How Korea Became Ict Hotbed

South Korea: From the Land of Morning Calm to ICT Hotbed Author(s): Sang M. Lee Source: The Academy of Management Executive (1993), Vol. 17, No. 2 (May, 2003), pp. 7-18 Published by: Academy of Management Stable URL: http://www.jstor.org/stable/4165947 Accessed: 21/04/2009 11:56 Your use of the JSTOR archive indicates your acceptance of JSTOR's Terms and Conditions of Use, available at http://www.jstor.org/page/info/about/policies/terms.jsp. JSTOR's Terms and Conditions of Use provides, in part, that unless you have obtained prior permission, you may not download an entire issue of a journal or multiple copies of articles, and you may use content in the JSTOR archive only for your personal, non-commercial use. Please contact the publisher regarding any further use of this work. Publisher contact information may be obtained at http://www.jstor.org/action/showPublisher?publisherCode=aom. Each copy of any part of a JSTOR transmission must contain the same copyright notice that appears on the screen or printed page of such transmission. JSTOR is a not-for-profit organization founded in 1995 to build trusted digital archives for scholarship. We work with the scholarly community to preserve their work and the materials they rely upon, and to build a common research platform that promotes the discovery and use of these resources. For more information about JSTOR, please contact [email protected].

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'Academy

of Management

Executive, 2003, Vol. 17, No. 2 .

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South Korea: From morning calm to

the ICT

land hotbed

of

Sang M. Lee Executive Overview For centuries, Korea was known only to its immediate

neighbors, China, Japan, and Russia. Not quite strong enough to control its own destiny, while occupying a strategic location among ambitious and powerful neighbors, Korea has gone through numerous crises in its recent history. Japanese colonization, the devastating Korean War, poverty, and a backward social infrastructure left the country ill prepared to face the modern world. However, these multiple shocks to the nation awakened the Korean people. In less than fifty years since the end of the Korean War, South Korea has transformed itself from a poverty-stricken country into a leading information and communication technology (ICT)country, especially in the most critical areas which support the new e-global age: the high-speed Internet and mobile communication. South Korea's vitality as an ICT hotbed has resulted from a number of factors such as the changing global economic environment, government policies, and Korean cultural characteristics supporting ICT diffusion. The Korean government has made bold investment in technological and human infrastructures. These factors have enabled Korea to establish new competitive strategies for high-tech areas, especially ICT. Korean cultural characteristics that have contributed to a favorable environment for ICT development and diffusion include, among others, valuing efficiency and speed, selfefficacy, a subjective norm of belongingness, and the Korean language. The Korean experience, especially its economic transformation and ICT diffusion process, should be of interest to the governments of developing and developed countries as well as to scholars and executives involved in international business. ......................................................................................................................................................................

Korea was an enigmatic country known as "The Land of Morning Calm" to all but a few westerners until the 20th century. The larger geopolitical community first paid attention to Korea during the destructive Korean War, 1950-1953. Although the war was devastating, the influx of aid and modern ideals of western nations helped wake up the Korean people. Starting from almost below zero after the war, South Koreans have achieved phenomenal economic development, transforming the nation from an agrarian economy into an industrial country. According to Bank of Korea statistics, the per capita GNP leapt from $87 in 1962 to $10,307 in 1997, an average increase of more than 8 per cent per annum over the thirty-five-year period.' In 1997, South Korea (hereafter Korea) became the 12th richest country in the world. Korean economic development was praised with such accolades as "The Miracle on the Han River" and being one of the five

"Asia Tigers" (along with Malaysia, Singapore, Taiwan, and Hong Kong). Peter Drucker calls Korea the most entrepreneurial nation in the world.2 By the late 1980s, Korea had become a major trading country, with such products as automobiles, consumer electronics, semiconductors, container and tanker ships, chemicals, and so forth. The chaebols (the unique Korean form of conglomerates), the backbone of Korean economic development, led the export drive.3 Their growth was based primarily on governmentguaranteed short-term financing by foreign institutions. The burden of debt in the competitive global economy, which demanded accountability, transparency, and rule of law, became overwhelming. The 1997 Asian financial crisis was another wake-up call to Koreans. The International Monetary Fund (IMF) helped save the Korean economy by infusing $57 billion. Also, a 7

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rapidly developing China began to dominate export trade for low- to mid-tech products.4 The Korean government established priorities regarding high-tech industries, enabling Korea to develop competitive advantage, especially over China. The Korean government also boldly restructured the chaebols and forced banks to wipe clean all bad loans from their balance sheets. About one-half of the thirty largest chaebols went bankrupt (including Daewoo, the second largest chaebol), and most banks were sold, often to foreign financial institutions. The drastic shock treatment has paid dividends in the form of competiThe main engine tion-toughened businesses. behind Korea's recovery from the 1997 crisis has been the advance in ICT. For example, Business Week's latest report of "The IT 100 Best Performers" lists Samsung Electronics #1, KTF (Korea Telecom Freetel) #4, and SK Telecom #9.5 Korea's ICTrelated accomplishments have also been noted by several foreign sources (see Box 1). Box 1 Evaluation of Korean ICT Success by Foreign Sources * The Organization for Economic Cooperation and Development (OECD) analyzed the success factors of Korea as the world leader in high-speed Internet technology and recommended Korea as the model for benchmarking.6 * The Wall Street Journal reported that Korea is now the world leader in both quantity and quality of Internet use.7 * The U.S. House of Representatives changed laws to reinforce government strategies in developing infrastructure for high-speed Internet based on the example of Korean success.8 * The Gartner Group reported that the primary reason for the sudden emergence of Korea as the world leader in Internet service was its government's critical role in creating a favorable competitive environment for ICT firms.9 * The Brown University Public Policy Center analyzed 198 countries for their e-government efforts. Taiwan was rated as the best with Korea second, followed by Canada and the United States.10 The purpose of this article is to examine some of the important factors behind the emergence of e-Korea as an information and communication technology (ICT) powerhouse including its transformation based on Internet-powered growth, the socio-economic background supporting ICT devel-

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opment and diffusion, and the current state of ICT application. While most ICT firms around the world, even such giants as AT&T, NTT, and DT (Deutsche Telecom), have suffered astronomical financial losses, Korean ICT firms have been reporting record earnings. Thus, this article also elaborates on the implications of Korean ICT success and the future challenges facing Korea, especially its ICT industry. The Korean experience provides valuable insights to countries trying to improve their ICT infrastructure and industry. Also, Korea's ICT success offers lessons for scholars and executives involved in international business.

Internet-Powered Growth The early movement toward e-Korea was attributable to the government's resolve that the country would not make the same mistake with the ICT revolution as it had with the Industrial Revolution in the late 1800s. Many Koreans believe that their late participation in the Industrial Revolution was the main cause of the country's backwardness and isolation which eventually led to Japanese colonization."I Since the so-called IMF Period, 1997-2000, the Korean government has reexamined its economic structure. The drastic restructuring of chaebols, banks, and even the government itself was intended to prevent any recurrence of the 1997 financial crisis and also to chart future economic strategies. Korea's primary export items in the 1970s and 1980s had been light and heavy industry products such as apparel, shoes, toys, consumer electronics, machine tools, automobiles, and ships.'2 However, the increase in global competition, especially China's rapid development as a major exporter with its cheap labor and improving product quality, posed a real challenge. Thus, Korea established new strategies to concentrate on high-tech, knowledge-intensive products such as semiconductors, precision goods, and communication equipment. In brief, the Korean government designated ICT as its strategic industry for the future. From 1996 to 2001, the Korean government invested $5 billion in ICT infrastructure development. During this period, the following major projects were undertaken:'3 * 144 major cities were connected through highspeed computer networks. * 10,400 schools (elementary to high schools) were provided with free broadband Internet service. * Free training in Internet use was provided to more than 13 million persons (29 per cent of the population) throughout the country-students,

.

.

*

.

*

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teachers, home-makers, the handicapped, military personnel, and so forth. High-speed Internet service using commercial ADSL (Asymmetric Digital Subscriber Line) was started for the first time in the world. CDMA (Code Division Multiple Access) technology was implemented for mobile communication for the first time in the world. Commercial service of International Mobile technology (IMT)-2000 Telecommunications was started for the first time in the world. Development of ICT specialists was fostered through investment of $600 million to train 740,000 specialists, including 15,600 master's/ Ph.D. degree holders and 88,500 bachelor's degree holders. Seoul City has unveiled an ambitious plan for the Digital Media City,'4 a living community of tomorrow based on advanced ICT.

As Gartner reported, Korean government policy has played a crucial role in leading the country to "the pinnacle of the global ICT industry."'5 Also Alvin Toffler, a noted futurist and the author of The Third Wave, stated when he visited Korea in May, 2001, that Korea should establish its own strategic directions for its ICT industry as there is no place in the world against which to benchmark anymore. The rapid growth of ICT-related industries has driven Korea's economic recovery and growth since the financial crisis of 1997. The amount of

value added by the ICT industry grew from $32.6 billion in 1997 to $58.7 billion in 2001. This high rate of increase resulted in considerable growth in the ICT industry's share of GDP, jumping from 8.6 per cent in 1997 to 12.7 per cent in 2001, the highest among all OECD member countries.16 The production growth rate of ICT-related industries exceeded the GDP growth rate by a large margin, recording an annual rate higher than 30 per cent during the 1997-2000 period, as shown in Figure 1. In 1998, while total GDP recorded a negative 6.7 per cent growth rate because of the financial crisis, production of ICT-related industries grew 20.7 per cent. In 1999 and 2000, ICT industries grew 36.0 per cent and 36.5 per cent respectively and made a great contribution to the economic recovery.17

The 1997 financial crisis brought a huge unemployment problem. In particular, university graduates found no employment opportunities waiting for them. Many of these new professionals turned their knowledge and efforts into venture creation, mostly in ICT-related businesses. The share of venture financial capital invested in ICT-related industries was 31 per cent in 1998 but increased to well over 60 per cent by 2001.18The Korean government established a comprehensive ICT export plan called "e-Silk Road." Consequently, the amount of the ICT industry export grew from $31 billion in

40 Growth 1 Growth Rate (%) 30

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1998

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Contribution of ICT-related industries to GDP growth (%point)

Source: Kim, K. (Ed.). 2001. Three years after the IMF bailout: A review of the Korean economy's transformations since 1998. Samsung Economic Research Institute.

FIGURE 1 Contribution of ICT-Related Industries to Korea's Economic Growth (1996-2000)

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1997 to $51 billion in 2000 and represented about 30 per cent of the nation's total exports. In short, ICT industry exports have greatly boosted the Korean economy. 19 Foreign investment in the Korean ICT industry has increased over 1,200 per cent since the 1997 financial crisis, from $0.4 billion in 1997 to $5 billion in 2001, which represents 42.3 per cent of the total foreign investment in Korea.20 Coupled with the huge domestic commitment, this increasing foreign investment in the ICT industry has helped Korea build the world's best ICT infrastructure. The changed landscape of the Korean ICT industry can be summarized as shown in Table 1. It should be evident that the Korean ICT industry is indeed world class, and this has greatly helped Korean economic growth, especially during the past five years. Korea's ICT Adoption and Diffusion

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cultural meaning systems or norms that define social reality.2' North further focused on the formation of political and economic institutions and their impact on economic performance over time.22 Lefebvre and Lefebvre defined environmental factors as conditions that exist in an organization's external environment and influence its technology adoption decisions.23 These factors can be: (1) at the industry level such as the degree of innovativeness of the industry, the requirements imposed by major customers and external markets, and overall levels of competition and technological sophistication in the industry,24 (2) in the macroeconomic environment such as financial and human capital,25 and (3) in national policies such as regulations and policies governing taxes, trade agreestrategies, and ments, industrial development so

on.26

Technology Acceptance Model

Theoretical Background There exists a rich body of knowledge on technology adoption and diffusion. In this section, we will examine selected theories and models that would help explain Korea's ICT development and diffusion. Many of the theories discussed here were developed to explain technology adoption at the individual (e.g., end user), organizational, or industry level. However, the basic principles also apply to the country level. Institutional Theory Institutional theory posits that the institutional environment contains taken-for-granted social and

The widely tested technology acceptance model (TAM)27 and its extensions posit that perceived usefulness and perceived ease of use influence actual intention and actual use of a technology as shown in Figure 2. Initially, TAM, which was anchored on the Theory of Reasoned Action and Theory of Planned Behavior,28 focused on system usage by end users in the workplace. However, recently TAM has broadened its application to other dimensions of technology adoption. The Extension of Technology Acceptance (TAM2) elaborates the impact of three interrelated social forces (subjective norm, voluntariness, and image) impinging on an individual facing the opportunity to adopt a new system.29 TAM2 shows that image, job

Table 1 Changed Landscape of the Korean ICT Industry: 1997-2001 (Korean Population: 47.3 million as of December 2001) Sector Informatization Index

ICT Industry Index

High-speed Internet subscribers (million) Internet users (million) PCs in use (million) Wired telephone subscribers (million) Mobile telephone subscribers (million) Production value ($ billion) ICT value added ($ billion) Portion of GDP (%) ICT export ($ billion) ICT trade balance ($ billion) ICT industry employees (thousand) ICT firms ICT venture firms

1997 1.4 1.6 6.9 20.4 6.9 62.9 32.6 8.6 31.3 9.4 560 9,397 636

2001 7.8 24.4 20.7 22.7 29.1 125.0 58.7 13.4 38.4 10.6 1,163 17,719 5,073

Source: Minister's report: IT policy direction for building IT-led country. KMIC, 11 October 2002; Mid- to long-term market overview for the information communications industry (2002-2006). February 2002. Korea Information Society Development Institute.

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not voluntary) systems. Venkatesh's extension of TAM, also shown in Figure 2, includes anchoring and adjusting based on the determinants of system-specific perceived ease of use.30 This extended model presents conditions conceptualized as computer efficacy, computer playfulness, and computer anxiety as an-

relevance, output quality, and demonstrability of results significantly influence perceived usefulness as shown in Figure 2. Specifically, "subjective norms"-that is, people's beliefs about what others a significant direct effect on expect of them-exert usage intention over and above perceived usefulness and perceived ease of use for mandatory (but

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1989) ~~~~~~~~~~~(Davis,

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Objective Usability

FIGURE 2 Technology Acceptance Model and Extensions

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chors that determine early perceptions about the ease of use of a new system. With increased experience in system use, it is expected that perceived ease of use will reflect perceived enjoyment and objective usability of the system. Diffusion of Innovation Theory Diffusion of innovation theory (DIT) explains innovation adopters' adoption behavior.3' DIT has supported much research on how and why innovations are adopted at different rates by individuals or organizations. There are many variant types of diffusion models. However, their basic forms can be classified into the following three models: 1. External influence model-In this model, the diffusion process is driven by information and communication technology sources external to the social system.32 The diffusion rate at a given time depends on the organization's need for the technology (intrinsic desire for adoption). Thus, the assumption is that there is no communication between early adopters and potential adopters. 2. Internal influence model-This model, also known as the imitation diffusion model, assumes that diffusion occurs only through individual contacts. Thus, the diffusion rate of an imitation effect is the result of social interaction or internal communication between early adopters and potential adopters in a social system. The imitation effect can be viewed through subjective norms and word of mouth. A subjective norm can be thought of as perceived social pressure, that is, whether significant others would want the person to perform, or to refrain from, the behavior in question.33 Possible salient referents for the subjective norm, with

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respect to ICT adoption, could be friends and coworkers. Word-of-mouth (WOM) is a powerful determinant of technology adoption. In particular, face-to-face messages have proven to be important to consumer attitudes and behaviors toward technology.34 3. Mixed influence model-The model is a combination of internal and external influence models. This model is widely used as it explains reality more precisely than the two separate models previously discussed.35 In this mixed model, technology adoption is influenced by both imitation behavior and innovation behavior.36

Major Factors Behind Korea's ICT Diffusion We shall now discuss Korea's ICT development and diffusion based on a framework which integrates the various models and theories described in the previous section, as shown in Figure 3. Specifically, we emphasize the importance of the following kinds of factors: external, innovation, and imitation. Korean culture is clearly the underlying anchor which encompasses all of the factors discussed here. For purposes of this article, only a few important Korean cultural and social characteristics relevant to the innovation and imitation factors for ICT diffusion will be presented.

External Factors While numerous external environmental factors affect ICT diffusion, we will limit our discussion to the changing global economy affecting Korea, and Korean government policies toward ICT.

Innovation Factors External Factors

Global

SelfEfficacy

Ease of Use

Usefulnes

S )~~~~~~~~~~~~~~~~~~~~~~~neto IIX3CT ___

Economy____________________

Imitation Factors Government Policies __________________

Subjective ~Norm

Wrd-ofM outh

FIGURE 3 Framework for Korean ICT Diffusion

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* Global Economy The Korean economy relies heavily on international trade as the country has scarcity in natural resources but wealth in human capital. Thus Korean economic development has been directly tied to success in trade. Surrounded by fast-developing Asian countries, especially China, as alluded to earlier, Korea was unable to maintain a competitive position in the manufacture of many light and heavy industry products. Consequently, Korea had to reformulate its economic strategies and elected to emphasize knowledge-intensive, high-tech areas. More specifically, Korea chose ICT as its core competence area and has supported wide diffusion of ICT and aggressively developed infrastructure, research, and new products and services. For example, domestic research organizations and teams have developed the following technologies or products: * TDX (Time Division Switch)-Exchange (loth in the world) * High-density semiconductor microchips * Mini-super computer (TiCom) * CDMA digital mobile telecommunication system * TFT-LCD panel * Broadband Internet-related equipment * Digital TV * Government Policies As presented earlier, the Korean government has played the central role in shaping the current status of Korean ICT. MIC (Korea's Ministry of Information and Communication) lists the following as success factors for Korea's ICT status: (1) the government's strong leadership and policies for development of ICT infrastructure, (2) education and promotion of ICT throughout the country to close the digital divide, (3) development of well-trained ICT technicians and core technologies, and (4) creation of a constructive competitive environment for ICT businesses. The government has provided leadership in the national informatization campaign by establishing comprehensive processes, strategies, laws, and an adequate budget. The e-government project, driven by MIC as the project manager, attempts to transform the government into a transparent and user-friendly service provider which is digitalized and networked. Most government services are now provided through the Web. Procurement for the Korean government is undertaken through more than 200 e-marketplaces. Transactions between government agencies and businesses are much more tratnsparent and speedy

Lee

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than ever before. Today, the government is moving toward m-government (mobile). For e-election and e-voting, Korea is the world leader. Political activists have developed websites and organized campaign activities online and offline. For the general election of 2000, a political activist group targeted 96 candidates as unfit for the Parliament, and 59 (69 per cent) of them indeed failed to be elected. In early 2002, the ruling party elected its presidential candidate using electronic voting instead of punching paper tickets. It took only 15 minutes to tabulate the votes and announce the winner. These government policies and initiatives have helped Korean citizens everywhere to leam and use ICT for their daily activities. Innovation Factors * Usefulness During the rapid economic development since 1962, Koreans created a new word, "ppali ppali," which means "quickly and quickly." This word represents Korean emotion in economic development. That is, Koreans are restless for fast growth. Consequently, Koreans consider usefulness and efficiency as important factors for a new technology or innovation. For example, Korea is the world leader when it comes to mobile payment. SK Telecom, the biggest mobile telecommunications company in Korea with about 53 per cent of the market share, produces mobile phones with smart chips inside. Because the smart chip contains and updates the phone owner's financial and personal information, people can purchase goods or services through the Internet by using their mobile phone numbers rather than their credit cards. In Korea, over 10 million people use Internet banking, and more than 70 per cent of stock trading is now done on the Internet. In 2001, e-business transactions amounted to more than $80 billion in Korea. * Ease of Use Unlike Chinese hieroglyphics, the Korean language is supported by phonographic symbols. This linguistic characteristic supports the argument that culture directly affects ICT diffusion. Hangeul (the Korean alphabet), invented in 1443, has only 24 characters. This makes it easy to represent every expression by using only 10 vowels and 14 consonants. In contrast, the technology to support written expression of Japanese must be capable of producing not only the 100 phonetic symbols, but also about a thousand Kanji (Chinese) characters

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Academy of Management use.37

A mobile phone keyboard repre-

senting such a large array of Japanese or Chinese ideograms is clearly impractical. Ease of use of new ICT in conjunction with the Korean language has helped diffuse ICT as part of Koreans' work and daily life. 0 Self-Efficacy

The psychological concept of self-efficacy38 has been extensively researched and has been used for information systems research concerning technology adoption and use.39 For thousands of years, Koreans were afraid of change. The twentieth century's crushing shocks (the Japanese colonization, the Korean War, the Asian financial crisis, etc.) broke history's hold on Koreans' concept of themselves and their environment, and an alternative self-concept was enabled by graduate education of most Korean leaders in the U.S. or other western nations. Koreans have embraced the knowledge/ information age where informatization and ICT greatly influence the competitiveness of individuals, organizations, and the nation. Self-efficacy, gained from the successes of e-transformation and the can-do spirit nurtured through overcoming countless hardships, has given Koreans the confidence to build an ICT powerhouse in Asia.

For thousands of years, Koreans were afraid of change. Imitation Factors * Subjective Norm of Belongingness Koreans' adoption of ICT has a social normative implication. Adopters of new ICT often brag about their newfound skills and knowledge to their peers. The need to acquire the same knowledge, to belong to the group, drives everyone in the group to become an agent of change in the cycle of ICT adoption. Because of their Confucian roots, Koreans place a great emphasis on the sense of belongingness as one of their central cultural values. The basic unit of belongingness is the family, based on blood ties. Then, the hometown, school, profession, and organization are important units of belonging. For example, it has been observed that Koreans form more alumni groups than any other country. The sense of belongingness is usually accentuated by communication and frequent interaction. Koreans desire constant renewal and assurance of belongingness through conversation. Advanced LOT

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has become a convenient means to enrich the sense of belongingness and satisfy the needs of constant communication. * Word of Mouth In the e-global age, digitalization has created a customer-driven market. E-customers create their own communities, and their personal experiences are quickly communicated throughout the network. Thus, the impact of word-of-mouth becomes more important and powerful with networks. Specifically, word-of-mouth communication is a determinant of ICT mass adoption by Koreans because most are Internet users living in close proximity, usually in huge apartment complexes. The wordof-mouth effect heavily influences e-customers who are networked. Two out of three Koreans spend up to 2 hours a day on the Web as a member of a community. Over 5 million members visit their community portal websites every day. E-communities sometimes act as negative or positive marketers for a specific product, organization, or social issue. For example, Hyundai, the biggest automaker in Korea, had to send an apology letter to each of its new model buyers and issued a recall when a cyber community found a defect and publicized it.40 The e-community has become the most powerful reference group for most Koreans. ICT Applications and Innovations The downward spiral of the global ICT industry has drastically decreased investment in ICT by most organizations around the world. The tumbling stock prices of such bellwether firms as Cisco, Nokia, and Sun Micro Systems and once leading firms like Lucent, Ericsson, Qwest, and WorldCom clearly indicate the industry's woes. To avoid such problems in Korea, MIC is working with major Korean ICT firms to establish the "ITInvestment Fund." MIC believes the threats of the global slump of the ICT industry today provide excellent opportunities for Korea to accelerate its ICT leadership through more investment. With its welldeveloped ICT infrastructure, Korea has been innovative in developing ICT applications through businesses, government agencies, and people in all walks of life. With the influence of additional investment for ICT innovation, many new applications may be expected. Some recent ICT applications are described in this section. Mobile Phone Code Division Multiple Access (CDMA) is a digital wireless technology pioneered by Qualcomm in

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1995. In 1996 Korea became the first nation in the world to implement CDMA for mobile communication. The International Telecommunications Union selected CDMA as the industry standard for new third-generation (3G) wireless systems in 1999.41 Today, Korea has 11,460,000 mobile communication subscribers representing about two-thirds of the population (the world's largest proportion of users), which created a new market worth $150 billion.42 Korean 2.5G mobile communication technology with Evaluation Data-Optimized System (EV-DO) can transmit and receive data at a speed of up to 2.4 megabytes per second, seven times faster than Japan's 3G service.43 Recently, Korean mobile communication firms (KT, SKT, and LGT) have been under tremendous public pressure to lower their service rates as they attained over $1 billion profit for only the first half of 2002. According to the MIC's tally, China is becoming the first export market for Korean mobile phones, and it reached $291.58 million in the first half of 2002, a 41-fold increase from $6.85 million recorded during the same period in 2001.44

Korea has 11,460,000 mobile communication subscribers representing about two-thirds of the population (the world's largest proportion of users).

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DRAM and TFT-LCD Korea is the world's largest producer of DRAM (Dynamic Random Access Memory) and TFT-LCD (Thin Film Transistor-Liquid Crystal Displays). According to DRAMeXchange, a memory chip industry news provider, Korea has more than 48 per cent of the world market share for the DRAM memory chip, ahead of the U.S., Taiwan, the EU, and Japan, which churned out 18, 16, 12, and 7 per cent of the total global DRAM chips, respectively.48 Holding 40.7 per cent of the global production, three Korean chipmakers-Samsung Electronics, LG-Philips, and Hynix-became the world's largest producers of TFT-LCD in 2001.49 The number of display units produced by these firms outpaced Japan, whose global market share was 36.6 per cent. Samsung Electronics developed the industry's first fully working lGbyte DDR and SDRAM in December 2002 and 4Gbyte DDR in February 2003. Samsung plans mass production of 1Gbyte DDR and SDRAM in the second half of 2003. Samsung is also the industry leader in advanced memory solutions, including DDR333Mbyte, DDR400Mbyte, and DDR512Mbyte. According to Gartner Dataquest, the market for lGb DDR SDRAMs is expected to reach $7.4 billion by 2006. The Future of Korean ICT Development Building De Facto Global Standards

High-Speed Internet ADSL (Asymmetric Digital Subscriber Line) is a technology to deliver digital information at high speed over the same twisted-pair line used to deliver telephone service for ultra-fast access to the Internet and corporate networks while also enabling real-time multimedia services. The downstream bit rate is higher than the upstream rate because most subscribers retrieve much more information than they send. ADSL is nearly 300 times faster than 28.8K dial-up modems and 70 times faster than paired 128-Kbps ISDN.45 In 1999, Korea started providing high-speed Internet service using commercial ADSL for the first time in the world.46 ADSL use reached more than 60 per cent of the population (over 10 million households), the highest rate in the world, and Internet use is 5th in the world. KT has exported ADSL and other speedy Internet solutions to Mongolia, Hungary, and other Eastern European countries, Japan, and even the USA.47 The government is also set to expand the nation's export of high-speed Internet service products, aiming to reach US$10 billion a year by 2006.

The Korean ICT industry has been effective in commercializing new ICT such as CDMA, and soon VDMA (Virtual Division Multiple Access), highspeed Internet (ADSL and VDSL: Very-high-bit-rate Digital Subscriber Line), and Semiconductor (DRAM) for the first time in the world, just as Japan did in the past with electronics. Based on new ICT applications, the Korean ICT industry is attempting to set de facto global standards for new technology applications through continuous R&D. Simultaneously, the Korean government is in the process of forming strategic alliances with Japan, China, and other nations to coordinate standards development for such technologies as 4G (fourthgeneration wireless communication), mobile IP (Internet protocol), IPv6 (IP version 6), wireless communication and NGN (Next transmission, Generation Network). Korea's MIC announced that Internet products would soon become Korea's third core export item, following semiconductors and CDMA handsets. MIC forecasts exports of high-speed Internet products, which stood at $240 million in 2001, to reach $10 billion in 2006, through the government's support for overseas marketing for firms engaged in

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the export of Internet-related products, such as ADSL and VDSL. To date, the Korean ICT industry has relied primarily on mobile communication and high-speed Internet. However, as the markets for these technologies are becoming saturated, Korea is striving to develop new core competencies for the future. Some of these areas are:50 . Wireless LAN . Contents industry, such as digital animation movies (cyber Hollywood projects) . 3GH and 4G wireless communication * Digital TV (Korea has basic patents for the DTV receiver chipset) . Digital life and smart home, based on the converged networks of fixed and wireless ICT. Future ICT Landscape Based on solid human and physical ICT infrastructures, its unique and supportive environment, and its brand value as an ICT leader, Korea has a vision to become a global ICT hub for traffic, content, and R&D.As an ICT traffic hub, it can produce, store, and distribute digital content in Asia and throughout the world. In short, Korea aspires to play a pivotal role in bringing to reality the true digital world by strengthening ICT cooperation with other leading ICT countries. As shown in Table 2, MIC of the Korean government forecasts some dramatic changes in store for the Korean ICT landscape.5-

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Lessons Learned Since the 1997 financial crisis, Korea has made progress in the ICT field that is remarkable by any standard. Almost overnight Korea has become the country to benchmark against for the application of value-adding business solutions based on the most advanced Internet and mobile communication technologies. The speed and scope of ICT adoption, diffusion, and assimilation in Korea are unprecedented. While the global ICT market has been in a worrisome slump since the turn of the new century, Korea's ICT industry is still booming with growing markets, revenues, and profits. For example, Samsung Electronics, KT, SK Telecom, and LG have become well-known world-class ICT firms.

The speed and scope of ICT adoption, diffusion, and assimilation in Korea are unprecedented. While Korean ICT firms have received many accolades in the world business press, it must be remembered that the U.S. is still the ICT leader in the world in terms of sheer size and power. The Korean ICT industry has so far relied heavily on as most domestic firms imported technologies have yet to develop a sufficient set of core technologies. Thus, Korean firms have been paying very

Table 2 Changes in the Korean ICT Industry Category

Items

Informatization

1. Citizens' ICT use ability * Internet use * PCs provided to schools 2. Business * Online connection * e-transaction * B2B networks 3. Public organizations * Online government service * e-signature user Production value Proportion of GDP Export amount Employees Wired telephone subscribers Mobile phone subscribers High-speed Internet homes Wireless Internet Homes with digital TVs Digitalization of communication network

ICT Industry

ICT Service

2001

2006

55.6% 1.22 million

90.0% 1.60 million

60.0% 4.0% 20 industries

100% 30.0% 50 industries

54 types 1.92 million $125.0 billion 12.9% $38.4 billion 1.16 million 22.73 million (48.0%) 29.05 million (64.4%) 7.91 million (55.0%) Seoul and 6 major cities 3.6% 81.0%

All types 25.00 million $230.0 billion 17.0% $89.5 billion 1.44 million 24.48 million (50.0%) 39.16 million (80.0%) 15.00 million (100.0%) All cities and counties 50.0% 100.0%

Source: Minister's report: IT policy direction for building IT-led country, op. cit.

2003

high license or patent royalty fees to foreign firms. It is difficult for a firm to develop a competitive edge in the ICT market when most of its products and services are based on imported technology. As a matter of fact, in 2001 Korea ranked only 19th in the world based on the Information Society Index. Korea's goal is to be in the top ten by 2006.52However, in the most crucial technological areas that are essential for generating new value-adding business solutions and for services that will engender digital life for ordinary citizens, for its size and recent history, Korea is making highly impressive advances. After the IMF financial crisis, Korea sought a new growth engine in "Cyber Korea 21." Singapore has focused on industrial R&D and innovation by means of capital investment, technology development, and skill formation in manufacturing and service.53 Korea, on the other hand, has paid attention to ICT infrastructure development by wiring government, business, and individuals, and reinforcing growth in software and informationprovider industries during the past five years. Moreover, Korea has built the ICT national brand through mobile phone, high-speed Internet, DRAM, and TFT-LCD. Government, Technology Innovation, and Economic Performance Korean experiences provide a good case study for many developed countries. The concerted publicprivate partnership (PPP) has enabled Korea to leapfrog many advanced countries in terms of wide diffusion and use of the most advanced ICT. Furthermore, such ICT diffusion has helped Koreans develop new patterns of daily life that are not only supported by technology but also built on newly formed trust in technology-based systems. While the issues of trust and privacy are still major barriers of e-business in many developed countries, Koreans have quickly overcome most of these obstacles for their B2All and m-commerce transactions. For scholars and executives involved in ICT or international business, Korea's ICT experience serves as good reference material. Korea has been the test bed for many new ICT products, services, business solutions, and government initiatives. For example, Korea's experiments in m-government, B2All, u-commerce (ubiquitous), and enterprise solutions should provide valuable information in terms of finding critical success factors of these new applications of ICT. Korea is a good example of how a government can take the initiative to improve a country's eco-

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nomic performance based on technology innovation. Korea has become a test bed, an incubator, for new ICT. Close and cooperative working relationships between government and industry have produced effective human and technological infrastructures. The Korean experience, in terms of its background, economic transformation, ICT diffusion process, government strategies, and ICT application, should serve as a good lesson to developing countries as to how the PPP can become a catalyst for developing national competitive advantages. Endnotes l See http:/lwww.kusec.or.kr/english/archives/koreainfo/economy/growth.html. 2Drucker, P. F. 2002. Managing in the next society. New York: St. Martin's Press. 3 Steers, R. M. 1999. Made in Korea: Chung Ju Yung and the rise of Hyundai. New York: Routledge; Yoo, S., & Lee, S. M. 1987. Management style and practice of Korean chaebols. California Management Review, 29(4): 95-110; and Lee, S. M., Yoo, S., & Lee, T. M. 1991. Korean chaebols: Corporate values and strategies. Organizational Dynamics, 19(4): 36-50. 4 Cheong, Y. R. 2002. Korea's option for facing China's economic challenge. Korea Focus, 10(6): 114-130. 5 Information technology annual report. Business Week (Internet edition), 24 June 2002. See http:Ilwww.businessweek.coml magazinelcontent/O2_25lb3788701.htm. 6 The development of broadband access in OECD countries. OECD, 29 October 2001. An OECD report to the working party on telecommunications and information services policy (TISP). Available at http:/lwww.oecd.orglpdf/M00020000IM00020255.pdf. 7 Wall Street Journal, 3 May 2001. 8The Internet freedom and broadband deployment act. See http://energycommerce.house.gov.; Tauzin, B., & Dingell, J. D. High-speed access will spur growth: Should Congress pass the Tauzin-Dingell Internet Freedom and Broadband Deployment Act? Roll Call. July 23, 2001. 9 South Korea: IT services overview, 2001. October 2002. Gartner Group. 10Global E-government, 2002. September 2002. Taubman center for public policy at Brown University. See http://www.insidepolitics.orgIegovt02int.PDF. " Sunoo, H. H. 1978. Economic development and foreign control in South Korea. Journal of Contemporary Asia, 8(3): 322-339. 12 See http://www.aftak.or.krlal_2.html. 13 Minister's report: IT policy direction for building IT-led country. KMIC (Korean ministry of information and communication), 11 October 2002. 14 See www.dmc.seoul.kr. 15 Ubiquitous network society: E-Korea Project. Gartner Group, 14 May 2002. 16 Mid and long range market prospects of Korean information and communication technology industry (2001-2005). Research report 01-04, 2001. Korean Information Society Development Institute. 1' Kim, K. (Ed.). 2001. Three years after the IMF bailout: A review of the Korean economy's transformations since 1998. Samsung Economic Research Institute. 18 Digital economy of Korea 2002. August 2002. Korean Information Society and Development Institute. See http:/lwww. kisdi.re.kr/advertiseldigital.pdf (in Korean).

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"9KoreanWhite Paper. 2001. Korea Ministry of Information and Communication. 20Digital economy of Korea 2002, op. cit. 21 Handelman, J.M., &Arnold, S. J. 1999.The role of marketing actions with a social dimension: Appeals to the institutional environment. Journal of Marketing, 63(3):33-48. 22North, D. 1990. Institutions, institutional change, and economic performance. Cambridge, UK: Cambridge University Press. 23Lefebvre, E., & Lefebvre, L. A. 1996. Information and telecommunication technologies: The impact of their adoption on small and medium-sized enterprises. Ottawa, Canada: IDRC (International Development Research Centre). 24DeCanio, S. J.,Dibbie, C., & Amir-Atefi,K. 2000.The importance of organizational structure for the adoption of innovation. Management Science, 46(10):1285-1299;and Chau, P. Y. K., and Tam, K. Y. 1997.Factors affecting the adoption of open systems: An exploratory study. MIS Quarterly, 21(1):1-24. 25Spanos, Y. E., Prastacos, G. P., & Poulymenakou, A. 2002. The relationship between information and communication technologies adoption and management. Information & Management, 39(8):659-675; and Grover, V., & Goslar, M. D. 1993.The initiation, adoption, and implementation of telecommunications technologies in U.S. organizations. Journal of Management Information Systems, 10(1):141-163. 26DeCanio, S. J., Dibbie, C., & Amir-Atefi,K. 2000.The importance of organizational structure for the adoption of innovation. Management Science, 46(10):1285-1299. 27Davis, F. D. 1989.Perceived usefulness, perceived ease of use, and user acceptance of information technology. MIS Quarterly, 13(3):319-340. 28Sheppard, B. H., Harwick, J., & Warshaw, P. R. 1988. The theory of reasoned action: A meta-analysis of past research with recommendation for modifications and future research. Journalof Consumer Research, 15(3):325-343;Mathieson, K. 1991. Predicting user intentions: Comparing the technology acceptance model with the theory of planned behavior. Information Systems Research, 2(3):173-191;Adams, D., Nelson, R. R.,&Todd, P. 1992.Perceived usefulness, ease of use, and usage of information technology: A replication. MIS Quarterly, 16(2):227-248; Taylor, S., & Todd, P. 1995.Understanding information technology usage: A test of computing models. Information Systems Research, 6(2):144-176;Agarwal, R.,&Prasad, J. 1997.The role of innovation characteristics and perceived voluntariness in the acceptance of information technologies. Decision Sciences, 28(3):557-582; Moore, G. C., & Benbasat, I. 1996. Integrating diffusion of innovations and theory of reasoned action models to predict utilization of information technology by end-users. In Kautz, K. & Pries-Heje, J. (Eds.).Diffusion and adoption of information technology. London:Chapman and Hall: 132-146. 29Venkatesh, V., &Davis, F. D. 2000.A theoretical extension of the technology acceptance model: Four longitudinal field studies. Management Science, 46(2):186-204. 30Venkatesh, V. 2000.Determinants of perceived ease of use: Integrating control, intrinsic motivation, and emotion into the technology acceptance model. Information Systems Research, 11(4):342-365. 31 Rogers, E. M. 1995. Diffusion of innovations, 4th ed. New York:Etats-Unis Free Press. 32Vankatraman, N., Loh, L., & Koh, J. 1994. The adoption of corporate governance mechanisms: A test of computing diffusion models. Management Science, 40(4):496-507. 3 Fishbein, M., & Ajzen, I. 1975.Belief, attitude, intention and behavior: An introduction to theory and research. Reading, MA: Addison-Wesley.

34Webster, C. 1991.Influences upon consumer expectations of services. Journal of Services Marketing, 5(1):5-17. 35Vankatraman, N., Loh, L., and Koh, J., op. cit. 3 Mahajan, V., Sharma, S., & Bettis, R. 1988.The adoption of the M-formorganizational structure:A test of imitation hypothesis. Management Science, 28(6):1188-1201. 37Straub, D. W. 1994. The effect of culture on IT diffusion: E-Mail & fax in Japan and the US. Information Systems Research, 5(1):23-47. 38Bandura, A. 1986.Social foundations of thought and action. Englewood Cliffs, NJ:Prentice Hall. 39Compeau, D. R., & Higgins, C. A. 1995a. Application of social cognitive theory to training for computer skills. Information Systems Research, 6(2):118-143;Compeau, D. R., & Higgins, C. A. 1995b.Computer self-efficacy: Development of a measure and initial test. MIS Quarterly, 19(2):189-211; and Compeau, D. R., Higgins, C. A., & Huff,S. 1999.Social cognitive theory and individual reactions to computing technology: A longitudinal study. MIS Quarterly, 23(2):145-158. 40 According to the website of Hyundai Motor Company (http://www.hmc.co.kr)and the websites of a cyber community (http://www.antihyundai.pe.kr)that found defects and publicized them on the Internet, May, 2000. 41 See http://www.qualcomm.com/cdma. 42Minister's report: IT policy direction for building IT-led country, op. cit. 43 Larkin, J. The future is in South Korea. Far Eastern Economic Review, 20 June 2002. Available at http://www.feer.com/ articles/2002/0206_20/pO32innov.html. 44 Impe, M. V. Korean mobile phone exports to China surging. Mobile CommerceNet, 29 July 2002. 45Comer, D. 1999. Computer networks and Internet, 2nd ed. Upper Saddle River, NJ:Prentice Hall. 46 See http:l/event.kt.co.krlkorlaboutktlhistorylhistoryO2_04. html. 47 Korea Times, 9 April 2001. 48 See http:llwww.dramexchange.comldefault.asp. 49 See The Chosun Ilbo, 21 March 2002; see http://www.displaysearch.com/. 50Minister's report: IT policy direction for building IT-led country, op. cit. 51 Ibid. 52 See http://mic.gov.kr. 53 Garrett-Jones, S. National science and technology initiatives for ESCWAmember countries: Lessons from the South and East Asian Region. In the expert group meeting on initiatives for science and technology capability-building in the twenty-first century in Beirut, November 1, 2000.

Sang M. Lee is the University Eminent Scholar and Regents Professor at Distinguished the University of NebraskaLincoln. He received his Ph.D. degree from the University of Georgia. His current research interests deal with the strategic use of ICT for interorganizational collaboration. He has published over 200 journal articlesand5Obooks.Contact:sleel@ unl.edu.