Major parts of the electronics industry are in a process of evolution
from discrete products to networked multimedia as a result of
'digital convergence'. This continuing trend will have significant
implications for Korean electronics companies (the chaebol),
who were extremely successful in semiconductors (especially in
Dynamic Random Access Memory Chips: DRAMs) and in mass market
consumer electronics products.
In this presentation on the Korean electronics industry, we explained;
· how the multimedia challenge is different from the DRAM-challenge,
· how Korea successfully caught up in DRAMs,
· how Korean companies are now responding to the multimedia challenge,
· to what extent the chaebol
are "multimedia-ready" in terms of technological innovation
capability and company structure.
We did this by looking at the evolution of chaebol-governance,
which proved highly effective in DRAMs, but may not be appropriate
for meeting the multimedia challenge.
The discussion first analysed how the role of governance
- not merely public policy, but rather a consideration of the
all the mechanisms for controlling and co-ordinating economic
activity (including the private sector) - has been crucial in
the rise of the Korea chaebol to world class DRAM prominence.
Chaebol governance might most accurately be defined as
a combination of "hierarchical and networked" co-ordination
and control. One of the vital outcomes has been the possibility
of financial cross-subsidisation from one sector to another within
the firms. DRAMs and chaebol governance proved to be a
neat match both in financial and technological respects, by allowing
sustained heavy investments in DRAM process innovations. And this
- together with the crucial "window of opportunity"
which emerged in the world market - in fact enabled the Korean
chaebol's rise to world leaders in DRAM production.
The presentation then analysed how the four chaebols' (Samsung,
Daewoo, LG and Hyundai) shape up to the multimedia challenge and
whether the match will still be quite so effective in the multimedia
Although one cannot predict the future, the forthcoming technological
trajectory can be expected to be spectacularly non-linear
and the targets presented in the shift from a "known unknown"
in memory capacity to a multimedia "unknown unknown"
are likely be moving ones. The chief characteristics of the multimedia
era seem to be the considerable uncertainty into which constituent
markets are being thrust. This, in particular, in view of the
convergent and integrative capacity of digital technology to draw
on inputs from a variety of individual sectors - telecoms, computing,
The large scale, hierarchical corporate governance structures
which served Korea so well throughout its 'catching up' phase
might prove singularly inappropriate in conditions of such technological
uncertainty. The challenge facing Korean firms is therefore to
continue to reap the rewards from scale-intensive production areas
and to devise new strategies and structures to keep up with the
fast changing pace of digital multimedia technology.
* A fuller summary of the presentation is presented
in Dr. A. Hayward's (editor of Pacific Business) resume of our
presentation, prepared for APTS 1996/97 compilation. For further
information please contact Dr. Ran Kim (Sussex European Institute,
Sussex University, 01273 606755)
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