Intellectual Capital and Innovative Capabilities of Manufacturing Enterprises in Korea

Abstract

This study, for the first time, finds out motors of rapidly growing innovation in Korean manufacturing enterprises utilizing particular attributes of intellectual capital created from firm characteristics and management practices of enterprises. In this way, this study increases our understanding of innovative capability in Korean enterprises at various angles. This study uses 2009 and 2011 data from 360 enterprises in 22 manufacturing industries taken from the Human Capital Corporate Panel by the Korea Research Institute for Vocational Education and Training. Probit and random effects estimations along with ordinary least squares found that greater human capital radically reinforces innovative capability, and stronger social capital has significant effects on radical capability in line with the hypothesis of Subramaniam and Youndt (2005). However, unlike the hypothesis, stronger organizational capital had stronger effects on radical innovative capability than on incremental capability. Important findings for economic and enterprises’ policy making are: For developing new markets, advanced research skill radically and advanced marketing skills incrementally reinforce innovative capabilities among human capital. A larger number of utility model and design registrations as organizational capital tend to enhance radical innovative capability. As social capital, cooperating human resource development between prime company and subcontractor, and employee stock ownership system radically empower innovative capability. A mentoring system incrementally reinforces innovative capability. For developing company’s knowledge and technology, a larger proportion of employees with PhD tend radically to increase innovative capability. Master’s degree and advanced marketing skill incrementally increase innovative capability. A highly developed IT-Infrastructure and a R&D alliance with other company seem radically to increase innovative capability.

Keywords: Korean manufacturing enterprises, Incremental and radical innovation, Intellectual capital