As food demand gaps between countries become smaller due to developments of information technology, transportation, and media, food industry as one of the typical multi-national industries tends to be a global industry. However, food industry of South Korea occupies only 1.0% share in the worldwide ...
As food demand gaps between countries become smaller due to developments of information technology, transportation, and media, food industry as one of the typical multi-national industries tends to be a global industry. However, food industry of South Korea occupies only 1.0% share in the worldwide food market, which is very low against the economic status South Korea has. Besides, food industry has the second place in the rank of international trade deficits among all industries in South Korea. Strengthening international competitiveness emerges as a pressing task of food industry. In addition, since FTA agreements with the major countries over the world ask much more strong competitiveness, the government and enterprises should make proactive efforts together.
Because the food processing business in food industry is playing the role of both consumers of agro-livestock products that belongs to the primary industry and suppliers for whole/retail distribution that belongs to the tertiary industry, it is a very important task to expand exports by obtaining competitive advantage in the global market in order to properly respond to globalization and contribute to the nation's economy. Accordingly, it is necessary to enhance technological innovation by R&D investment to secure this competitive advantage. Performance difference gained by technological innovation is a fostering factor for companies to advance into the global market as well as to keep their competitiveness after entering the market and promote exports. So, it can be said that the first step to gain global competitive advantage should begin with R&D investment. However, despite the importance of R&D, not all companies engage in it. Their degrees of R&D investment differ depending on how they are aware of their business environments, since technological innovation as a target of R&D expenditure takes high risk to fail and demands long term investments. Because not all the companies investing in R&D succeed to achieve technology innovation, they should determine whether and how much they would invest, considering their inner capacity and external environment, etc. Even among the companies that win a technological innovation, some succeed to achieve export, but the others fail. It means there are diverse influencing factors between R&D, technology innovation and export performance, and figuring out the factors is the main purpose of this research. In the research, the companies exporting without R&D investment and the companies exporting despite failure of technology innovation are excluded from the objects list, because they are not included in the list of exporters through R&D and technology innovation, which is the very subject of this research.
This research is to find out the factors influencing on R&D investment, technology innovation, and exports of food processing companies and derive implications based on them. It uses the decision tree model to conduct empirical analyses. The 3 models for analyses were set up according to the flow of the research. The model 1 covers the whole of food manufacturers, and sets the R&D investment as the target variable, and external environment and companies' characteristics as the explanatory variables. The model 2 analyzes only the companies investing in R&D, setting technology innovation as the target variable, and R&D resources and capacity, employment of external resources, and companies' characteristics as the explanatory variables. The model 3 includes only the companies that won the technology innovation, and sets features of the innovations, employment of external resources, and companies' characteristics as the explanatory variables. The data for analyses were from [Korea Innovation Survey 2010] which was conducted by Science and Technology Policy Institute. The data of KIS 2010 were gained from the survey of 3,295 domestic manufacturing companies from 2007-2009. Among them, 284 food manufacturing companies were derived and analyzed for this paper. To complement the decision tree model that are based on the non-parametric statistics, robustness analysis was conducted for 167 food manufacturing companies derived from KIS 2008.
The analysis results are as follows: Through the model 1, the influencing factors on food manufacturing companies' R&D are identified. Uncertainty of demands as external factors and the size of a company and its products life cycles as a company's characteristic factor have influences on the R&D investment, respectively. High level of demand uncertainty means consumer preferences change rapidly and complicatedly, so technology innovation by R&D investment is necessary to properly respond to it such as releasing new products or renewing existed ones. The more uncertain market demands the companies are aware of, the more efforts they tend to make for developing products fitting consumers' needs, or reducing costs and raising price competitiveness by improving its production process. Size of a company also affects R&D investment. Previous studies on the scale of company and R&D investment tells us that larger companies tend to expend more R&D investments because they have bigger market shares and higher appropriation of technology innovation. In the meantime, smaller companies tend to actively engage in R&D investment because they are highly dependent on technology and take more risks. According to the analysis of this study, small businesses show more intensive R&D budget comparing to middle and large companies, which reflects both of the two tendencies. However, it might not be appropriate to interpret the tendency as to support one over another because the net amounts of R&D budget are bigger for middle and large scale companies, though intensiveness is higher for small businesses. And the companies that answered ‘short product life cycles’ as characteristics of companies showed more intensive R&D budgets. It means that when new products of competing companies are released continuously and consumer preferences change rapidly, they are likely to engage more actively in R&D investment.
From the model 2 the influencing factors on technological innovation and characteristics of the companies which implement R&D investment were identified. Among the factors of R&D resources and capacity, intensity of R&D budget and the organizations carrying out researches and developments are the influencing variables. High intensity of R&D budget means that securing men power and facilities for R&D is easy and more resources are available to them, and it influences on raising success probability. When an organization in charge of R&D activity is an affiliated institute of a company, it is more likely to succeed in technology innovation than otherwise, because it has more official and systematic organization for technology innovation. Among the factors of external resources affecting technology innovation, utilizing external R&D, government subsidies, and tax cuts were found as the influencing variables, respectively. It means that companies should employ external resources in order to successfully achieve technology innovation. It was found that government supports have positive influence on achieving technology innovation by strengthening companies' resources. Particularly, both tax cuts and subsidies are influencing factors. Also utilizing external R&D resources and capacities raises the probability of technological success than solely concentrating on internal R&D resources, by making companies overcome their limits of resource and capacity. Among the characteristics of companies, scale of a company has influence on its technology innovation.
In the model 3, from the companies that achieved technology innovation, the influencing factors on export performance and the companies' characteristics were figured out. Among the technology innovation factors, use of information from competing companies is one of the influencing variables. If a food company trying to export analyzes the products and trends of its competing companies and apply them for technology innovation, the success probability of exports is likely to be raised much more. Among the factors of external resources use, using the marketing supports from the government is one of the influencing variables. Marketing supports by the government consist of the programs such as support for attending exhibitions in abroad or promotion for exports, and have positive influence on their exports. Therefore, food processing companies trying to export to abroad need to utilize actively the marketing supports from the government. Among the factors of company characteristics, size and ownership state of company have positive influence, respectively. It was found that the bigger scale a company has, the lower risk the company has in exportation, because they are likely to succeed to export by assigning more resources. And the more independent the ownership of a company is, the higher rate of success they achieve, because it tends to take higher risk.
To sum up, it can be said: the companies feeling their products' life cycles are short and the market demands are uncertain tend to invest more into R&D than otherwise, because they would like to respond to it by technology innovation. The companies that successfully perform technology innovation have characteristics of high intensity of R&D budget and systematic working organization for R&D activities, and utilize well external R&D resources as well as the government supports system. Among the companies that won technology innovation, the ones that achieved export results were found as the companies that had sizable scales and independent ownerships, and implemented the innovation based on the information gained from competing companies. Meanwhile, according to the results of the robust analysis using KIS 2008, the models used in this research are found to be appropriate to explain the influential factors on research and development, technology innovation, and export performances of food processing companies.
This research has its limits as below, even though it has the implications for studies, practices, and policies: First, it figured out the characteristics of each node by using CRT algorithm, but not the causal relationship between the target variables and explanatory variables. Second, it is difficult to generalize the results because it used non-parametric statistics. Third, the exporting companies that did not invest in R&D or failed in technology innovation were excluded out of this research. Finally, due to the limit of data this paper could not particularly consider the traits that are only identifiable in food processing companies.
As food demand gaps between countries become smaller due to developments of information technology, transportation, and media, food industry as one of the typical multi-national industries tends to be a global industry. However, food industry of South Korea occupies only 1.0% share in the worldwide food market, which is very low against the economic status South Korea has. Besides, food industry has the second place in the rank of international trade deficits among all industries in South Korea. Strengthening international competitiveness emerges as a pressing task of food industry. In addition, since FTA agreements with the major countries over the world ask much more strong competitiveness, the government and enterprises should make proactive efforts together.
Because the food processing business in food industry is playing the role of both consumers of agro-livestock products that belongs to the primary industry and suppliers for whole/retail distribution that belongs to the tertiary industry, it is a very important task to expand exports by obtaining competitive advantage in the global market in order to properly respond to globalization and contribute to the nation's economy. Accordingly, it is necessary to enhance technological innovation by R&D investment to secure this competitive advantage. Performance difference gained by technological innovation is a fostering factor for companies to advance into the global market as well as to keep their competitiveness after entering the market and promote exports. So, it can be said that the first step to gain global competitive advantage should begin with R&D investment. However, despite the importance of R&D, not all companies engage in it. Their degrees of R&D investment differ depending on how they are aware of their business environments, since technological innovation as a target of R&D expenditure takes high risk to fail and demands long term investments. Because not all the companies investing in R&D succeed to achieve technology innovation, they should determine whether and how much they would invest, considering their inner capacity and external environment, etc. Even among the companies that win a technological innovation, some succeed to achieve export, but the others fail. It means there are diverse influencing factors between R&D, technology innovation and export performance, and figuring out the factors is the main purpose of this research. In the research, the companies exporting without R&D investment and the companies exporting despite failure of technology innovation are excluded from the objects list, because they are not included in the list of exporters through R&D and technology innovation, which is the very subject of this research.
This research is to find out the factors influencing on R&D investment, technology innovation, and exports of food processing companies and derive implications based on them. It uses the decision tree model to conduct empirical analyses. The 3 models for analyses were set up according to the flow of the research. The model 1 covers the whole of food manufacturers, and sets the R&D investment as the target variable, and external environment and companies' characteristics as the explanatory variables. The model 2 analyzes only the companies investing in R&D, setting technology innovation as the target variable, and R&D resources and capacity, employment of external resources, and companies' characteristics as the explanatory variables. The model 3 includes only the companies that won the technology innovation, and sets features of the innovations, employment of external resources, and companies' characteristics as the explanatory variables. The data for analyses were from [Korea Innovation Survey 2010] which was conducted by Science and Technology Policy Institute. The data of KIS 2010 were gained from the survey of 3,295 domestic manufacturing companies from 2007-2009. Among them, 284 food manufacturing companies were derived and analyzed for this paper. To complement the decision tree model that are based on the non-parametric statistics, robustness analysis was conducted for 167 food manufacturing companies derived from KIS 2008.
The analysis results are as follows: Through the model 1, the influencing factors on food manufacturing companies' R&D are identified. Uncertainty of demands as external factors and the size of a company and its products life cycles as a company's characteristic factor have influences on the R&D investment, respectively. High level of demand uncertainty means consumer preferences change rapidly and complicatedly, so technology innovation by R&D investment is necessary to properly respond to it such as releasing new products or renewing existed ones. The more uncertain market demands the companies are aware of, the more efforts they tend to make for developing products fitting consumers' needs, or reducing costs and raising price competitiveness by improving its production process. Size of a company also affects R&D investment. Previous studies on the scale of company and R&D investment tells us that larger companies tend to expend more R&D investments because they have bigger market shares and higher appropriation of technology innovation. In the meantime, smaller companies tend to actively engage in R&D investment because they are highly dependent on technology and take more risks. According to the analysis of this study, small businesses show more intensive R&D budget comparing to middle and large companies, which reflects both of the two tendencies. However, it might not be appropriate to interpret the tendency as to support one over another because the net amounts of R&D budget are bigger for middle and large scale companies, though intensiveness is higher for small businesses. And the companies that answered ‘short product life cycles’ as characteristics of companies showed more intensive R&D budgets. It means that when new products of competing companies are released continuously and consumer preferences change rapidly, they are likely to engage more actively in R&D investment.
From the model 2 the influencing factors on technological innovation and characteristics of the companies which implement R&D investment were identified. Among the factors of R&D resources and capacity, intensity of R&D budget and the organizations carrying out researches and developments are the influencing variables. High intensity of R&D budget means that securing men power and facilities for R&D is easy and more resources are available to them, and it influences on raising success probability. When an organization in charge of R&D activity is an affiliated institute of a company, it is more likely to succeed in technology innovation than otherwise, because it has more official and systematic organization for technology innovation. Among the factors of external resources affecting technology innovation, utilizing external R&D, government subsidies, and tax cuts were found as the influencing variables, respectively. It means that companies should employ external resources in order to successfully achieve technology innovation. It was found that government supports have positive influence on achieving technology innovation by strengthening companies' resources. Particularly, both tax cuts and subsidies are influencing factors. Also utilizing external R&D resources and capacities raises the probability of technological success than solely concentrating on internal R&D resources, by making companies overcome their limits of resource and capacity. Among the characteristics of companies, scale of a company has influence on its technology innovation.
In the model 3, from the companies that achieved technology innovation, the influencing factors on export performance and the companies' characteristics were figured out. Among the technology innovation factors, use of information from competing companies is one of the influencing variables. If a food company trying to export analyzes the products and trends of its competing companies and apply them for technology innovation, the success probability of exports is likely to be raised much more. Among the factors of external resources use, using the marketing supports from the government is one of the influencing variables. Marketing supports by the government consist of the programs such as support for attending exhibitions in abroad or promotion for exports, and have positive influence on their exports. Therefore, food processing companies trying to export to abroad need to utilize actively the marketing supports from the government. Among the factors of company characteristics, size and ownership state of company have positive influence, respectively. It was found that the bigger scale a company has, the lower risk the company has in exportation, because they are likely to succeed to export by assigning more resources. And the more independent the ownership of a company is, the higher rate of success they achieve, because it tends to take higher risk.
To sum up, it can be said: the companies feeling their products' life cycles are short and the market demands are uncertain tend to invest more into R&D than otherwise, because they would like to respond to it by technology innovation. The companies that successfully perform technology innovation have characteristics of high intensity of R&D budget and systematic working organization for R&D activities, and utilize well external R&D resources as well as the government supports system. Among the companies that won technology innovation, the ones that achieved export results were found as the companies that had sizable scales and independent ownerships, and implemented the innovation based on the information gained from competing companies. Meanwhile, according to the results of the robust analysis using KIS 2008, the models used in this research are found to be appropriate to explain the influential factors on research and development, technology innovation, and export performances of food processing companies.
This research has its limits as below, even though it has the implications for studies, practices, and policies: First, it figured out the characteristics of each node by using CRT algorithm, but not the causal relationship between the target variables and explanatory variables. Second, it is difficult to generalize the results because it used non-parametric statistics. Third, the exporting companies that did not invest in R&D or failed in technology innovation were excluded out of this research. Finally, due to the limit of data this paper could not particularly consider the traits that are only identifiable in food processing companies.
주제어
#R&D Innovation Export Food Processing Industry Decision Tree Analysis
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