Does a Technology Incubator Work in the Regional Economy? Evidence from South Korea

Abstract

There has been a recent trend among policymakers to consider the science park as a knowledge-based economic development strategy—one that encourages and supports the start-up and development of innovation-led industry. This paper assesses the effectiveness of the South Korean technopark. Technoparks on average had a higher number of tenants, tenant employees, and tenant firm sales compared to those of the other business incubators in Korea. Although the survival rate was relatively high in technoparks compared to that of the other business incubators, some of the technoparks were not effective at encouraging tenants to graduate from the incubator in a timely manner. The support program provided by the technopark format enables firms to easily access innovation resources and to reduce the costs of doing business. The incubator reduces the operating costs of tenant firms by providing facilities and shared services at low cost as well as aiding in market expansion. Moreover, the incubator provides tenant firms with research and development support, which results in the enhancement of innovation capability. Nonetheless, the strategies of the technopark and local government have not been sufficiently thorough in encouraging the incubated firms to settle in the same jurisdiction, in order to promote regional economic growth and to stimulate a continuous regional innovation system. We explored the organizational performance of the technopark and ascertained the relationship between the organizational effectiveness and the performance outcome. Local government and the technopark should coown the objectives and connect their support systems, to lead the firms incubated in a technopark to settle and grow successfully in the local region. This examination of working technoparks in South Korea will contribute to the development of strategies for creating science parks in other developing countries.