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Industry Report

Industry reports, briefs issued by Samsung Economic Research Institute

Open Innovation

Open Innovation

LIM Young-Mo

Oct. 30, 2006

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Korean companies have rapidly grown by emulating advanced technologies of leading global companies. Some domestic industries, most notably information technology, are now globally competitive. The firms' increasingly advanced products make it more difficult to emulate basic technologies. In addition, firms in industrialized countries have gradually slowed down technology transfers to Korean companies. In order to survive increasing global competition, therefore, Korean companies have increased research and development (R&D) investment levels. Korean firms' total R&D investment has more than doubled from 8 trillion Won in 1998 to 18.6 trillion Won in 2005. Even with such a dramatic increase in investment, however, firms have still experienced a low return on investment.

Korean Company's R&D Investment

Among other things, Korean firms' new status portends grater challenges to develop new technologies, instead of merely copying advanced technologies from other countries. To ensure sustainable growth, Korean companies must overcome the uncertainties inherent in first-mover's advantage and maximize the efficiency of their own R&D investment.

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