Betting on Biotech: Innovation and the Limits of Asia's Developmental State by Joseph Wong

Author:Joseph Wong [Wong, Joseph]
Language: eng
Format: epub
Tags: Political Science, Public Policy, Economic Policy
ISBN: 9780801463372
Google: F_2tDwAAQBAJ
Publisher: Cornell
Published: 2011-10-15T14:05:38+00:00

Diffusion and Integration

The Korean state no longer has the capacity or the willingness to “husband” chaebol firms in the life sciences sector. And as I have described so far, it has taken on a more indirect role in facilitating the development of fully integrated biopharmaceutical firms by allocating resources to upstream and midstream R&D and by supporting the growth of technology-intensive, R&D-focused SMEs. The state’s efforts are thus aimed at nurturing a supporting cast of actors with which to draw in and help develop Korea’s would-be national industrial champions in the commercial biotech sector. This supporting cast can also be seen as the state’s indirect role in facilitating the diffusion of knowledge. By this I mean the spread of knowledge up and down the technology R&D division of labor, across the public and private sectors, and spanning large integrated chaebol conglomerates as well as small, savvy, and specialized technology firms.

But the diffusion of knowledge alone is not enough; integrating these disparate bases of knowledge is what drives technological innovation and the development of commercial breakthroughs. Molly Webb, in her recent study of Korea’s innovation system, finds that nearly two-thirds of R&D productivity among technology-based SMEs during the late 1990s and into the 2000s was generated through interfirm collaboration, not firms working in isolation.54 She concludes, therefore, that for technological innovation to be facilitated within Korea’s leading chaebols, diffuse and disparate bases of knowledge must be integrated in complementary and collaborative ways. The diffusion of knowledge is helpful in the innovation process only if the various bits of knowledge, expertise, and availability of research services can be used by industry.55 Public and private, upstream and downstream linkages need to be complementary.

How would such complementarities emerge in the biotech sector? The short answer in Korea is that they have not so far. Knowledge diffusion has been thorough, prompted, as I have argued, by both state and industry efforts. However, the consensus among biotech stakeholders in Korea is that the integration of such knowledge has been shallow. The formation of linkages that bring together leading firms and their supposed supporting casts has been slow. When asked about the likelihood of collaboration between biotech SMEs and chaebols invested in the life sciences sector, Bioneer’s Han-Oh Park responds simply, “In biotech, there is no interaction at all in Korea.”56 To the extent that any linkages have been formed among firms and labs, they have by and large been based on supplier-buyer relations and not on R&D collaboration.

There are several reasons for such shallow integration. First, there is a weak tradition of interfirm R&D collaboration in Korean industry, especially in comparison with firm behavior in Japan and Taiwan. Korean companies are historically less willing to cooperate with one another, and chaebol firms in particular have tended to eschew premarket R&D consortia involving other enterprises. They prefer to do their R&D in-house.57 Second, R&D outputs from both upstream research institutes and smaller bioventures remain too distant from the market, too “raw” for meaningful R&D linkages to be formed with biopharmaceutical firms in Korea.

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