The more interactive, the more innovative? A case study of South Korean cellular phone manufacturers

This paper shows that there had been a gap in R&D intensity between South Korean and western cellular phone firms in past years, but this gap has closed. South Korean firm R&D efficiency has recently generally been superior to that of European and American competitors. South Korean innovative power came from three sources: interaction with operators, getting service information and applications from service providers, and internal and external competition. After successful experiences in innovating products for the domestic market, South Korean cellular phone makers used customised design with foreign mobile operators and their foreign R&D centres to localise design and make modifications to meet foreign market demand. Therefore, for 3C (computer, communication and consumer) latecomers in developing economies, due to capital, cost and risk issues, they should strengthen their R&D efficiency through these methods in place of prematurely increasing R&D intensity before the firm is large enough.