Boosting Cluster and Mini-Cluster-Based Programs in

Korea

Beom Cheol Cin & Eui Young Lee

Special Plenary Session: Clusters in Korea: Development Process and Achievement

Boosting Clusters and Mini-Cluster-Based Programs in

KoreaBeom Cheol Cin & Eui Young Lee

TCI Conference 2015

1.Why Cluster?Positive Role of Clustering• Boosting innovation• Lead to higher wages and productivity• Improve employment opportunities• Stimulate regional entrepreneurship• Aid diversification and improve regional sustainabil-

ity

1. Risk Factor of Clustering

• Lock-in of existing clusters and technologies makes it more difficult for new clusters or technologies to de-velop and thus can potentially limit competition

• Excessive specialization in specific sector or depen-dency on one firm can lead to greater vulnerability to external shocks

• A barrier to cross-sectional collaboration• A weak entrepreneurial culture, difficulty in integrating

SMEs, mismatches on labor qualification, and insuffi-cient supply of innovation finance

OECD(2010)

2. Cluster policy in Korea

• To enhance the industrial competitiveness through in-creased interconnection be-tween the industry and the technology R&D sector in the region

• Used as a tool for industrial policy & regional develop-ment policy as well

Industry Policy

Regional Policy

Cluster Pol-icy

Science, Technology

Policy

2.1 Development of Korean Cluster Model:shifting from industrial complex through regional cluster to innovation cluster model

2.2 Development of Korean Cluster Model:shifting from industrial complex through regional cluster to mini-cluster in 2000s

2.3 Performance of Cluster: Output, Employment and Exports

　 All Manufacturing

Sectors

All Industrial Clusters

(IC)

National Industrial Clusters

(NIC)

Share of IC(%)

Share of NIC(%)

Production (Bil. Won) 15,114,951 10,374,502 6,796,019 68.6 45.0

Employment 3,715,162 1,726,562 949,432 46.5 25.6

Export( Mil. US Dollar) 533,193 430,128 267,435 80.7 50.2

• Shares of production in clusters and NICs out of all manufacturing sectors are 68.6% and 45% in 2013;

• Employment shares are 46.5 and 25.6%; • Export shares are 80.7% and 50.2%

2.3 Performance of Cluster Par-ticipants:increase in 7.7% of exports, 6.6% of Production, 6.7% of employment over the period 2011 and 2012

3. Shifting Cluster Policy: from industrial complex model to in-novation cluster policy• Due to lack in R&D capability and industry-university-Research

linkages, Korea had difficulties with development of new technology and new products and thus sustainable growth

3.1 Development of Mini-Cluster Pro-grams:What is Mini-cluster Program?

1. To response to the risk factors associated with clustering, both Korean government and KICOX implement various Mini-cluster programs

2. Mini clusters are various types of small group al-liance, composing of firms(especially SMEs), universi-ties, research institutes, KICOX and local government

3. categorized by sectors (e.g. engines, materials), by technological goals and types, by R&D collaboration be-tween large and small medium sized enterprises, by market-ing strategies

4. Policy Mix of top-down approach with bottom-up approach to market demand

3.2 Feature of Korean MC Model:MC Activities

1. Types of Activities: • Policy briefing, technology seminar, project-finding meeting, evalua-

tion, regular meetings among member companies

2. Role of Actors:• KICOX plays a role of broker and network agent to encourage inter-

connection of SMEs within a cluster; support for formation of Mini-cluster, inter-firm network activity and R&D collaboration projects

• Leader Company proposes projects and hosts various MC program meetings

• Members are sharing knowledge and information about technology, market demand, difficulties with management and production, build-ing up trust and thus solving the problems together

3.3 Operating system of Mini-Cluster Model:

• Identifying firms’ problem & seeking solution together through MC activities;

• KICOX supports for networking and joint R&D of IUR(Industry-Universities-Research institute)

3.3 Operating system of MC Programs: Composition & Operating Process of MC

3.3 Operating system of MC : Operating process of MC

• Market-driven R&D investment through MC activities can reduce failure rates

3.3 Operating system of Mini-Clus-ter:MC Activities for joint R&D, Production and Commercialization

3.4 Operating Mini-cluster programs:Successful Cases

3.4 Operating Mini-cluster programsSuccessful Case: Banwol Sihwa metal and material MC pro-grams

3.4 Operating Mini-cluster pro-grams:Banwol Sihwa metal and material MC pro-grams

4. Performance of MC programs:Expansion to 68 MC programs in 6 major areas in 2012;

4.1 Performance of MC programs:Formation of Mini Cluster, Inter-firm Network Activity and Project support

• The number of MC is when peak of 81 and then transform in 2013, 69 MC

In 2013, 69 Mini Clusters create 59,900 network activities and 7,500 members of Industry-University-Research Institute completed 17,700 projects

7차 8차

70 69

9차

34

3차 4차 6차5차

81

54

39

77

2차

55

1차

35

9차

7,537

10%

3%

13%

8차

3%

10%

4%

12%

73%

5,987

11%

74%

7,182

72%

11%

13%

4%

13%

5차

5,413

7,087

11%

6차

73%

7차3차

5%

2차

69%

5%19%

70%

15%

69% 70%

5,153

3,120

8%6%

2,706

4%

17%

67%

4차

11%

13%

11%5%

3,149

1차

5%19%

대학기업

지원기관연구소

대상단지 확대

광역 개편

10,560(17.6%)

정부정책 및클러스터사업 설명회1,802(3.0%)

교류회

7,686(12.8%)

1,589(2.7%)

5,222(8.7%)

기술세미나기타 ( 홍보등 )

1,718(2.9%)

지원기관협의회

정기회의 평가위원회

27,107(45.3%)

4,205(7.0%)

과제발굴회의 시제품제작

2,975(16.8%)

기관연계

마케팅

5,170(29.1%)

R&D

2,005(11.3%)

산업재산권

기타

3,906(22.0%)

120(0.7%)

1,644(9.3%)

1,935(10.9%)

교육

Mini Cluster formation

Number of MC member N/W 활동 Project SupportsN/W Activities

MC membership is increasing trend average per year 13% in 2013, number of member 7,537

The number of N/W activities 59,889, Ave. per year in-creased23% and through confer-ence of project is the most impor-tant

Total number of project support 17,755, Marketing skill support is the highest (total share 29.1%)

자료 ) 한국산업단지공단 자료 기반 KnowledgeWorks 분석

4.1 Performance of MC pro-grams:Network Activity of Mini-Clusters

Incidence of Network Activity of Mini-Cluster

Types of Network Activity

4.2 Performance of MC programs:Sales rate of all members, project-participants, all manufacturers

• Participants have, on average, higher annual rates of sales than manufacturers:

• in 2012, 34.15% for all MC members, 30.9% for project participants, 4.21% for all manufacturers

4.3 Performance of MC programs:Patent registration and commercialization of projects

No. of Patent App and Registration per 10 Bil. Won

Patent Performance Commercialization Performance

Cluster project, Regional Specialization Project, Ministry R&D Project, National R&D Project

4.4 Performance of MC pro-grams:Support for joint R&D project by 50% of total investment

R&D Subsidy per project(Mil. Won)Annual Subsidy for all projects and R&D projects (Bil. Won)

4.4 Performance of MC pro-grams:Commercialization and Sales Effect of Project

Cluster Project

SME Technology Development Project

CommercializationSuccess Rate(%) 52.40% 44.10%

Sales per project(Bil. Won) 12.15 7.23

Employment per project 4.8 3.7

MC activities help member companies to increase per project sales and employment, and commercialization of transferred technology.• Overall cluster project has higher commercialization success

rate, higher sales and employment than SME project

5. Performance of MC Programs: Concluding Remarks• Boosting Cluster by enhancing inter-company cooperation

and participation in R&D activities, MC programs show bet-ter economic performance (higher sales rates, employment, and commercialization)

• Facilitating IUR(Industry-university-research) joint coopera-tion and aiding technology transfer, MCs can mitigate nega-tive effects such as lock-in, reduce international mismatches between knowledge infrastructure and market needs

• SMEs members within a cluster can participate in national R&D programs, which results in getting more opportunities of joining medium and large-sized R&D collaboration pro-grams

BEOM CHEOL CIN, EUI YOUNG LEE

THANK YOU