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Integration of products and services of Korean firms and innovation policy directions

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  • Integration of products and services of Korean firms and innovation policy directions
  • Jang, Pyoung Yol
  • Science and Technology Policy Institute


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Title Integration of products and services of Korean firms and innovation policy directions
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Material Type Articles
Author(English)

Jang, Pyoung Yol

Publisher

Seoul:Science and Technology Policy Institute

Date 2012-10
Journal Title; Vol./Issue STI Policy Review:vol.3(no.2)
Pages 19
Subject Country South Korea(Asia and Pacific)
Language English
File Type Link
Subject Industry and Technology < Science/Technology
Holding Science and Technology Policy Institute

Abstract

The integration of products and services is being expanded in both manufacturing and service companies
such as in Apple’s iPod & iTunes, Amazon’s Kindle, and Hyundai Motor Company’s Mozen. This phenomenon
has recently accelerated due to multiple factors including market change, lessening of differences in
quality of products or services, the paradigm of participation and sharing, and deindustrialization and evolution
toward becoming a service economy. The objective of this paper is to investigate and analyze the status
and characteristics of integration of products and services in Korean firms and to suggest policy directions
promoting this integration. Towards this purpose, income statements from the Korea Listed Companies Association
(KLCA) database of companies listed on the Korea Stock Exchange are analyzed regarding the
servitization of manufacturing firms as well as the productization of service firms. In addition, this research
investigates the Korean Innovation Survey 2011 database for the service sector and 2010 database for the
manufacturing sector in order to evaluate R&D activity in each. In the manufacturing sector, the average ratio
of service sales (servitization) was low at 0.208, with bias in the level and distribution of ratios associated
with the manufacturing sector. 18 out of a total of 23 sectors (78%) have low servitization, showing there's
a long way to go for servitization in the Korean manufacturing sector. In the service sector, the average ratio
of product sales (productization) was 9.53%, which is relatively high compared to that of the manufacturing
sector. However, the distribution of ratios is also biased, as with the manufacturing sector. Based on this analysis,
policy directions are proposed in terms of 1) R&D, 2) concept boost, 3) R&D result spread, 4) statistics,
5) infrastructure and 6) green growth.

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