Analysing the Changing Trajectory of South Korea's ICT Business
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Analysing the Changing Trajectory of South Korea’s ICT Business Environment Nigel Callinan Thesis presented for the award of Doctor of Philosophy Supervisors: Professor Bernadette Andreosso & Dr. Mikael Fernström University of Limerick Submitted to the University of Limerick November 2014 Declaration I hereby certify that this material, which I now submit for assessment on the programme of study leading to the award of Doctor of Philosophy is entirely my own work, that I have exercised reasonable care to ensure that the work is original, and does not to the best of my knowledge breach any law of copyright, and has not been taken from the work of others save and to the extent that such work has been cited and acknowledged within the text of my work. Signed: ___________________________________ I.D No: 10142886 Date: Monday 10th November 2014 2 Abstract This thesis aims to provide a new perspective on the development of South Korea’s Information and Communications Technologies (ICT) Business Environment by taking a cross-disciplinary look at the area. Most studies on this subject have tended to remain within the boundaries of a single discipline. In this study, an interdisciplinary approach is taken to trace more of the paths that have influenced the development. This will provide a better understanding of the area and this insight should make it easier for any prospective organisation hoping to enter the Korean market to be successful. In little over two generations, South Korea has transformed from being one of the poorest countries in the world into a global business leader. Currently, Information Technology products are at the forefront of exports from the country and the world’s largest electronics company hails from a city just south of Seoul. In order to understand how this transition took place and how some of these small infant startups became international giants, this study begins with a look at Korean history with the focus on early interactions with foreign cultures. The information provides a foundation for understanding why certain decisions were taken when Korea began its post-war journey towards industrialisation in the 1960s. Then, using these details, Korea’s modern ICT Business environment is analysed using case studies to show how the strategies taken earlier have evolved but not disappeared. In today’s world of free trade agreements and international bodies aiming to remove barriers, the rules governing business and the role of government have morphed into a more complex but subtle framework. This thesis shows how ICT companies who can operate within this changing framework can use the situation to their advantage, providing a springboard to international business success. The conclusions from this study will provide an insight into the approaches taken in South Korea to nurture innovation in enterprises and track the paths that these companies took. 6 Table of Contents Chapter 1: Introduction to the Research 21 1.1 Introduction 21 1.2 Objectives, Questions and Themes 25 1.3 Introduction to Research Methodology 26 1.4 Thesis Chapter Outline 27 1.5 Summary 29 Chapter 2: How history still resonates today in Korea 31 2.1 Introduction 31 2.2 Korea’s Ancient Warring Kingdoms 33 2.2.1 The Gojoseon Kingdom 33 2.2.2 The Three Kingdoms Period (75 BCE – 668) 33 2.3 United Korean Dynasties 36 2.3.1 The Goryeo Dynasty and Mongol Invasions (918 – 1392) 36 2.3.2 The Joseon Dynasty (1392 – 1897) 37 2.3.3 Joseon’s first contact with Europe and the U.S.A 38 2.3.4 Annexation into the Japanese Empire 40 2.4 Korea under Japanese Rule 42 2.4.1 Introduction 42 2.4.2 Social Unrest and the March 1st Movement 43 2.4.3 Changes to the Korean economy and education system 44 2.4.4 A change in Japan’s policy in Korea 46 2.4.5 Legacy of the colonial period: The Korean diaspora 47 2.5 The Korean War 48 2.5.1 Introduction 48 2.5.2 Arrival of the U.S and Soviet Forces 48 2.5.3 The outbreak of war 49 2.5.4 U.N and Chinese involvement 50 7 2.6 The Economic Transformation of South Korea 51 2.6.1 Introduction 51 2.6.2 Post-War South Korea 52 2.6.3 Park Chung Hee’s Coup D’état 52 2.6.4 The First Five-Year Plan 53 2.6.5 State control over enterprise 56 2.6.6 Assassination and Legacy of Park Chung-Hee 59 2.7 Korea’s path to Democracy 61 2.7.1 Introduction 61 2.7.2 Filling the political vacuum 62 2.7.3 The Path to Democracy 63 2.7.4 The 1997 IMF Crisis 64 2.7.5 The Sunshine Policy 65 2.7.6 The Participation Government Movement 66 2.7.7 Korea Inc. 67 2.8 Conclusion 68 8 Chapter 3: The role of Neo-Confucianism in Korean Business and Society 76 3.1 Introduction 76 3.2 A Simple Definition of Confucianism 77 3.2.1 Introduction 77 3.2.2 Yi And Li 77 3.3 The History of Confucianism in Korea 79 3.3.1 The Introduction of Confucianism from China 79 3.3.2 The birth of Neo-Confucianism 80 3.4 Neo-Confucianism in Organisational Culture 82 3.4.1 Introduction 82 3.4.2 Paternalistic leadership 82 3.4.3 Family-like Working Environment 84 3.4.4 Hierarchical Structure 85 3.4.5 Importance of Family Ties and Blood-Based Succession 86 3.4.6 Gender Inequality 89 3.5 Flaws of Confucianism 90 3.5.1 Rigid Communication Rules 90 3.5.2 Over-attention to procedures 91 3.5.3 Over-emphasis on Rote-Memorisation 92 3.5.4 Sexism 92 3.5.5 Importance of standardised exams 92 3.6 Neo-Confucianism in Education 93 3.6.1 Introduction 93 3.6.2 The CSAT exam and the SKY Universities 93 3.6.3 The relative importance of education in Korea 95 3.6.4 Adult ICT education in Korea 96 3.6.5 ICT education in schools 98 3.6.6 ICT learning outcomes 99 3.7 Conclusion 100 9 Chapter 4: Literature Review on ICT Business in South Korea & Research Methodology 103 4.1 Introduction 103 4.2 ICT Business 104 4.2.1 Definition of ICT Business 104 4.2.2 Development and Government involvement in Korean ICT Business 104 4.2.3 Current status of South Korea’s ICT Business 109 4.3 Importance of Korea’s ICT industry to the world 110 4.3.1 E-Government Development Index 110 4.3.2 Network Readiness Index 111 4.3.3 Measuring the Information Society 112 4.3.4 Internet Access and Infrastructure 115 4.3.5 Internet Use 118 4.3.6 Internet Skills 120 4.4 Research Methodology 121 4.4.1 Introduction 121 4.4.2 Multi-disciplinary, Cross-disciplinary or Interdisciplinary Studies 122 4.4.3 Historical approach and Path Dependency 125 4.4.4 Use of Case Studies 127 4.4.5 Choice of Case Studies 127 4.4.6 Expectations from each Case Study 129 Chapter 5: The Growing Influence of Korea’s Netizens 132 5.1 Introduction 132 5.2 What is a Netizen? 133 5.3 Origins of the Netizens 132 5.3.1 ARPA 132 5.3.2 Usenet 135 5.3.3 The Convergence of ARPANET and Usenet 136 5.4 Birth of the Netizens Concept 137 5.5 Netizens in Korea 137 10 5.5.1 Civic activism and student protests 137 5.5.2 Government involvement in the media 138 5.5.3 Ohmynews and the Nosama Group 138 5.5.4 Netizens and Sports 139 5.6 How Korea Netizens became a major force 141 5.6.1 The Middle School Girls Incident and the 2002 Elections 141 5.6.2 Protests against military involvement in Iraq 146 5.6.3 Other targets of Netizen activism 146 5.6.4 The Netizens Vs 2MB 147 5.7 Cyberbullying and the Real-Name Registration System 150 5.8 Conclusion 151 Chapter 6: The Battle for Office Suite Dominance in Korea 154 6.1 Introduction 154 6.2 Representing Hangul Digitally 155 6.3 The arrival of Microsoft Word to South Korea 156 6.4 Microsoft’s attempted takeover of Haansoft 158 6.4.1 Discussions behind the scenes 158 6.4.2 The Campaign to Save Hangul 159 6.4.3 The Hangul Venture Company Committee 160 6.4.4 The restructure of Haansoft 161 6.5 Office Price Wars 162 6.6 Government Intervention 164 6.7 Haansoft explored UNIX and Launches Cloud Based Services 166 6.8 Chasing pirates 168 6.9 Conclusion 11 Chapter 7: SEED, Active-X and Online Transactions 173 7.1 Introduction 173 7.2 Early Online Encryption and the creation of SEED 174 7.3 Opposition by the Open Web Group 176 7.4 Microsoft turns against Active-X 178 7.5 Looking beyond Microsoft Windows 181 7.6 Conclusion Chapter 8: Mobile Devices 187 8.1 Introduction 187 8.2 Infrastructural Development under a Government monopoly 189 8.3 The decision to use CDMA 190 8.4 The emergence of private companies 192 8.5 Falling behind on 3G and the implementation of the WIPI Standard 194 8.6 The Smartphone revolution 197 8.7 The decision to use Android and the decommissioning of WIPI 199 8.8 Recent Developments in the Mobile Area 202 8.9 Conclusion Chapter 9: Research Findings and Conclusions 207 9.1 Introduction 207 9.2 Key Questions Addressed 209 9.2.1 Can South Korea’s rise as an ICT-based economy be attributed to a free-market policy or to a government-controlled, protectionist policy and to what extent can these policies be attributed to events in Korean History? 209 9.2.2 Can case studies provide examples that show tariff-based trade barriers are sometimes replaced by Technical Barriers to Trade in the ICT Industry to protect domestic businesses in South Korea? 213 12 9.3 Contributions to the Field 219 9.4 Limitations of the Research 219 9.5 Possibilities for further research 220 9.6 Concluding thoughts 221 13 List of Tables Table Title Page 2.1 Korean Manufacturing Versus Agriculture 45 in Colonial Times.