policies for
technological innovation, including Technopark project. As a major part of that project,
Government designated eight technoparks in 1998 and followed by 2003, added eight
more to make sixteen and endorsed it as a strategy to develop new growth engines.
However, this paper attempts to appraise the activities of one well-performing
technopark as an illustration for developing countries, Gyeongbuk Technopark, which
the government has selected four times as the best institution between 1999 and 2003.
In doing this, this paper first reviews the relevant literature about Korean science parks
and university-industry-government (UIG) relations to make a better performing
authority. Finally, it briefly examines the history and the performance of Gyeongbuk
Technopark and using that as a treatment of regional development for rising states.
2. Two Major Perspectives on Science Parks
Mostly a techno park stated as for supporting the business model, through which
technology transfer, incubation, innovation and finally industrialization process take
place. Diverse of R&D are developed in science park arenas and in industry sectors to
motivate the research based industrialization. Some science parks are focused on
basic research (e.g., the Cambridge Science Park), while others are on applied
research (e.g., the Singapore Science Park) (Koh et al., 2005). Other science parks
emphasize commercialization or strong manufacturing capabilities, either within the
parks themselves or in their vicinity (e.g., the Hsinchu Science Park in Taiwan). By
enticing new firms to locate within or in their region and forming clusters, science
parks can create substantial agglomerative effects for the regional economy. Therefore,
the studies conducted thus far encompass a range of geographical localities. Notable
examples include: Storey and Tether (1998), who provided an overview of science
parks in Europe; Lofsten and Lindelof (2002, 2003) who studied science parks in
Sweden; Athreye (2002), who assessed the agglomeration and growth of the
Cambridge science district; Saxenian (2001a, b), who studied the Hsinchu Science
Park in Taiwan; Conceicao et al. (2002), who worked on Italian technology parks; and
Kihlgren (2003), who evaluated the St. Petersburg Technology Park in Russia.
There are two main streams of theories regarding science parks: the economic
geography perspective and the institutional perspective. From the economic
geography perspective, a science park and its surrounding region are regarded as an
entity consisting of specialized firms with an evolving structure of inter-firm linkages
and agglomerative effects. The roles and contributions of science parks are examined
in the context of regional development or regional innovation systems (e.g., Storper
and Harrison, 1991; Markusen, 1996).
On the other hand, from the institutional viewpoint, technoparks are considered as an
institution based supporting body for its stockholders with specific policy-based or
mechanism-based ways. This view emphasizes issues such as the functioning of
incubators, the degree of spin-offs, and whether science parks grant competitive
advantages to their tenant firms as well as positive turn over effects to firms located in
their complex. The affinity towards endorsing science parks as an expert one to held
technology-based firms has focused chiefly on the direct and tangible contributions of
science parks and the institutions within them. The assistance includes new job
openings, quality of employment which eventually devoting Technoparks to go for
investing on R&D to raise venture capital, as well as to increase the role of universities
towards contemporary ideas on research with the science parks.
Korean science parks are mostly organized by evaluating this view point, through
which, establishing infrastructures, incubating high-tech firms, and promoting UIG
(university-industry-government) relationships took places. However, after President
Moo-Hyun Roh assumed power in 2003, by focusing on distributive policies, the
government planned to relieve the unbalanced development between regions and set
up a new political agenda: the so-called, entire country‟s balanced development
between regions through devolution and innovation. Thus, it attempted to foster
technoparks as an important means for regional technology innovation and economic
development (Lee et al., 2004). Ever since, technoparks created a channel for zonal
economic expansion or revival towards economic growth as a whole.
3. Infant Stages of Science Parks in Developing Countries
The development of a country is measured with few statistical indexes such as
income per capita, GDP, life expectancy, the rate of literacy, etc. Depending on these
criteria, a country is been declared as developed or developing one or even under
developed. According to the World Bank classification, countries with low or middle
levels of GNP per capita as well low life styles comparing with other developed
countries are said to be developing countries. Sometimes, it‟s closely associated with
social development, in terms of education, healthcare, life expectancy, etc. These
Countries started refocusing their attention on industrialization more specifically
development of SMEs to enhance their role in bringing about structural changes in
their economies. Our focus mainly staying with developing countries, which are
generally implies as, not having significant degree of industrialization relative to their
populations and trying to enhance foreign investments or even exporting of products.
Among this huge number of developing countries, we mostly focused on Bangladesh
of South Asia and Uzbekistan of central Asia as samples.
SMEs in Bangladesh have assumed as special significance for poverty reduction
programs and potential contribution to the overall industrial and economic growth. In
the context of the industrial scenario in Bangladesh, barring a small number of large
fertilizer factories, composite textile mills, modern chemical and pharmaceutical plants,
etc. the bulk of the existing industries may be notionally called either medium or small
industries by global standards. Bangladesh is at present largely engaged in the
manufacture of common consumer goods as frozen food and beverages, textile
including lather, furniture, drugs with chemicals, glass and nonmetallic products, basic
metallic products to meet up local and global demands. Besides, the country is
booming in technological sector mostly in ICT and other civil engineering works.
For locating the exact number of cottage and small industries of the country, in 2003,
BSCIC (Bangladesh Small and Cottage Industries Corporation), under the Ministry of
Industries, conducted a survey by the help of International Consultancy Group (ICG) of
the UK, in collaboration with the Micro Industries Development Assistance and
Services (MIDAS), Department of International Development (DFID) of the UK
Government, the United States Agency for International Development (USAID), the
Swiss Agency for Development and Cooperation (SDC) and the Swedish International
Development Cooperation Agency (SIDA). The survey results drew the conclusion that
there were approximately 6 million micro, small and medium enterprises (MSMEs),
which included enterprises with up to 100 workers employing a total of 31 million
people, equivalent to 40 per cent of the population of the country of age 15 years and
above. About three quarters or more of the household income in both urban and rural
areas is provided by the MSMEs. Despite of Government support, most SMEs are
grown by their own interest and initiatives though there stays some of Govt. legislation
behind them. Right away, most of the technological business is driven more or less by
the support of other giant vendors or operators of the world, but it is predicted that, in
near future they might be organized by the local initiators and the trend has been
started as it is clearly noted few renowned local ISPs, operators and software firms are
operating in technological market quite significantly.
The country is blessed with 87 renowned public and private universities mostly
operated in different divisions. Among them, Dhaka, capital city, houses 52
universities. Most of the universities focus on general studies along with very limited
amount of research amenities to the students as because of the trend of research
work are not well practiced throughout the universities. However, to meet up the need
of modern era, now-a-days, universities are also emphasizing on research works
mostly on ICT, medical and biotechnologies. Even though a huge lack of modern
machineries, the teachers and students are still trying to cope up with the situation and
as the outcome of it, they came out with some delightful existence to world market,
mostly in ICT sector. The country yet to explore itself towards techno vision, as it plays
a major role in provincial advancement by industrialization where practicing of proper
technological research from universities is mostly welcomed and everlasting
government supports behind it‟s surviving.
On the other hand, another central Asian country, Uzbekistan, mostly devoted with
business pattern related with Electricity, Mining (gold, copper and gas) and also
processing industries like textile, wood accessories, agro processing etc. They usually
renowned to the world in exporting few precious metals, mainly, gold and zinc, besides,
they offers raw materials of plastic, fruits, grains, vegetables and very few contribution
on automobiles. Among the exporting zone, Russia, UK, China, USA, Germany and
few neighbor countries can be named. As the estimation of Ministry of Industries, till
2002 about 240,000 SMEs were registered. With new legislative role, in 2005, Uzbek
government introduces 14 leasing companies along with 18 commercial banks for
dealing the leasing services. in recent days, government introduces a „Microcredit‟
bank to satisfy the needs of financing and 37 credit unions only to support the SMEs.
Since 2002, credit unions, created more than 12,000 jobs and provided entrepreneurs
with simplified access to financing. Because of sectoral and geographical
concentration of enterprises in few sub-sectors, industrialization did not come forward
though having of sufficient raw materials and natural gas. However, Government is
encouraging foreign direct investments in this sector for creating more jobs and also
research facilities.
According to the university studies, mostly focused on course based works and offered
almost all typical subjects. However, in 2000, government, focused on research based
studies and as the outcome of it, they introduced Science parks in few renowned
university campuses mostly involved with the researches on ICTs, agriculture, textile
and few other mixed uses. The Technoparks are mostly, helping the junior researchers
along with professors to cope up with the new trend of research. Though the culture
was started, as like other developing countries‟ one, poor government legislation and
lack of support from the industries, Uzbek Technoparks is enduring with sufferings in
recent days.
4. A Brief History of Korean Technoparks
Korean government executed a range of industrial legislations till 1990s for technology
development. Before introducing technoparks, most countries that have developed
UIG relations and incorporated some independent bodies, worked as inspiration
towards the edifice of Daeduck Science Park (DSP) in the early 1970s. The Park
Chung-Hee government required the Ministry of Science and Technology (MST) to
develop an industrial cluster in the Daejon region, where social actors were easily able
to access the nation‟s transportation network of highways and railroads. The MST had
responsibility for planning and coordinating the process of developing the science
parks and the Ministry of Education helped them to build new schools and relocate
universities to that area. Beginning with 1980s, some private research institutes of big
conglomerates were also induced to relocate to the park. Nowadays, a large number
of research institutes within the complex of DSP have developed and commercialized
with many technologies, and cooperated with the private sector. As a result, DSP has
been positioned as a major axis of scientific research and development in Korea (Shin,
2001).
However, in actual fact, until the late 1990s, DSP had not performed well despite
enormous input from government only because, the low level of social capital like trust,
lack of strong infrastructure, inexperience in connecting technology and
commercialization. Therefore, to overcome the limitations of DSP‟s previous
experiences, replicate the success of Silicon Valley, and take the lead of both Taiwan
and Singapore, which were particularly keen to invest in new science parks in an
attempt to enhance economic competitiveness, the Korean government introduced the
so-called Technopark project in 1997. A technopark, the Korean version of Science
Park, is a technologically intensive industry park that puts every essential function in a
single spot for effective high-tech industry development. In other words, in a
technopark, the R&D, business incubation, education, business support, and
production functions can be executed as one-stop activities under one roof. For
supplementing the limitations of institutional systems of UIG relations, the project got
initiations. In fact, from 1990s, the Korean governments concentrate chiefly on
establishing high-tech industries, preparing knowledge-based culture, and eventually
in time refresh of the local economy. In addition, the government employed business
incubator programs to invigorate local economies, job openings and rearing up the
high-tech industries.
The Case of Gyeongbuk Technopark
Gyeongbuk Technopark Foundation (GBTP), designated as a model technopark by
the Ministry of Knowledge and Economy (MOKE) along with five other exemplary
technoparks, was established in August 1998 placed in Gyeongsan city.
Geographically, Gyeongsan located in southeast of Korea and next to Daegu, the
fourth largest city in Korea. In addition, there are several universities and industrial
complexes in Gyeongsan. In more detail, GBTP is located on the campus of
Yeungnam University, covering 153,120㎡. Its major stakeholders are Gyeongbuk
Provincial Government, Gyeongsan-City Government, Gyeongsan Chamber of
Commerce and Industry, Yeungnam University, Daegu University, Kyongil University,
Daegu Hanny University, and Catholic University of Daegu. The total funds amounted
to 99.7 million dollars, of which a fourth came from the central government (i.e., the
MOKE) and a fifth from the Gyeongbuk Provincial Government (GBTP,
www.gbtp.or.kr).
As with other technoparks, the core principle of GBTP is to incubate new venture
endeavors. GBTP supported to its tenant bodies with venture funds, business
endorsement, investor relations, exhibitions or even technology transfer by providing
researchers. In fact, GBTP‟s incubation intense with combining entrepreneurs with
technology and relevant parties such as venture capitalists and marketing experts.
That is, GBTP‟s incubation required to connect “think” with “do.” This meant that GBTP
tried to effectively link talent, technology, capital, and know-how with one another in
order to influence talent, accelerate the development of new companies, and speed up
the commercialization of technology (Rhee, 2004).
5. Towards a Regional Development Agency
At times of president Moo-Hyun, major characteristics of Korean technoparks were
changed so that they could act as catalysts for regional economic development or
revitalization and promote economic growth in lieu of serving as institutions that were
focused on establishing infrastructures, incubating high-tech firms, and promoting UIG
relations. Thus, technoparks were being asked to transform themselves toward
regional development agencies that endeavor to respond to the expectations of key
regional stakeholders to work as regional innovative hubs with regional uniqueness;
however, the technoparks have not been accustomed to such a role.
Considering the significance and role of technoparks, the technopark project has been
regarded as one of the most important means for regional technology innovation and
balanced economic development. Therefore, the MOKE ambitiously started a project
called “Setting up Regional Innovation Governance System” and even assigned
technoparks to the role of regional innovation hubs by revising the 1998 Special Act
for supporting Industrial Technology Cluster (Technopark) in 2007. To undertake these
tasks successfully, technoparks aim to minimize bureaucracy and add value to
delivery through shared experience and best practices: bringing together key
stakeholders and regional partners and providing high-quality service by combining
skills at the regional level with the coordinating role in the central government to
influence policy design and implementation. It can be said that, the present
technoparks feature the economic geography perspective in which a science park is
regarded as an entity consisting of specialized firms with an evolving structure of interfirm linkages and agglomerative effects, while Korean technoparks prior to President
Roh adopted the institutional perspective. Now, Korean technoparks are asked to
transform themselves toward regional development agencies that endeavor to
respond to the expectations of regional key stakeholders to serve as regional
innovative hubs.
As mentioned earlier, GBTP also has become a stronghold and a mechanism that
enables industries, academia, and research institutes in the region to actively
exchange information. GBTP has also emphasized to nurture companies that have
already entered the growth stage after the start-up stage. For instance, regarding
business incubation, it has prioritized venture companies that have technologies and
evince potential for growth but suffer from a shortage of money and facilities and a
lack of management skills. GBTP has provided them with services such as production
tests, manufacturing facilities, equipment tests, consulting, marketing services, and
even funding. Sometimes, it has also provided manpower through the mobilization of
researchers and students based on networks of experts from various areas including
the participating universities and professors. About 30% of resident firms in GBTP
have had difficulties in securing technicians, and companies particularly in the growth
stage were suffering from serious shortages of employees such as researchers, core
technicians, and specialized engineers. In this regard, GBTP has actively supported
the firms so that they can find the desired employees through university employment
centers and employment stabilization centers.
Table 1. Main Achievements of GBTP‟s Business Incubation (Incubation Status).
Dimension
New
companies
1999
2000
2001
2002
2003
2004
2005
Total
51
39
41
30
19
28
20
228
48
51
53
53
53
59
3
36
39
30
19
21
13
161
48
51
53
53
53
60
66
67
Existing
companies
Exit
Current number
Sales
-
US$
7.0
million
US$
7.5
million
US$
16.4
million
US$
20.8
million
US$
22.3
million
US$
54.4
million
US$
128.8
million
Exports
-
US$
0.5
million
US$
3.5
million
US$
2.2
million
US$
3.0
million
US$
6.0
million
US$
10.2
million
US$
25.4
million
Employees
253
409
409
483
417
411
2,382
Source: GBTP, Internal Document by Department of Business Incubation, 2006.
Table 1 shows the performance in business incubation of GBTP between 1999 and
2005. During this period, 228 firms were attracted to GBTP. Among thes e, 161 left the
park and 67 firms were in business within the park as of 2005 till now. The trend is that
the overall number of firms within the park tended to increase continually from 48 in
1999 to 67 in 2005. The total sales in this period were recorded as US$ 128.8 million.
As the economic performance of firms within the park continued to improve, their sales
also continued to increase from US$ 7.0 million in 2000 to US$ 54 million in 2005.
Simultaneously, their annual exports rose from US$ 0.5 million in 2000 to US$ 10.2
million in 2005.
Based on the data and experiences, we identified the following success factors as
possibly contributing to such positive outcomes.
(1) Successful firms made the most use of internal and external infrastructures with an
open mind.
(2) They were established by experts who had experience in the field and/or had
worked in a similar area for a long time; success was likely when the companies
were operated with their know-how (experience).
(3) The firms were able to develop prototype products and implement mass production
in a short time after the establishment of their respective businesses.
(4) They reduced the financial burden at the early stage by renting equipments.
(5) They had both clear goals (clarity, achievement) and operation strategies
(concreteness, realization).
(6) The successful firms built an effective network with supporting institutions, tenant/
off-line firms, finance/business- consulting firms, government/local communities,
and even other competitors.
These are somewhat tremendous outcomes for Gyeongsan province. This is how;
Korea‟s 16 regionally-based technoparks have committed to enormous efforts to play
their role as regional innovation hubs in accordance with their respective regional
uniqueness.
Such an illustration always shows an optimistic view towards developing countries that
are desired to enhance regional economic growth by raising the ideas and giving the
priority on regional needs. However, for better recital, government should give more
benefits to small and med-sized companies. At the same time, they need to put the
priority in the interest of the high tech companies and the region`s well beings,
because the success of the high tech companies could bring the betterment of a
region and even nation.
6. Conclusions
This research explores and evaluates the Korean technopark project both theoretically
and practically and sets it as an example for the developing countries through a brief
review of Korean Technoparks, more detailed case study of Gyeongbuk Technopark.
Without any doubt we can admit the significant contributions made by Technoparks
and it cannot be same as one with others Science Park in developed countries, which
in many ways depend on unique conditions of industry, history and area based
industrial preferences. However there are common principles for building the
successful science park as the infrastructure of innovation such as the presence of
clear vision and philosophy for the science parks, the continuous support for the
expansion of networks from long term perspective, the proactive commitment and
participation based on a trust and autonomy, the interactive learning through the
sharing of relational knowledge, and building the virtuous circle of success which can
be used in creating a superlative science park in developing countries.
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