A Study On The Support Policy For The Small And Medium-sized Enterprises In Korea

Under the global competition environment,most countries are strengthening the governmental supporting policy for achievingthe national development goals by reinforcing the competitiveness of SMEs.In Korea,the importance and role played by SMEs in production,employment and exports can be identified by their key roles in the national economy.Based on those facts,various SME support policies have been promoted by the Central and Local governments and supporting agencies,including the Small and Medium Business Administration(SMBA).However,many previous studies point out that the effectiveness of the policies have not contributed significantly to enhancing the competitiveness and strengtheningcapacity of SMEs.Therefore,it is time to review the performance and limitations of Korean SMEs support policies and establish the new support policies.This study intended to provide the improvement direction from a short-term and medium/long-term point of view on the Fund support policies,Technology Development support policies and Export support policies which are three key areas of the 2016 support policies for SMEs.The key achievements of support policies for SMEs can be summarized into the quantitative and qualitative achievements.The quantitative performance shows that a variety of support policies improved the quantitative indicators in the number of SMEs and workers,the value added and the number of innovative SMEs.Indications were also improved in terms of the number of knowledgebased service SMEs as well as the continuous increase in the number of SMEs of the manufacturing sectors.In addition,it was confirmed that the positive performance of the small manufacturing companies with less than 10 employees and the start-up SMEs with less than 10 yearsin the field of the growth,profitability and employment.Regarding the qualitative achievements,one of them was the establishment of the environment for the SMEs to enhance their own capabilities by enacting relevant laws and implementing the system.During overcoming the IMF and the global financial crisis,the Policies have also contributed to the industrial structure acceleration,creating employment opportunities.In case of the Export support policy,it has increased the willingness of the domestic SMEs to enter into the global market.Despite the quantitative and qualitative achievements,the support policies for SMEs pose various limitations.First,In the Funding support,Technology Development support,and Export support policies,they are commonly very difficult to identify the scope,methodsor contents of the support projects/programs.Therefore,the projects are complicated,similar and overlapping.So the duplicate beneficiary cases may occur.Secondly,since the projects are largely divided,independently established and implementedby Central and Local governments,the ineffectiveness contributes to the support projects.Thirdly,there is no Control Tower with the function to oversee,coordinate and integrate these issues despite of the financial inefficiencies.Fourthly,the support policies are insufficient to reflect the needs of the policy consumers.Fifthly,the strict assessment of the support projects' achievements is insufficient.The shortand long-term development directions to solvethose issues can be divided into two measures.One will be necessary to improve the efficiencies of the individual policy;another will be the directions for the commonly raised problems on the overall policies.First,the short-term development directions for commonly raised problems can be presented as follows.First,it is necessary to efficiently improve the publicity system in order to fully recognize the contents of support projects and eliminate the perception that �support projects are complicated and difficult to utilize'.To resolve the similar or overlapping issues,it is necessary to make an efficient operation of the �Integrated Management System for SME support projects' and set up the �SME Policy Review Committee'.Second,in order to increase the efficiency of the support system,the three options can be possible.Namely,the assessment of performance through the competitions,strengthening the integrated collaboration.If both assessment and collaboration are difficult,it may be operated separately but with exceptional case.In addition,the support history should be shared among support entities to strengthen the integrated management system.Third,for the establishment of the control tower and increasing the policy's efficiency,the distributed SME support functions need to be transferred to the SMBA and the integrated budget control and operation are also needed.In addition,the �SME Policy Council' should be established for the review and adjustment of the policies.Also in order to eliminate the problem of support efficiency and overlapping promotion,the function of the regional SMBA offices need to be transferred to the local governments' SME support organizations.Fourth,in order to build a customized support system for SMEs,the short,medium and long-term policies should be provided based on the stage of SMEs' growth.And it is also necessary to maximize efficiency by avoiding the promotion of the small budget support projects and need to find the promising SMEs.Fifth,to improve the performance evaluation and enhance the efficiency of follow-up assessment,it is necessary to operate a dedicated organization with the authority to assess the results of support projects and the preliminary feasibility to the support projects.The followings are the major proposals needed to enhance the efficiencies of Funding support,Technology Development support and Export support policies.For Funding support policies,it is necessary to review to support start-ups up to 7 years from operation with an exceptional extension of 3 years.And the funds need to converse to investment-based support.Regarding the credit guarantee policy,the excessive public credit guarantees need to be reviewed with the recognition of problems.In case of Technology Development support policy,R&D support projects by the Research Institutes of the universities need to be carried out under the premise of collaboration with SMEs and the transfer obligation to them.Also need to review to increase 10% of the government's mandatory purchasing the technical development products from SMEs.For Export support policy,it is necessary to consolidate and share the information on the buyers' Data Bases(DB)owned by the three major organizations,the Small & medium Business Corporation(SBC),KOTRA and the Korea International Trade Association(KITA).In the direction of the development of the long-term perspective,it is necessary to continuously improve the perception on the SME by SMEs' workers and government officials who make policies and implement them.Second,for researching R&D tasks,need to focus on the future-oriented challenges that are expected to be needed in the future instead of the existing needs.Third,the appropriate restructuring of the SME support policyitself together with SME should be coordinated.Fourth,the function of KOTRA need to be mainly focused on the overseas marketing but SBC focus on providingthe funding and technology development support for SMEs.A number of implications can be presented for SME's future direction which need to be oriented.First,in order to achieve the goals and maximize the SME support policies,SMEs are perceived to be the key forces for the future economic growth and power generation.Second,the goals of SME support policies cannot be achieved by simply protecting them,but possible by the healthy competition among SMEs.Third,considering the role and importance of SMEs in the national economy,the necessity of SME supporting policy should be steadily emphasized.