This study investigates the relationship between expected audit hours and audit quality, and audit fees of unlisted firms in Korean stock market. Kwon et al. (2005) investigate similar relationship with data on listed Korean firms. Because the transparency and reliability of unlisted firms are not comparable to those of listed firms, this study focuses on unlisted firms and replicate the study. It is because the documented findings in Kwon et al.'s (2005) study are not apparent if they are applicable to the setting for unlisted firms.
Private firms reporting is interesting in its own right, due the predominance of private firms in the economy. The private firms setting is particularly interesting, because the markets for private and public financial reporting are substantially different. We expect private firms to have significantly different demand and supply functions for audits as compared to listed firms. This makes them an interesting sample to independently evaluate audit theories for the existence of a Big 4 fee premium that have been developed almost exclusively based on evidence in listed firms. Moreover, it is the very difference in the environment that provides an optimal setting in which to identify and evaluate new dimensions, such as the cost of providence audit services, along which audit markets could potentially be segmented.
Examining the relationship between audit fees and audit effort is likely to aid the understanding of quality and independence, and also provide a better insight into the market of audit services. This understanding is of importance to users of financial statements, consumers and providers of audit services and to those who attempt to regulate the market.
For this purpose, this study use expected audit hours data collected by Korean Institute of Certified Public Accountants (KICPA). The KICPA collect the expected audit hour data from the audit contract that auditor and client firms made before the start of actual audit works. Then, the expected audit hour data are compared with actual audit fee data. Though the expected audit hour is determined based on expected audit fee, the actual audit fee may vary from expected audit fee (for which the data are not available publicly) because some problems occurred during the audit process. For example, if auditors find some previous unknown problems in the internal control system of the client firms, they may spend more audit hours than expectation and charge higher audit fees. It is known that audit fee is mostly fixed-amount contract in Korea. However, if there are some substantial findings during the audit process and auditors can change the negotiated term in ex post basis, the actual audit fees may vary.
Furthermore, this study examines if the clients of Big 4 auditors pay higher fee premium for the increased audit hour or only reputation premium without increased audit hour. The higher-audit quality can be achieved through more input (i. e., auditor's effort), which implies more audit hours. Since audit hour is the most important determinant of audit fee, the evidence documented in this study represents why Big 4 auditors charge higher audit fees than non-Big 4 auditors.
The sample used in the empirical analyses are 23,335 firm-year observations from the recent period of year 2007 and 2008. The sample includes both registered firms at Financial Supervisory Service and other firms subject to external audit. Empirical results using ordinary least squares regression methods are summarized as follows. First, after controlling for other factors that influence the audit fees, expected audit hours are positively associated with actual audit fees. Although somewhat obvious, the results imply that auditors can charge higher fees when they spend more audit hours than the originally expected hours.
Second, the hiring of Big 4 auditors itself, after controlling for other factors, is significantly associated with audit fees with positive sign. It implies that Big 4 auditors can charge higher audit fees than the other non-Big 4 auditors do. The subsequent analyses reveal that the study fails to find evidence that Big 4 auditors spend more audit hours to audit a client, compared with non-Big 4 auditors. The finding suggests that the documented audit fee premium for Big 4 is due to higher reputation of the Big 4 auditors, rather than higher-quality audit services and this relationship is consistent even among unlisted firms as listed firms.
Finally, the coefficients on abnormal expected audit hours (actual expected audit hours minus the expected estimated audit hours from audit hour determination model) are positive. In addition, the coefficient for Big 4 auditors are substantially greater than that for non-Big 4 auditors. It implies that Big 4 auditors can charge for higher audit fees for the extended audit hours.
These findings should draw the attention of regulators to specific groups of audits of unlisted companies where there appears to exist a room for further action. From the findings of this study, any recommendation to raise the awareness of unlisted companies on the issue should be directed to smaller companies, companies less dependant on external financing and companies audited by large audit firms. Auditees from these groups and their auditors are expected to be more affected the new regulation. Hence, before any massive redirection and regulation of audit is introduced to satisfy the public's concerns, any measure should be carefully examined with regard to potential consequences. This study could be of assistance to auditors, regulators, academics, investors, and practitioners.
Our study contributes to the literature as follows. First, we analyze audit fee model in a different setting than most prior studies. Second, our study is one of the few studies to empirically examine the implications of audit study where audit quality influence financial accounting and where an audit provides value to interested parties because it improves the quality (reliability) of information in financial statements. Third, our study contributes to the existing literature on auditor quality differentiation. This is the informational role of auditing. This paper fills a widely acknowledged gap in the literature regarding the determinants of audit time and the concept of audit quality, particularly in a newly unlisted firms markets.
We expect private firms to have significantly different demand and supply functions for audits as compared to listed firms. Relative to listed companies, financial statements of private firms are less widely distributed, and managers of private firms are more likely to make reporting decision that are influenced by income tax objectives and dividend policies. Hence, even though private firms face substantially the different regulations, demand for high quality financial reporting and auditing may be lower for private firms. Hence, based on these arguments, the demand for a high quality auditor may also be lower among private firms relative to listed firms.
Several arguments have been presented in the literature to explain observed fee differential across Big 4 and non-Big 4 auditors. These hypotheses are, however, primarily focused on listed firms and so may not directly extend to private firms. Private firms differ in important ways from listed firms in terms of their ownership, corporate governance, across to public capital markets, and litigation risks. As a consequence of these differences, the demand for financial reporting and auditing is also likely to differ substantially across these firms. we extrapolate predictions from the literature on audit fees paid by listed firms to private firm setting, including discussions of their relevance in our setting. Several recent studies have relied upon samples of private firms to improve our understanding of the financial accounting literature.

This study examines the association between firm size (i.e., large versus small firms) and the listing status (i.e., Korea Stock Exchange [KSE] market (which is comparable to New York Stock Exchange (NYSE) in the U.S.) listed firms versus Korea Securities Dealers Automated Quotation [KOSDAQ] market (which is comparable to National Association of Securities Dealers Automated Quotations (NASDAQ) market in the U.S.) listed firms), and the firms' tendency to avoid negative earnings surprise (i.e., the case when actual earnings are smaller than financial analysts' consensus earnings forecasts announced before the actual ex post earnings announcements). Multiple number of financial analysts follow a firm and issue earnings forecasts. Before firms release actual earnings (both quarterly and annual earnings), they compare the estimated earnings with contemporaneous analysts' earnings forecasts. If the estimated earnings fall short of financial analysts' earnings forecasts, implicit claims by outside or inside stakeholders can greatly influence the firm's behavior and, thus, firms have incentive to try to report earnings that meet or beat analysts' contemporaneous earnings forecasts. To do so, if firms find out that their internally estimated earnings are slightly below the market's expectation (which is measured by the consensus forecasts), firms may release pessimistic or bad news forecasts to lower the market's expectation. This tendency is called as expectation management. Otherwise, firms may manage earnings upward to shift earnings upward to the level that exceeds the analysts' forecasts. As a result, the tendency that firms report earnings that are equal to the market's expectation (i.e., meeting the expectation) or just above the expectation (i.e., beating the expectation) increases. This tendency is called 'negative earnings surprise avoidance.' Since Burgstahler and Dichev (1997) and Degeorge, Patell, and Zackhauser(1999) report this kind of tendency to meet or beat three earnings benchmarks (i.e., loss avoidance, earnings decrease avoidance, and negative earnings surprise avoidance'), many studies started to investigate this issue with various topics. The studies show that firms try to meet the earnings benchmarks to meet or beat the three benchmarks in various reasons. There are also several studies that investigate the same issue in Korean context. In this study, we focus on negative earnings surprise avoidance because prior studies have documented that the tendency is the related to the most important benchmark among the three benchmarks (e.g., Brown and Caylor(2005) and Skinner and Sloan (2002)).
In this study, we investigate the relationship between the above mentioned tendency and firm size and firms' listing status. Large firms, compared with small firms, and firms listed in KSE market, compared with firms listed in KOSDAQ market, are watched and followed by many interested parties or stakeholders. For example, many financial analysts cover large and/or KSE listed firms but they are less likely to do son for small and/or KOSDAQ listed firms. Media coverage also show similar pattern. Prior studies of Graham, Harvey, and Rajgopal(2005) and Nam and Choi(2009) report that firms try to report actual earnings to meet the analysts' forecasts when there exists greater interests on the firm from the interested parties or stakeholders. Studies of Barton and Simko(2002) and Matsumoto(2002) also reported that, consistent with this prediction, large firms and firms followed by more number of analysts show stronger tendency to meet or beat analysts' earnings forecasts. Firms that receive a lot of attention from media or stakeholders may have stronger incentive to try to satisfy the needs of those organizations or individuals than followed my small number of outsiders.
In this study, we examines if large firms, compared with small firms, and firms listed in KSE market, compared with firms listed in KOSDAQ market, are more likely to show such a tendency. Large firms, as already investigated by prior studies, are more likely to report earnings that meet or beat analysts' earnings forecasts. In addition, firms listed in the KSE market are more likely to report earnings that meet or beat the forecasts, since larger firms or KSE listed firms received more attention from stakeholders. Those firms are likely to have stronger incentives to meet the expectation of those stakeholders, by reporting earnings which satisfy the expectation of the stakeholders.
With 3,207 firm-year observations collected from Korea over the period from year 2000 to year 2008, we empirically examine these two predictions by using logistic analyses. The samples are collected from non-financial industries, because firms in financial industry use very different types of accounting principles which are difficult to compare with firms in other industries. The financial data are retrieved from Kis-Value II database and analysts' earnings forecasts data are collected from FnGuidePro database. We use various measures to divde the full sample into small versus large firms. The theoretical predictions are all supported by empirical findings. Furthermore, we find that large firms are not more likely to meet or beat analysts' earnings forecasts than small or medium-sized firms are when the firms are listed in KSE market. In contrast, we find significant evidence that large firms listed in KOSDAQ market are more likely to avoid negative earnings surprise than small firms listed in the market. It may caused by the fact that KSE listed firms receive enough attention from stakeholders, regardless of the size of large or small firms. As a result, firms try to report earnings higher than analysts' earnings forecasts only in the KOSDAQ market where there are mixed set of firms that receive more or not enough attention. Furthermore, we find that not only the tendency for meeting or beating analysts' earnings forecasts but also the tendency for just meeting or beating (i.e., by small margin) the forecasts are also present. This is more direct evidence that the documented phenomena are due to the firms' opportunistic behaviors.
The findings in this study has various implications. The findings in this study suggest that in some situation, unlike popular beliefs, large firms and KSE listed firms are more likely to report earnings that meet or beat analysts' forecasts. Unlike the findings in this study, prior studies document that the magnitude of earnings management is greater for the small firms than that of large firms (e.g, Dechow and Dichev 2002). Contrary to the finding and popular beliefs, this study show that in a specific situation, even large firms can avoid negative earnings surprise more frequently than small firms can. It could become possible by market's expectation management or actual earnings management. As a result, this paper shows that the large firms are not always more transparent. In some situations. like the one documented in this study, even large firms could manage earnings or market's expectation more frequently than other firms, although the magnitude of the earnings management could be small. Regulators, investors and creditors need to know this phenomena and may use the findings in this study for their decision-makings. Academics can also apply the discussion in this paper for any future research.

For the past several years, the Korean government has been carrying out training programs (named Programs Designed to Enhance the Personnel Structure: EPS program) for human resource development in SMEs. The objectives of the programs are to strengthen the capability of existing manpower and induce competent workers to join SMEs. Approximately, 100 million dollars of subsidies has been supported every year, and 469 training courses has been offered through 8 business associations. A total of 12,420 SMEs takes part in the programs with 31,296 employees enrolled.
It is difficult to evaluate the performances of the training programs subsidized by government since the goal, which is mainly to enhance the productivity and human resource capability of the trainees, is often hard to measure. That is the reason why qualitative assessment is often conducted to the training programs. However, there are several limitations to this approach. First, the often-used Lickert scale measure, in which the evaluations are described in words to make qualitative assessments, has the ambiguity problem of words undermining the objectivity of numerical scores. The ambiguity associated with the linguistic variable must be reflected for the possibly-accurate evaluation. Second, the results may be distorted if the evaluators lack of sufficient understanding of the program or of the assessment criteria. The difference in the confidence levels measured by each of the evaluators must also be factored into the results.
To address these issues regarding the composition of evaluation indicators and measurements, the fuzzy set theory may be employed to put together the indicators and measurements. The fuzzy set theory is generally used as a powerful tool to reflect or lesson the uncertainty and inaccuracy in the decision making process.
The fuzzy set theory is used to evaluate the EPS programs of SMEs in this study. In order to assess the programs, we make the qualified indices over the process of program, and calculate the program score using the fuzzy methods.
In the program evaluation, we decided three qualified criteria from the Delphi method. The criteria consists of the effectiveness of the training program, the performance of training program and feedback effect. The evaluation indicator of EPS program consists of three qualified indicators : PEI (Program effectiveness indicator), TPI (Training performance indicator) and PFI (Program feedback indicator). These indicators assess the program and calculates the respective composite indices for each type of training programs. The types of training programs can be categorized as the technical fields training course, the technical theory training course, the management training course and the CEO course.
We use three kind of methodology for evaluation: SMS(Simple mean score), FICS(Fuzzy importance and confidence weighting score) and FIS(Fuzzy Importance weighting score). The FICS is the linguistic rating score with the fuzzy calculation method, which takes into consideration of the importance of criteria and confidence of judgement, applied . The FIS is the linguistic rating score with the fuzzy calculation method, which takes into consideration of only the importance of criteria. The SMS is just the mean of the linguistic rating score. In view of all the programs, the program effectiveness score (0.745) and feedback effect score (0.744) are nearly the same, followed by the training performance score (0.726) in the terms of SMS. However, in terms of FIS and FICS, the program feedback index (respectively, 0.625 and 0.538) scored the highest followed by TPI (respectively, 0.621 and 0.536) and PEI (respectively, 0.606 and 0.522). The results differ when taking into consideration the ambiguity of the linguistic expressions and the uncertainty of human judgment. Methodologically, the FICS is likely to be less fit than the FIS since the evaluator has a lower confidence on his/her judgment.
The scores for each type of the training are as follows. The score ranking of composite index is CEO training (0.75) > work-field skill training (0.74) > theoretical knowledge training (0.73) > management training (0.72) in terms of SMS. In terms of FIS, the score rankings of composite index are work-field skill training (0.62) = CEO training (0.62), then theoretical knowledge training, management training (0.59). FICS ranking of composite index are work-field skill (0.54), technical knowledge (0.53) and CEO (0.53), and management (0.52). The score of management training scored the lowest in FICS and FIS. In the three methods, the work-field skill course scored the highest.
We applied the OLS estimates in order to find the characteristics of training course. The OLS estimate is drawn up with the FICS as the dependent variable and the characteristics of the training course such as training periods, number of trainees, government training subsidy, degrees of improvement for human resource technology as the independent variables. The estimation results reveal that the evaluator gives higher scores when the training is done over longer period, the number of participants is smaller, the government subsidies per trainee is smaller (or the individual cost-sharing is larger), and the capacity(or productivity) increase is greater. This indicates that small-scale and long-term training courses are more effective. Furthermore, since the possibility of deadweight loss effect of subsides may be high, the ratio between government subsidies and individual cost-sharing should be well-balanced.
Next question is how the confidence of evaluation is relevant to score? We can suggest that the difference between FICS and FIS is the confidence of evaluator. If the degree of evaluator's confidence is complete, FICS is equal to FIS. If the degree of evaluator's confidence is less complete, FICS is less than FIS.
The difference between FIS and FICS is denoted as dP = FIS/FICS. We may suggest that the difference between FIS and FICS, The dP, is used to accept or not to accept for the evaluation result. That is, the results are the more different, the less acceptable. So, we can define the level of evaluation confidence (LEC). If the LCE is equal to 1, the confidence of evaluator is complete and the decision maker may accept the result of evaluation. However, the LCE is near to 0, we can recognize that the evaluator assesses the training program with weak information or ambiguous judgement. So, we may not accept the evaluation results. The LCE helps the policy maker decide whether to accommodate the results or conduct another round of evaluations.
We find that the training programs, which has the long duration and applied to small groups of trainee, shows more positive performance. And the workplace training program shows the best performance and the management program, the next programs and then, CEO course.
This study reveals that the evaluation indicators may has the impact on the results of a qualitative evaluation for policy assessment. We find two things: one is that the fuzzy importance weighting score infuses partial objectivity by translating the ambiguity of linguistic expression into numerical figures, and the other is that fuzzy importance and confidence weighting score boosts the reliability of the results by adding the confidence of the evaluator. This study suggests that the Fuzzy evaluation methods can suffice as an alternative method of policy evaluation.

This paper aims to examine risk sharing in the Korean supplier relations. Risk sharing in supplier relations can be conceptually framed contrasting two opposite hypotheses : the risk shifting and the risk absorption hypothesis. Under the risk-shifting hypothesis, customers seek to minimize purchasing costs transferring to suppliers the negative effects of business risk. Customers try to use them as a buffer against business fluctuations. Under the risk absorption hypothesis, customers are concerned not only with short- term reductions of purchasing costs but also with building and maintaining long-term relations with reliable suppliers (Kawasaki and McMillan, 1987; Asanuma and Kikutani, 1992). Within this framework, customers have an interest in absorbing at least part of the risk deriving from unpredictable cost or demand fluctuations. There is a common interest of customers and suppliers in pursuing supply chain global optimization and in designing effective supply contracts, able to allocate profit and risk to each partner in a way that no partner can improve at the expense of the other. Customers can offer to suppliers a sort of ‘insurance' against unexpected variations of production costs, and get the advantages associated with ‘relational quasi-rents’ (Aoki, 1988).
The results of previous empirical studies (Kawasaki and McMillan, 1987; Asanuma and Kikutani, 1992; Yun, 1999; Tabeta and Rahman, 1999; Camuffo et al., 2007) seem to support this idea of risk absorption by large customers. However, their empirical results cannot be readily accepted because of serious problems in the econometric method.
In the theoretical discussion, Kawasaki and McMillan(1987) assumed the quantity ordered from the customers for each period is constant. From this assumption, risk sharing parameter(α) deduced from Kawasaki and McMillan(1987) agency model can not be used when the output of suppliers fluctuates during estimation period.
Besides, as Asanuma and Kikutani(1992) admitted, the effect of demand fluctuation experienced over time cannot be analyzed in the Kawasaki and McMillan(1987) model. Since they do not consider the risk of demand fluctuation at all, this may be at least as essential for parts suppliers as that of cost changes. They fail to provide enough evidence to reject the traditional view of risk shifting.
Okamuro(2001) presented an alternative way to examine the risk sharing in the supplier relations. He adopted an econometric method to test if the relative stability of the profit rate of the suppliers, which is regarded as the measure of risk absorption by their customers, differs significantly according to the intensity of business relations. Okamuro(2001) appropriately takes into account of risk from demand fluctuation. It can test risk sharing between customers and suppliers, regardless of its particular risk types. An advantage of Okamuro(2001) model is that it enables us to examine the risk sharing as a whole. Moreover, the problems in estimating the risk absorption parameter(α) can be avoided with this method. But his model has some limits. Although it includes proxy variables for the risk aversion of the suppliers (λ), proxy variable for moral hazard (δ) is omitted. Moreover, his model does not distinguish supplier’s risk sharing from cost fluctuation and demand fluctuation. Therefore, his model does not fit for testing the risk sharing arising from cost fluctuation on which the Kawasaki and McMillan(1987) principal-agent model discussed.
This paper examines risk sharing in the supplier relationship, based on an alternative method presented by Okamura(2001), using a unique data set of Korean automotive and electronic parts suppliers. It was tested if the relative stability of the profit rate of the suppliers is significantly influenced by business relationship intensity(MCR), the degree of supplier's risk aversion(λ) and possibility of moral hazard(δ).
Firm size(LNLAB), financial solidity(EQTR), large group affiliations(GROUP) were used for the proxy variables for supplier's risk aversion(λ). Labor productivity(VAL) was used for the proxy variable for supplier’s moral hazard(δ). Standard deviation of annual sales increase rate(SDQ) and standard deviation of the profit rate of the main customer(MCSDP) were used as controlling variable to measure the effect of business fluctuation on the stability of supplier's profit rate. The main estimation results are as follows;
1. The relative stability of the profit rate of the suppliers is significantly influenced by the intensity of business relations with the main customer. In regard to the variable of the business intensity(MCR), estimated coefficients have always expected negative significant signs. It means that customer absorbs the larger part of the risk of its suppliers, the higher their dependence on it in sales is, which is consistent with Okamura(2001).
2. As for the proxies for risk aversion, some coefficients have expected signs, but other has not. Those of EQTR and GROUP have expected positive signs. It shows that customer absorb supplier's risk, partly, according to the degree of risk aversion. But those of firm size(LNLAB) have wrong signs, like that of Okamura(2001). This shows that large suppliers can stabilize their profit rate not by risk sharing, but by themselves.
3. Variable for moral hazard(VAL) has significant effects on the stability of the profit rate. It shows that the more capable the supplier is to reduce production cost, the less is the customer’s incentive to absorb supplier's risk.
These findings support the risk absorption hypothesis that the risk sharing by the main customer depends on the intensity of the business relationship, the degree of supplier's risk aversion and possibility of moral hazard.
4. The coefficient of MCSDP(standard deviation of the profit rate of the main customer) shows somewhat different risk sharing between automobile and electronic industry. It has insignificant values in the automobile industry, significant positive signs in the electronic industry. This shows that instability of the profit rate of the suppliers is positively correlated with that of main customer in the electronic industry. The profit stability of the suppliers is significantly influenced both by the profit level and instability of the main customer in the electronic firms. This implies that customer's risk absorption does not exclude risk shifting in electronic firms.
These results suggest as a whole that the Korean main customers absorb a part of the business risk of their suppliers depending on the intensity of the relationship, the possibility of suppliers’ moral hazard, and, partly, the degree of suppliers’ risk aversion. However, these factors explain only a small part of the profit stability of the suppliers, as the values of adjusted R2 indicate. Moreover, these provide the evidence from electronic firms that customer shift a part of their own risk to suppliers.

This study aims to analyze the success factors for benefit sharing system between large and small to medium sized companies that participate in Benefit Sharing System with large company customers. 1,237 small & medium sized companies which were recognized to participated in Benefit Sharing System with large companies from April 1, 2008 to June 20, 2008 were ed, and the survey questionnaires were sent to them via email and mail. Out of 11 total returned questionnaires, 151 were used in analysis and the results are as follows:
First, it turned out that the conformity of the strategic aim of large and small to medium sized companies had positive effect on the reliance between partners, which indicates that the relation between large and small to medium sized companies' win-win cooperation is important strategically for the both partners, and that it has positive effect on the competitive status. The better the conformity of the strategic aim is, the more common interests the partners may share. Further, the mutual expectation on the achievement from the win-win cooperation increases while uncertainty of the relation between companies goes down.
Second, it turned out that the conformity of the strategic aim between large and small to medium sized companies had positive effect on the relation consistency, which indicates the following two aspects: ① A win-win cooperation enhances the possibilities of success when the company is superior to the other company. ② With relation consistency between companies, expenses for information searching are reduced. In addition, when the two companies have the same strategic aim and relation consistency, they share the goal, the expenses for information searching are reduced, and thus efficiency is enhanced accordingly. Thus, efforts should be put forth to maintain the continuity of inter-company relationship, reduce the expenses for information searching, and increase efficiency.
Third, as a result of analyzing the positive effect of corporate culture on trust between partners when it comes to large and small to medium sized companies' win-win cooperation, it turned out that there was no significance. This is because the extent of trust is different depending on the corporate culture, and the social structure and rules, which are the basis for trust, are different. Thus, for the relationship involving trust based on knowledge to be hanged to that based on belonging, the cultural background that fosters the same belonging as well as the special relation between organizations with different corporate culture are necessary.
Fourth, as a result of analyzing whether corporate culture had positive effect on relation consistency when it comes to large and small to medium sized companies' win-win cooperation, it turned out that it had no significance. This indicates that the corporate culture in Korea has yet to be developed to the point of sharing and accepting the other's different cultures. Thus, the corporate culture of win-win cooperation is necessary so that companies admit the difference of cultures, the values of each other and the spirit of businessmen could be accepted as social values, and the added values created from newly generated knowledge could be evenly distributed.
Fifth, as a result of analyzing the positive effect of immersion of the corporate members on trust in the other partner when it comes to large and small to medium sized companies' win-win cooperation, it turned out that it had significance. This indicates that members of the organization have a sense of oneness regarding the goals and expectations of the organization or the partner. In other words, As companies with positive possibilities for immersion between companies and with appreciation, trust, and willingness to share the values with the other company are participate in Benefit Sharing System, the win-win cooperation partnership can be realized based on active investment, study, and dynamic energy of the company even though the level of technology of the other company is relatively low.
Sixth, as a result of analyzing the positive effect of immersion of corporate members on the company's relation consistency when it comes to large and small to medium sized companies' win-win cooperation, it turned out that it had no significance. This indicates that the expectation of sharing the achievement through win-win cooperation and a bond of sympathy have yet to be formed between large and small to medium sized companies. The difference in awareness of win-win cooperation between large and small to medium sized companies hinders the consistent relation, and thus ways of maintaining relation consistency through voluntary immersion, rather than through agreements or contracts such as agreement items and achievement sharing ratio should be sought.
Seventh, as a result of analyzing the positive effect of trust in the partner on the relation consistency when it comes to large and small to medium sized companies' win-win cooperation, it turned out that it had no significance. This indicates that large size companies tend to maintain existing practices, which is called 'inertia.' Thus, large size companies should take the lead of small to medium sized companies in changing the existing relation, and induce the formation of open win-win cooperation cultures even though it involves more expenses for multi-chances in transactions.
Eighth, as a result of analyzing the positive effect of trust in the partner on the achievement when it comes to large and small to medium sized companies' win-win cooperation, it turned out that it had no significance. This indicates that trust between large and small to medium sized companies has not been developed enough. To share the achievements between companies, benefit sharing system cannot succeed if they regard the relation as a means to take advantage of the other. The company might consider the opportunism in the relation as a superior strategy, but the other party could think the same way, which will lead to the worst result, The findings of this study indicate that establishing Benefit Sharing System only based on the short-term investigation of achievements cannot lead to success.
Ninth, as a result of analyzing the positive effect of relation consistency of the company on the achievement when it comes to large and small to medium sized companies' win-win cooperation, it turned out that it had significance. relation consistency turned out to have direct and significant effects on achievements in win-win cooperation between large and small to medium sized companies. relation consistency in win-win cooperation depends on the extent of the profits created by the cooperation, and more various resources and information could be utilized when the relation is opened than when it is closed and dependent. Benefit Sharing System could be successfully established when consistent win-win cooperation as well as such a relationship with business partners proceeds step-by-step. The findings of this study indicate that long-term, repeated partnership is necessary to improve a low level of trust and to gain mutual benefits.
The findings above show the positive effects of the consistency of the strategic aim between large and small to medium sized companies on corporate relation consistency and how relation consistency in cooperation between large and small to medium sized companies results in positive effects on achievement sharing. Important factors for the success of Benefit Sharing System between large and small to medium sized companies include sharing the values and goals with the large company and deciding a company with the same strategic aim. Foreign cases also support this conclusion.
Benefit Sharing System should be developed in direction of administration of sharing and innovation. This study is of significance even though it is an empirical study whose subject is companies that started adopting Benefit Sharing System since it brings out the point that only short-term cooperation cannot result in achievement sharing, and that long-term sharing of goals and cooperation with a partner with the same pursuit of values can bring in mutual benefits in win-win cooperation, which makes Benefit Sharing System effective. In addition, for the success of Benefit Sharing System between large and small to medium sized companies, approaches in terms of corporate 'eco-system' should be explored. Agreements or tie-ups only for short-term achievements, which have been common so far, should be changed since the findings of this study show that the consistency of the strategic aim has positive effect on achievement sharing and trust in the partner. As knowledge and information is not shared or distributed sufficiently in Korea, the disparity between large companies and small to medium sized companies gets more serious. The findings of this study indicate that in implementing Benefit Sharing System between large and small to medium sized companies, short-term achievement-sharing models based on the necessity of technology and marketing should be avoided, and rather relation consistency between large companies and small to medium sized companies should be strengthened. From the perspective of large companies, short-term profit centered cooperation cannot gain the superiority in the competitive environment of coevolution. In fact, the key element of win-win cooperation is to establish the corporate environment where companies advance together, and to enhance the strength of small to medium sized companies. This type of policy is very appropriate since dynamic growth of small to medium sized companies is a necessity in large companies' securing competitiveness. From the perspective of small to medium sized companies, they can secure a safe device for consistent technological innovation and service improvement in a certain strategic area. It is of great importance to secure stability with specialty and sincerity in transaction and pursue synergy of coexistence. As for trust in partnership and the variables of immersion, there has yet to be sufficient trust between large companies and small to medium sized companies. In other words, there remains a relation of the powerful and the weak between large companies and small to medium sized companies. To change such a relation as soon as possible, formation of long-term, and repeated relation should be sought in consideration of the fact that relation consistency and consistency of strategic aim have positive effects on trust in partnership. This study indicates that as long as they maintain the same strategic aim, large-sized companies, without moral slackening, will seek to improve the competitiveness of small & medium sized companies as part of their supply network.

Companies achieve their goals and obtain competitive positions through outsourcing in order to cope with uncertainty and rapidly changing environments. Therefore, partnerships within supply chain between parent companies and vendor companies have become important.
One of the purposes of this study is to analyze whether core competences have an effect on both financial performance and non-financial performance of vendor companies which do business with parent company(or buyer). The other purpose is to analyze how partnerships between vendors and parent companies could moderate the relationships between vendors' core competences and performances. That is, it is interested in looking at how levels of partnerships interact with competences, and which type of interactions will influence performance most.
To accomplish these objectives, it grasps not only the vendor's core competence but the various factors of partnership between companies. First of all, in this study, core competence is defined as companies' particular capacity, skill, and integrated knowledge, which brings highly customized values. Core competence includes skilled manufacture capability, R&D capability, sales promotion capability and financial capability based on the previous studies. Development of resources (eg. core competence that is inimitable and non-substitutable (Barney, 1991)) is the source of sustainable competitive advantages in markets(Grant, 1991). Thus, it is an essential element for elevating business performance.
Partnership is defined as the relationship which reflects long-term commitment, perception of collaboration, sharing profits and risk and other qualities which coincides with the theory and concept of participatory decision-making. And the partnership is known generally as six factors: that is, commitment, predisposition, shared knowledge, mutual dependence, organizational linkage, and mutual benefits; however, in this study, mutual benefits is excluded, resulting in the other five factors. The vendor companies' performance includes both financial outcome and non-financial fruit. While financial performance shows short term and operating revenues during a specified time within the same industry, non-financial performance displays long term and overall performance and reflects various stakeholders' interests. Non-financial performance is here measured as strategic performance including corporate competitiveness reinforcement and achievement of strategic goals(new product and service development, new market entry, strengthening of core competencies through collaborative production).
Thus, we constructed several hypotheses based on various previous research regarding core competences and company performance and collected and tested data from 408 vendors which operate in machine and components, IT and chemical industries. Findings are as follows:
First, it shows that vendor's core competence variables such as manufacturing capability, R&D capability, promotional capability, financial capability and business performance have positive effect on performances. This finding is consistent with that by Hitt & Ireland, et al.(1984). And it means that such core competences which other competitors hardly copy have an positive impact on the business performance. In other words, core competence is not only a significant factor but also a competitive advantage that is beneficial to the company performance.
Therefore, developing core competences which are scarce and impossibly alternative resources(Barney, 1991) could lead to sustainable success; thus, developing new resource is essentially necessary (Penrose, 1959; Nelson & Winter, 1982). So our finding supports the first hypothesis, and we can argue that such core competences as manufacturing capability, R&D capability, promotion capability, and financial capability are very necessary factors in order to become competitive and improve business performance.
Second, vendor's partnership has a moderating effect on the relationship between core competence factors and strategic performances. The stronger partnership there is, the more positive moderating effects it has on the relationship promotion and financial competence and strategic outcomes. Such moderating effect of partnership means that their strategic performances will be higher if the relationship between vendors and parent companies is more cooperative. So if their business relationships keep such an old fashioned contract based ones, business outcome wouldn't be secured. On the other hand, according to our results, partnership is found to have a negative moderating effect on the relation between R&D capability and strategic performance. This is contradictory to our hypothesis. The reason is that vendor companies in our sample have so different operating history that it is influenced by lagging effect. For instance, those companies that are in the incipient stage tended not to announce their report in R&D well or their data are difficult to track. Besides, recent relationships between companies have totally changed from parts suppliers to excellent partners which have core competence, armed with superior manufacturing and R&D. But extraordinary solidarity and information sharing could be beneficial to vendor companies' growth.
After analyzing moderating effect of partnership on the relation between vendor companies' core competence and financial outcome, we found that there is no effect. It shows that though the level of a partnership is high within supply chain, it has no impact on financial outcome, thus hardly leading to practical cost cut.
This study has several contributions. From a theoretical viewpoint, most of previous studies have been criticized for focusing on the determinants of outsourcing and mixed samples without sorting out them into parent companies and suppliers. On the other hand, this study is concentrated on the vendor companies. In other words, from the vendor's viewpoint, it is focused on analyzing the effect of partnership on the business relation between vendor companies and parent ones. Thus, this study provides future research direction for the partnership effect from the vendor's viewpoint.
In terms of practical implications, as core competence is found to have impacts on business performance, the vendors should understand and keep them exactly and exploit them strategically. Since core competence influence strategy which in turn affects business performance, making a harmonic fit between core competence and strategy must be very important. So companies are asked to figure out their core competences and build business strategies, which would secure excellent business outcome. And in order to make cooperative business network successful, building good partnership between parent companies and vendors is necessary. This kind of partnership will be strengthened by commitments of participants, shared information, and smooth communication. In order to make partnership function well, all partners involved should make a great effort volunteerly.
A good example is mutual investment. To develope better relationship between parent companies and vendors, well organizing communication channel and transformation from close cooperative system to open one should be introduced. In order for vendors to survive in a competitive market, they must develop a highly sophisticated partnership, which could build network competitiveness in collaborative business relations.
Lastly, this study has the following limitations. First of all, it didn't control such important antecedents as business strategy and organizational structures. Moreover, due to the research samples focusing on a few industries, a generalization of this research result is severely limited. It would be better to collect more samples across industries. Therefore it is necessary for future studies to obtain richer data with elaborate case studies by interviewing officials directly working for vendors.

Small and Medium-sized Enterprises (SMEs) play an important role in national economy and are also important objects of economic and industrial policies in industrialized economies. On the other hand, innovation is a critical factor for sustainable competitive advantage of firm as well as for long-run economic growth. Therefore, most innovative firms invest much resource in innovation activities including R&D, one of important business activities in firms. However, innovation can be more difficult challenge for SMEs because SMEs, in general, have lacks of innovation resources and complementary assets such as marketing and production capabilities, etc. for commercializing innovative outputs. In addition, environmental changes around innovation characterized by decreasing product life cycles, increasing uncertainty and risk of R&D, etc. are also other barriers for innovation of firms including SMEs. Accordingly, many firms tend to search new knowledge from various external sources and to pursue to achieve innovations through cooperation with broadly distributed external innovators for gaining access to or sharing innovation resources or knowledge of external innovators. This innovation strategy can be incorporated within a new conceptual framework called ‘Open Innovation', which nowadays is recognized as a new innovation paradigm by many academic scholars and business managers and is spreading rapidly to academics and business practices even though there is a controversy surrounding the open innovation. As a result, theoretical discussions and case studies related to the open innovation are fast growing.
Nonetheless, there are lacks of empirical literatures dealing with the open innovation activities of firms, particularly SMEs, and thus we have little empirical evidences about how opening for innovation can shape innovation performance of firms (including SMEs). Under this context, this research empirically investigates the relationship between open innovation and the innovation performance of firms by focusing on SMEs in South Korea in basis on a large scale survey, named ‘Survey on Technology of SMEs', which has been conducted by a public organization, Korea Foundation of Small and Medium Enterprises, in South Korea from 1995. Objective of this empirical research is to complement previous literatures on open innovation and to give some implications to business managers and policy-makers interested in development and implementation of innovation strategy or policy. To do so, this research explored the effectiveness of the open innovation on innovation performance of SMEs especially by focusing on ‘Inbound' open innovation (outside-in process) even though there are many important open innovation mechanisms categorized into ‘Outbound' type (inside-out process) and the coupled process of Inbound and Outbound. More concretely speaking, the paper examined the effectiveness on SMEs' innovation performance of opening R&D processes in two perspectives of the openness, investments in open R&D activities and networking for open R&D. Open R&D activities were divided by two different categories such as ‘collaboration R&D' and ‘bought-in R&D', whereas networking for open R&D was focused on formal relationship with different types of external innovators and examined in a viewpoint of network size. Furthermore, this empirical paper also investigated how the internal R&D effort influences innovation performance of SMEs because most firms invest much resource in internal innovation activities simultaneously in spite of pursuing to open innovation strategies. In addition, this study tried to obtain empirical evidences about how interactions between the internal R&D effort and the open R&D efforts influence the innovation performance of SMEs.
The data used in this study were those that had been collected for total 3,400 sample SMEs that had conducted R&D during the past two years (from 2005 to 2006), which is a largest survey of innovation activities of SMEs in South Korea. However, because the innovation performance of firms as the dependent variable was measured by sales from new or advanced products (including services) from innovation activities, the sample size used in model estimations was 2,911 by eliminating the data for firms that pursued only to process innovations during the sample period. The reason why the measure of the innovation performance of firms was used is to reflect recent trends of studies on innovation based on CIS (Community Innovation Survey) even though this approach has a weakness not of considering process innovation performance. From analysis of the sample characteristics during the past two years, 54.3% (1,580 firms) of the sample conducted open R&D for innovation, and portion of firms conduced the collaboration R&D was higher than that of the bought-in R&D during the period. Share of firms with employees less than 100 was 74.1%, and average age of sample SMEs was 13.3 years since the year of foundation. Startups that were defined by firms with age no more than 3 years shared 7.1% of total sample firms, and average R&D intensity of sample firms was 12.1%. On the other hand, results of correlation analysis showed there is negative correlation between the in-house R&D investments and the investments in the open R&D including both the collaboration R&D and the bought-in R&D, which implies potential substitution between both. In addition, size of firm showed positive correlations with the internal R&D investments as well as the open R&D investments including two sub-categories, which imply a possibility that larger firms might play more important role especially in the outside-in process of open innovation. In estimating the models which are relating the independent variables to the innovation performance as the dependent variable, several variables were introduced to control potential effects on the innovation performance of other factors different from independent variables. Those control variables include R&D intensity, size of firm, age of firm, a dummy representing startups, 14 dummies of industries. The models were estimated by Tobit regression because the dependent variable had censored distribution inherently and the sample had a ion bias to firms with R&D activities.
Empirical findings can be summarized as follows : first, the internal R&D investments affected positively the innovation performance of SMEs. This is consistent with arguments that the in-house R&D efforts play an important role in increasing the innovation performance of firms. Second, SMEs conducted open R&D achieved higher innovation performance than others. In addition, estimation results showed that increasing the investments in open R&D activities was effective for enhancing the innovation performance of SMEs regardless of open R&D categories, i.e. the collaboration R&D and the bought-in R&D. Third, empirical findings also indicated that expanding formal innovation networks for open R&D enhances the innovation performance of SMEs. Forth, although both the in-house R&D effort and the open R&D effort has positive relations to the innovation performance of SMEs respectively, it was showed that both have negative interactions to the enhancement of innovation performance of SMEs. In other words, the in-house R&D investments negatively moderated the effectiveness on the innovation performance of both of open R&D investments and the size of open R&D network. Accordingly, we found the evidence that strengthening both the in-house R&D effort and the open R&D effort (investments and formal networking) simultaneously affects negatively the innovation performance of SMEs.
In addition to complementing previous literatures on the open innovation mainly focusing on some advanced countries, these empirical findings show that the open innovation strategy is valid for enhancing the innovation performance of SMEs but business managers or policy-makers need to be careful in implementing or supporting the open innovation activities so as not to give rise to negative interactions with in-house innovation activities of firms.

Risks that occur across the range of management activities of Small-Medium (sized) Export Enterprises (SMEEs) are divided into underwriting risks, financial risks and operational risks. By definition, underwriting risks refer to those arising from the operation of export insurance business, financial risks are those that can occur in financial management, and operational risks are those involving clerical and system errors. Underwriting risks are classified into credit risks, which can be posed by the default of importers, exporters and importing nations, and foreign exchange risks, which may arise from the fluctuation of foreign exchange rates. Financial risks are divided into credit risks, liquidity risks and market risks. Credit risks may result from the bankruptcy of organizations where funds are deposited or organizations issuing bonds, while liquidity risks are those possibly arising from failures in responding to unexpected fund outflows. Market risks involve changes in values of investment assets.
In 2008, Korea Trade Insurance Corporation (KTIC) completed the launch of its Integrated Risk Management System whereby credit, market and operational risks alike can be comprehensively managed in a single system. The best practices of advanced financial institutions were benchmarked based on consultation with external professional agencies to fit into KTIC's working environment. This served as a basis for KTIC to further strengthen its company-wide systematic risk management. As for credit risks, the risk possibilities for the main stakeholders of exporters, importers and importing countries, based on which, expected losses, unexpected losses and risk concentration for each insurance type are calculated on a daily basis. Multi-faceted analyses of risk holders and insurance types are used to identify causes of credit risks. Meanwhile, as for market risks, the risk amounts are measured on a daily basis to measure risks from losses resulting from fluctuating interest rates and stock prices and are monitored accordingly. Lastly, liquidity risks are managed by calculating the adequate liquidity scale in a set confidence interval by factoring in the past errors between the planned and actual flows of funds. For operational risks, the Operational Risk Management System is used as a part of the Integrated Risk Management System to fully prevent operational risks by establishing management measures based on the Risk and Control Self-Assessment (RCSA) and the Key Risk Indicator (KRI).
On the one hand, marine insurance is that which covers risks (marine risks) which could possibly occur during marine transportation, on the other hand, export insurance is non-profit and political insurance that seeks to promote a nation's exportsby compensating exporters, producers and exporter-finance-loan-banks for their unexpected loss due to commercial risks such as contract breach, bankruptcy, and payment delay or denial by importer, and political risks such as war, rebellion, and exchange transaction restriction by the importing country.
Under the category of Medium and Long-Term transactions, KTIC has i) financial products to mostly support financing (Medium and Long-Term Export Credit Insurance, Overseas Business Credit Insurance, Export Bond Insurance, and Interest Rate Risk Insurance) and ii) insurance-type products to cover risks for export receivables and overseas investments (Overseas Construction Insurance, Knowledge Service Export Insurance and Overseas Investment Insurance). The Medium and Long-Term Export Credit Insurance is a scheme to cover risks of non-payment of principal and interest in a loan agreement with a payment period ofover two years for export of Korean capital goods. Overseas Business Credit Insurance, meanwhile, is a scheme to cover risks of non-payment of principal and interest in a loan agreement with a payment period of over two years for overseas businesses.
KTIC is extending active support for Korea's export and overseas investment activities by facilitating financing in the international financial market using the two insurance schemes. The roles of medium and long-term financial products will be more critical asthe demand rises for ECA-backed loans facing greater uncertainties in the international financial market. Foreign Exchange Risk Insurance protects exporters from potential losses resulting from fluctuations in exchange rates. This insurance product was designed to hedge exchange risks whereby KTIC covers risks when exchange rates go down and redeems profits when they go up. This enables exporters to fix the export contract amount in the Korean currency, helping to secure their operating income and remove foreign exchange risks when the rates fall. KTIC offers two types of insurance arrangements. First, under the forward exchange arrangement, exporters may freely subscribe to a forward rate contract within limits based on export performance and export contracts. Second, under the bidding arrangement, foreign exchange rates are fixed in advance when exporters bid for overseas construction, plant or shipbuilding contracts to prepare for a drop in exchange rates in signing an export contract. Under the forward exchange arrangement, when an exporter subscribes to insurance, KTIC removes exchange rate risks by hedging (selling of forward exchange) through a bank on the date of subscription. If the exchange rates are down on the maturity date, KTIC receives the proceeds from the bank and pays claims to the exporter. Conversely, if the rates are up, KTIC pays the proceeds in advance and later receives the recoveries from the exporter. In light of the function and role of KTIC for Korean export promotion, how many SMEEs (Small or Medium-sized Export Enterprises) in Korea are making use of the outstanding export insurance system? SMEs are generally at a disadvantage compared with large-sized enterprises in terms of capital, information, professional power, and skilled labor. SMEEs are particularly exposed to commercial and political risks in receiving export payment from importers abroad. So, the Korean government has also been running an export insurance system (KTIC) since 1969. Lee MB’s government established a goal toreach a trade amount of U$ 1.3 trillion and an export amount of U$ 650 billion by 2014. In order to attain this target, they decided to raise the export ratio of SMEEs from the current 30% level to a 40% level by 2014. It is necessary and crucial for SMEEs to raise the practical use ratio of export insurance in order to enlarge the export amount and ratio of SMEEs.
This paper aims at proposing some ideas for raising the practical use ratio of export insurance to promote more live export activity by covering commercial and political risks in importing countries. The methodology used to attain the objectives of this research is an analysis of the content of 'setting up a claim' proposed to KTIC during 2001～2005 by the insured or policy holder and find some bottlenecks faced in cases where SMEEs make use of the export insurance system. As a result of this research, the authors propose some concrete ideas for enhancing the practical use ratio of export insurance by SMEEs.

One of the most important ways for start-ups to gain resources as well legitimacy is to conduct an IPO. By going public firms increase their legitimacy in the business community, improve their access to debt financing, and create a means of exit for major shareholders (Sutton and Benedetto, 1988). Thus, the IPO has been used as a measure for start-up performance since conventional measures for performance, such as profit or sales, are not available for very young firms (Deeds et al., 1997 Stuart et al., 1999).
In Korea, over-the-counter (OTC) stock market has opened on April 1, 1987 to meet both the needs of investors who want high risk-return opportunities and emerging enterprises that have to finance capital for growth. The OTC market is not a formal organization with membership requirements or a specific list of stocks deemed eligible for trading. To have their shares traded on the OTC market, the unlisted companies have to register with Korean Securities Dealers Association (KSDA).Then, their stocks are traded on the KOSDAQ stock market through its advanced automated trading system. KOSDAQ market has opened on July 1, 1996.Its function can be stated as follows : (1) to facilitate corporate financing for promising small and medium-sized firms and venture businesses, (2) to provide new exciting investment opportunities for investors, and (3) to help venture capital firms redeem investment capital and set up new investment funds. KOSDAQ is the Korean version of America's National Association of Securities Dealers Automated Quotation (NASDAQ) System. Since 1997, the Korean government has operated a “venture company certification system,” which registers promising technology-based small and medium-sized firms as venture companies in order to facilitate starting up of new companies and enhance their entrepreneurship. Until now, about 15,400 firms have gained the venture company certification but a small minority of these new ventures went into IPO. Therefore, preparing a firm to go public has become a major challenge for entrepreneurial managers of high technology firms.
Then, which start-ups go public? Many researchers have studied this question. For example, Wilbon(1999, 2002) showed that high-technology firms who survive at least five years after an IPO have more intellectual property rights, more experienced senior utives, and spend less on R&D as a proportion of sales at the time of the IPO than their cohorts. Deeds et al.(1997), showed that the total amount of capital raised through a firm’s IPO is affected by the scientific capabilities of the firm including the location of the firm, the quality of the research staff, and the number of products under development. Another empirical study by Chang(2004) found that three factors positively influenced a start-up’s time to IPO the better the reputations of participating venture capital firms and strategic alliance partners were, the more money a start-up raised, and the larger was the scale of a startup’s network of strategic alliances. However, technology-related factors that are very important to technology-based firms are not considered sufficiently. Therefore, the first objective of this paper is to find the effects of technology-related factors, i.e. sourcing and timing of technology acquisition on IPO.
There are several motivations or benefits for going public. Arkebauer(1991) argued that the most important reason for going public was to infuse a significant amount of investment capital into a firm. In other words, an IPO is likely to be driven by expectations of future growth opportunities. On the other hand, Brau and Fawcett(2006) found the primary motivation for going public is to facilitate acquisitions. Pagano et al. (1998) argued that companies appeared to go public not to finance future investment and growth, but to rebalance their accounts after high investment and growth. These are likely to reflect the desire to exploit a window of opportunities suggested by Ritter(1991). Anyway, the firm will attempt to maximize the value by finding the optimal timing for its IPO depending on the motivation for going public.
Then, when is the optimal timing for going public? Benninga et al.(2005), studied the dynamics of IPOs by examining the trade-off between an entrepreneur’s private benefits of control, which are lost whenever the firm is publicly traded, and the gains from diversification of capital. Jovanovic and Roussear(2001) view the duration of the pre-IPO waiting phase as the result of a trade-off between firm learning and the opportunity cost related to delay to market. The greater the opportunity cost, in other words, the better the technology or business model, the sooner a firm will go public. A proposition that firms having greater capital intensity and are characterized by greater technological uncertainty go public earlier has been made by Chemmanur and Fulghieri(1999). These researches are based on the theoretical model and their results are not from empirical studies. Thus, the second objective of this paper is to empirically find the optimal IPO timing with the motivation for going public. This study is focused on determining the optimal timing for IPO by analyzing the effects of IPO both on the value of a firm at the time of IPO and on the post-IPO performance.
This study is unique in that it analyzes the timing of IPO with a two-equation recursive system model. In ex-ante stage, the time to an IPO is analyzed with several factors the experience of CEO, venture capital financing, the sourcing of technology, the timing of technology acquisition, R&D activities and other firm characteristics. In ex-poststage, the effects of IPO timing on the probability of future acquisition and the future growth opportunity are analyzed. This study guides us into the policy for start-ups as well their strategy for IPO. In the empirical analysis, I use the corporate disclosure data including IPO prospectus and data for patenting indicators of 201 high-technology start-ups(36 BT firms and 165 IT-H/W firms) that are registered on the KOSDAQ between 2000 and 2004.
Key findingsof this study is that a quick acquisition of the first technology is very important to lead the start-up to an early IPO regardless of the type of technology sourcing, while active internal development becomes more important when it is near to IPO. This result stresses the timing of technology acquisitionrather than the type of technology sourcing at the beginning of the business. In addition, the strategy for IPO timing should be different depending on the motivation of going public. To capture the future growth opportunity, start-ups should improve their chances of going public more quickly. If the primary motivation of an IPO is to exploit the window of opportunities, e.g. acquisition, start-ups had better wait refining the enterprise’s idea and strategy until the stock market becomes bullish.
This paper is organized as follows. Section 2 describes factors influencing the time to an IPOand hypotheses on the effects of an IPO. Section 3 provides methodology including a detailed description of the data and a regression model. Section 4 presents the regression results. Lastly, concluding remarks summarize the key findings and suggest implications.

Korea’s business is composed of a few large-sized enterprises (which can be abbreviated as LSE) and a majority of small-sized enterprises (SSE). Although there has been a growing recognition of the need for the development of medium-sized enterprises (MSE) which can serve as a link between SSE and LSE, as yet there has not yet been a consensus on the definition, characteristics and the function of the MSE in Korea.
Nowadays, the world is being globalized, and Japan and China are in competition to ne a great economic power. While East Asia is experiencing rapid changes, promoting MSE which can secure flexibility and efficiency through covering up the limitation of LSE and SSE is needed in order to respond the global market which is being specialized.
The features of MSE in Japan can be listed as follows.
First, the MSE in Japan is developing the company through getting into niche markets which are hard for major companies to enter rather than developing markets in order to compete against major companies directly. While MSEs are endeavoring to build the business firmly in the domestic market, they can possess special and competitive technical skills through trials and errors; so that they can get a chance develop their business through independent business system rather than putting their effort to compete against major companies.
Second, from the MSEs with competitive edge in the market, there are many contributions to the national exportation. Those MSEs produce in domestic and maintain the quality of high price products which need cutting-edge technology, while they relocate the low and middle priced goods to the country where manufacturing costs are low, so that they can maintain the price competitiveness.
Third, the industrial structure in Japan is formed from dual structure between major companies and small sized companies. In other words, in Japan’s industrial structure which are composed of subcontract structure, this dual structure has taken a major role of small sized companies’ growth and manufacturing businesses’ international competitive power.
Forth, MSE in Japan adopt a strategy of putting their value on qualitative scale growth rather than quantitative scale growth.
In this paper, the case of Japanese MSE is analyzed. Along with its long history of Industrialization, Japan has a corporate environment where the SSEs can develop as a MSE and later a LSE through a full-support system. Among its SSEs, there are a number of world class corporations equipped with a large domestic market, win-win cooperation with the LSEs and an independent technology development. It can also be observed that these SSEs develop into MSEs with sustainable growth potentials. This study will focus on the condition under which the MSEs of Japan have been developed, and how they have survived the competition between SSEs and LSEs. Through this study, this paper attempts to offer solutions to Korea’s polarization between the SSE and LSE, while providing the basis for SSEs revitalization.
In general, if both extremities phenomenon deepen between LSE and SSE, there are possible fears of occurring disutility in national economy by the monopolization of LSE. For that reason, enterprise group, which can make SSE or MSE compete LSE in some area and ease the monopoly and oligopoly problem, is needed. This awareness has been shared for ages long. Nevertheless, there is no legal definition for MSE in Japan, and there is no definition about the enterprise size or unified view of MSE between scholars, but it is defined differently by each of academical person or research institution and study meeting.
For that reason, this paper will organize the definition of MSE in Japan, and then will propose the characteristics of the background which has made MSE secure competitiveness and sustainable growth in global market. This study focus on that because through this process, the positive change to the awareness of MSE can be proposed in Korea and to seek the policy direction for building institutional framework which can make SSE become MES.
Through this way, the fundamentals for SSE to become MSE can be managed and some appropriate suggestions which will be able to make MSE enter the global market in the future can also be proposed. Due to these facts, this study is very important and well timed task.
In a sense of this way, this study will examine the definition and role of MSE in Japan. after this examination, this study will deal with the status, special feature, and promotion policy for MSE. Through this analysis of MSE in Japan, the foundation which be able to set the desirable role model for MSE in Korea can be proposed. Also, the political implication which is needed to push ahead to contribute to creating employment and economic growth through sustainable growth of MSEs in economic system of Korea can be offered through this study.
It has been found that Japan’s MSE functions as an indispensable link among various industrial structures by holding a significant position in employment rate, production and value added. Although the MSEs took up less than 1% of the entire number of businesses with 2700 manufacturing firms and 7000 non-manufacturing firms, its employment ratios are about 15%, while taking about 25% of the manufacturing industry’s exports. In industries such as machinery and electronics which is considered Japan’s major industry, the MSEs showed a higher than average ratio of manufacturing exports and employment rate. It can be analyzed that behind Japan’s advantageous industries, close and deeply knit MSEs exist. Although there are no clearly stated policies geared towards the MSEs by the Japanese government, various political measures exist such as the R&D Project and the inducement of cooperation between enterprises which gives room for MSEs to participate in the SSE policies.
In relation to these findings, the following practical measures can be considered in order to revitalize Korea’s MSEs: First, there is a need for a legal definition of MSE and the incentives to provide legal support for its growth. Second, if a law to support the MSEs is established, it could provide a powerful inducement for the SSE to grow as a MSE, rather than stay as a SSE. Third, there is a need for a strategy of MSEs to establish a stable base in the domestic market and then advance to the global market with the accumulated trial and error and competitiveness.
Fourth, the SSE themselves need the spirit of entrepreneurship in order to make the leap to a MSE. Because if nothing is to be changed about the system on the firms that grew, and the parts of the past custom was left to be managed alone, confusion and absence of management can take place.
No matter how much tax favors the government will give and no matter how much incentive there could be through the policies, there are limits for industries to higher the ability to propagate. And because of that it is a period where industries need their own innovative skills to reform their firms.

It may be important to activate business venturing for looking for a new growth opportunity in Korea. The entrepreneurship has been studying for a long time because very important in starting business. But, In korea, the studying history is not diversity and short. Also, the comparison studies between Korea and other countries are insufficient even international entrepreneurship studies are popular in the world.
The research field of cross-cultural entrepreneurship combines entrepreneurship research with research on national culture. Entrepreneurship is defined as 'the process of identifying, valuing and capturing opportunity'. Literature on cross-cultural entrepreneurship offers only a limited number of survey-based studies compared to more developed research streams such as cross-cultural marketing and management. Overall, according to their survey-based study, entrepreneurial orientation is more likely to be found in individualistic and uncertainty avoidance cultures. In a similar study, the authors address relationships between culture and four personality characteristics commonly associated with entrepreneurial motivation. Locus of control and striving for autonomy turn out to be more pronounced in individualistic cultures. Risk-taking tends to be more pronounced in cultures that rank low in terms of uncertainty avoidance, whereas there were no differences between cultures in terms of innovativeness (Engelrn et al., 2009)
There is growing recognition among post-socialist (PS) economies that free-market entrepreneurship is essential for ultimately improving their economic future. For this reason, governments in Central and Eastern European economies (CEE; Stoica, 2004), China (Kshetri, 2007; Segal, 2004; Schramm, 2004), and Vietnam (Reed, 2004) are encouraging free-market entrepreneurship. In a rich body of theory and empirical research, scholars have examined the context of entrepreneurship in PS economies (e.g., Feige, 1997; Hsu, 2006; Negoita, 2006; Yang, 2002). Unfortunately, most attempts to study entrepreneurship in these economies have not provided how various forms of entrepreneurship in these economies are related.
This study compared entrepreneurship among Korea, China, Mongolia, and Cambodia. China, Mongolia, and Cambodia were communism countries in Asia, but they has changed economic system to capitalism. The reason we choose specific countries China, Mongolia, Cambodia is staring to change from socialist market economy to capitalistic economy and Korea companies are preparing to advance into these countries market. As developing countries, they have interested in business venturing and increasing jobs. In addition, Korea has paid attention to them for their potentiality of economy. Therefor, it is meaningful to compare entrepreneurship of four countries to examine the relationship between the economic development stages and the entrepreneurship.
So, the purposes of this study are first, compare to tendency of entrepreneurship of college students among four countries. Second, to analysis influence factors of tendency of entrepreneurship and company evaluation aspect. Third, to suggest political implications for activating businesses venturing.
The concept of entrepreneurship is very multidimensional and complex. but the main concept is going to new business creation. So, we accept this point of view for this paper. The studies of entrepreneurship among Asia countries are lack in spite of many cross-cultural studies. Business venturing in countries from socialist market economy to capitalistic economy is popular. So, it need to study about post communism entrepreneurship.
We suggested three main research questions. First, Is there any difference of entrepreneurship of college students among four countries? Second, How the relationship between entrepreneurship and demographic characteristics(gender, age, major, income) among four countries? Third, How the relationship between entrepreneurship and company evaluation(attitude and reliability of company) among four countries?
We measured variables including entrepreneurship (tendency of business creation), materialism, attitude toward company, reliability of company, gender, age, monthly income. The tendency of entrepreneurship measured for 6 items using five likert (5=really true, 1=not really) ‘I want to start my own company,' ‘I eager to start my business even take risk,' ‘I enjoy to plan my own business' and so on.
The questionnaire was conducted using convenience sampling in each countries. The questionnaire was made in Korean first and translate to each language by bilingual and back translation for check translation errors. We gathered total 2,113 data which 776 data of Korea, 528 data of China, 480 data of Mongolia, 329 data of Cambodia. We performed frequency analysis, ANOVA, cross tab analysis and correlation analysis using SPSS.
The Korea mean was lowest and Mongolia, Cambodia mean were higher in total mean comparison of tendency of entrepreneurship. Also the tendency of entrepreneurship mean is higher in women generally. In specifically, Cambodia men were highest and Mongolia women were lowest.
There were not significant difference among age about tendency of entrepreneurship. But, there were significant difference among countries by age that Mongolia teenager and 20s were highest.
The mean of tendency of entrepreneurship was highest in management major student and Mongolia and Cambodia were higher in all of income levels. Finally, the correlation relationship between tendency of entrepreneurship and materialism was strongest in China, between tendency of entrepreneurship and attitude toward company was strongest in Mongolia, between reliability of company was highest in Cambodia.
Especially, the mean of entrepreneurship was highest in Mongolia student. Business venturing is very popular in Central Asia changing to capitalistic economy rapidly. Also Mongolia which affected by Western values in young people and have strong challenge and pioneer sprit inherent from nomadic life. Even though Cambodia is poorest among four countries, Cambodia student have strongest entrepreneurship. It may be that it is difficult to get a job after graduate because of lack of company job opportunity. However, it was surprise that Korea entrepreneurship was lowest among four countries. It may caused by economic slump. But, we need to prepare plan to figure out occupation problem, unemployment problem.
The collaboration among Korea, China, Mongolia and Cambodia are spreading rapidly in recent. So, it is possible to invest directly using high entrepreneurship and export to intangible assets like education of starting business, consulting, service, business item or models.
It is worthy of notice that significant correlation between tendency of entrepreneurship and attitude toward company, reliability among all four countries. We can know about the importance of good image toward general company activities for activating start business. And it can activate start business will when the existing companies managing ethically.
In the results, Korea's entrepreneurship was the lowest, Mongolia and Cambodia's were the highest. Also, men's entrepreneurship were higher than women mostly and students who are business administration major has high entrepreneurship.
We suggest several policies to activate and encourage business venturing. First, to make atmosphere for business venturing should be more easier. The culture of respect successful business man can activate business venturing. Also, education of business venturing should increase in university. So, it need to make university evaluation criteria including the rate of starting business and businesses venturing classes.
Second, it need to make plan for activating business venturing for women. So, to make network holding seminar invite successful women CEO or businessman.
Third, the plan of each majors. It need to give the knowledge for the business venturing not only management majors but non business majors. Also, the government support system of scholarship, job training, international working, also needed.
This study is an exploratory study of entrepreneurship and its associated factors. In the future, it is needed to more accurate measurements and sampling. Also, comparison investigate for not only college student but public and starting business rate and businessman characteristics also needed among four countries. It may be a valuable research topic that make causal relationship model consisting of influence factors to business venturing in the future.