Technological capabilities and industrial concentration in NICs and industrialised countries: Taiwanese SMEs versus South Korean chaebols

Abstract

This paper presents a comparative study of the technological development paths and the technological profiles of small and medium enterprises (SMEs) in two Asian newly industrialised countries - South Korea and Taiwan - in comparison with six advanced industrialised countries as well as a list of selected highly-populated nations. Using US patent statistics as technology indicators, the quantitative and comparative analysis of this paper shows that South Korea and Taiwan have achieved a level of technological capabilities that rival those of the advanced countries. They have achieved this through a reliance on generating and accumulating innovative and technological capabilities of their own as opposed to transferring them from other countries. The analysis also shows that the industrial structure has played a major, but different, role in these countries. In South Korea, these capabilities are concentrated in a small number of relatively larger firms (i.e. the Korean chaebols). In contrast, they are spread across a large number of relatively smaller firms in Taiwan (i.e. Taiwanese innovative SMEs). The relative technological success of Taiwan is therefore attributable to innovative activity of her SMEs.