The Process of Developing a Regional Innovation

System and Its Path for Growth

- Focusing on the Empirical Research of Daeduck Valley -

지역혁신체제의 형성과정과 발전방향

□지방정부연구□ 제8권 제2호(2004 여름) : 289∼306

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- 대덕밸리의 경험적 연구를 중심으로 -

Byung-Su Kang(Chungnam National University)

이 논문은 대전 대덕밸리 지역혁신체제의 형성과정을 경험적으로 연구하고, 이를 토대로 발전방향을 모색하였다. 경험적 연구를 위하여 이 연구는 지역혁신체제에 관한 이론적 모형을 검토하였으며, 이론적 모형에 기반을 두고 분석의 틀을 세웠다. 대덕밸리 지역혁신체계구축을 위한 지역의 사회적 환경과 지역사회기반을 파악하고 대덕밸리 지역혁신체제의 형성과정을 살펴보기 위하여 지역사회의 구성요소이자 지역혁신의 주체인 각 혁신 주체별로 어떤 역할을 했으며, 어떻게 네트워크체제를 형성하여 왔는가를 연구하였다. 이를 기반으로 대덕밸리 지역혁신체제의 과제와 발전방안을 제시하였다.

주제어 : 대덕밸리, 지역혁신체제, 기술상업화, 지역경제

I. Introduction

The Participatory Government, which started in 2003, established the goal of national balanced economic development as one of its primary statutory tasks, and is in search of a new developmental model of decentralization. This process for finding the new model started from the current development model, that of centralization.  Korea has been very successful in terms of industrialization through government-oriented compact growth, however; this approach has exposed weaknesses in the area of national competitiveness and the densification of the Korean population due to centralism. This phenomenon is characterized by congestion around the national capital region and stagnation in the other areas.  Moreover, Korea is confronting radical changes such as globalization and knowledge dissemination while not solving the above-mentioned national problems. This global trend establishes a regional organization as a core economic unit, and makes regional competitiveness into the source of national competitiveness. Therefore, the decentralization must be applied as the developmental model to solve the problem of the concentration of population around the capital region, to initiate the dispersion of individuals, and to cope with the changes of the global environment.

The Process of Developing a Regional Innovation System and Its Path for Growth

□지방정부연구□ 제8권 제2호(2004 여름)

In presenting its national vision, the government will encourage every region to establish a special economic development strategy, based on the specific character of that region and their competitive advantages.  Korea is not alone with this strategy; many developed countries are showing an increased tendency to create industry clusters and regional innovation zones so as to enable efficient transfer of technology to companies from research centers, universities and facilitating organizations.  Since the onset of innovation in economic development, successful regional development has occurred in areas where the system is well-prepared. The process is needed to build industry using a strong regional innovation system.

To invigorate the local economy, Daejeon Metropolitan City is preparing a regional innovation system centered on the Daeduck Science Town which was founded in 1972.  The model takes advantage of the favorable geographical conditions in the region.  Daejeon has experienced the second highest rate of new venture capital in Korea, trailing only Seoul.  As a result, in 2000, the central government had announced the decision to form a new industry cluster at Daeduck Science Town in Daeduck Valley. Daeduck Valley evolved from the Daeduck Science Town, starting as an education/research town and evolved to its recent cluster of ventures fitting into the conceptual framework of a regional innovation system.

However the future prosperity of Daeduck Valley is not so rose-colored.  As other advanced industrial clusters such as Songdo Valley and Seoul Media Valley develop around the capital city, which compared to Daejeon has a much better location; the competition level is getting higher.  Many ventures that started at Daeduck Valley are not staying in Daejeon, usually they are leaving for other cities, particularly Seoul.  In addition, the inward migration of ventures from other areas is very rare and the ability to attract prominent enterprises and research institutes is in a very early stage of development.  Although Daeduck Valley has developed as an area which represents a well-established regional innovation system in Korea, we are currently at the point of tackling the domestic and international problems previously described.

The previous studies of a regional innovation system mainly has emphasized the introduction of its concept and necessity(Korea Industrial Complex Corporation·Korea Institute for Industrial Economy & Trade 2001, Korea Institute for Industrial Economy & Trade 2001, Park, Sam Og · Choi, Ji Sun 2000, Park, Sam Og · Nam, Gi Beom 2000, Kwon, Young Sub 2001), or have commonly been focusing on a matter of policy in terms of building its Korean model so far(Kim, Sun Bae 2001, Choi, Bong Su · Lee, Hyun Gil 2001). And the international comparative studies of Daeduck Science Town in terms of the network theory and the new industrial district theory have also been conducted(Oh, Deog Seong · Kang, Byung Ju 2002, Sin, Dong Ho · Seol, Sung Su 2000, Kwon, O Hyeog 2000, Kang, Byung Su 1999, Sin, Dong Ho 1998).

However, those studies have not included the research on regional innovation system in Daeduck Valley including Daeduck Science Town.  And there was no research on a historical process on the formation and growth of a regional innovation system in terms of innovation subjects and a linking mechanism.

Therefore, this paper explored the processes for developing innovation systems in Daeduck Valley in terms of innovation subjects and a linking mechanism. And the paper presented the direction for development of Daeduck Valley by examining the roles and problems of the major issues in the process.

Ⅱ. Theoretical Model for Regional Innovation Systems

1. Definition of Innovation and the Elements of Regional Innovation Systems

Innovation refers to the creation, diffusion, and application of new and economically useful knowledge. Since innovation includes the development, application, and commercialization of something invented, its scope is much broader than the invention itself.  Innovation can also be a useful idea for improving daily life, for improving commerce, or the initial creation of a novel idea such as an inspiration or a scientific discovery.

But innovation in a knowledge-based economy means that every activity that elevates the competitiveness of companies or industries through the commercialization of proprietary knowledge should be distinguished from its source. Hence, the object of innovation is not limited to the development of basic and applied technology, but it is applied to various fields of business management such as the area of manpower training(Industry Research Center 2002).

According to the research of Cooke(1997), regional innovation systems are networks between businesses, which promote the commercialization of products, processes, and knowledge. The constituent elements of this system are classified into infrastructure and super-structure. The infrastructure includes physical structures such as roads, airports, and communication networks. Infrastructure also encompasses social structures such as universities, research institutes, financial institutions, and the local government. Super-structures involve local organizations, institutions, culture, atmosphere, and regulations. In short, regional innovation systems are the relationships between various economic entities related to the innovation process in the local area. These systems focus on those who are in charge of knowledge production, transmission, and application.

If we focus on the organizations and institutions that contribute most directly to technology innovation, we would be investigating public research and development organizations, private technology research centers, and universities.  If we expand our focus, financial institutions and other organizations which facilitate the provision of liquidity are essential components of the technology innovation infrastructure.  The issue of which specific form of infrastructure or system is preferable for the success of a regional innovation system is subject to much debate.

2. Role of Regional Innovation Systems

The role of regional innovation systems is to allow various regions to establish an internal institutional efficiency by overcoming functional and service redundancies and by organizing regional innovation to aid infrastructure effectively. In building the regional innovation system, mediators and leaders play an important role (Kang 2003a, Cooke 1997).  These mediators and leaders can be from the central government, the local government, a support center for business creation, a university or a local development organization.

The regional innovation system is based upon the experiences of developed regions and differs from technology innovation theories that espouse industry zones or innovation environments, therefore; it is possible to apply this system to structurally weak regions.  Moreover, because the system has an evolutionary characteristic, it can advise local policy decision makers to move towards effective development by investigating local routes to development (Cooke et al. 1998).

Consequently, regional innovation systems integrate the efforts of the components of technology innovation, specifically medium and small-sized businesses, large enterprises, research organizations, universities, and technology transfer centers, within an innovative regional cluster. This process establishes a close cooperative system, and more readily facilitates the successful incidence of innovation.

3. Theoretical Model for Regional Innovation Systems (RIS)

A system is necessary which can cope with the rapid change in the industrial environment (caused by globalization, the proliferation of information, localization, etc.) due to the shift to a knowledge-based economy. The regional innovation system is such a system. RIS can develop an environment which can encourage local industry with the formation of a technology cluster and the networks which are necessary for the process. In the new environment that confronts industry in the knowledge-based economy, clusters and networks are an essential way to elevate the competitiveness of business, so we should promote the formation of a cluster and activate its network. From this perspective, this research will establish the basic model of a regional innovation system and will analyze the regional innovation system of Daejeon Metropolitan City based upon this model.

With the focus on the production system, the basic model of the regional innovation system coordinates human resources and technology in the area of technology development and provides financial resources and know-how (management and information) to facilitate business support.  The basic resource, which is necessary for the building of regional innovation systems, is the ability to network and collaborate among resources of human capital, technologies, financial sources, know-how and infrastructure.

The Business Incubator (BI), the Techno Park (TP), and the Technology Commercial Center (TCC) connect the areas of technology development with the production system.  In addition, the Regional Research Center (RRC), the Regional Technology Service center (RTS), the Technology Support Center (TSC) play a role as facilitating organizations, connecting the different sections of the production systems with areas of business support.  Finally, the Regional Development Agency (RDA), which helps grow the cluster and maintain the network among the areas of technology development, production systems, and business support, is also included in the basic model.  The basic RIS model emphasizes the operational framework of the organic growth of regional innovation systems as well as expanding the availability of necessary resources for local industrial development as it focuses on the development of local industry to maximize the potential of the region.

Instead of emphasizing direct support to an individual company, the model stresses indirect support to the business environment including the formation of networks and emphasizes an institutional framework for planning and coordinating extensive systematic industrial development by the economic agents in the region.  International networks are necessary to expand the international information infrastructure, develop systems for technology transfers, provide a conduit for overseas funding and tap into foreign labor pools.

<Picture 1> Model for the Building of a Regional Innovation System

Notes : RCC(Regional Research Center), BI(Business Incubator),

TCC(Technology Commercialization Center), TP(Techno Park),

TIC(Technology Innovation Center), TSC(Technology Support Center),

RTS(Regional Technology Service center)

As a planning and coordinating organization for the development of local industry, the Regional Development Agency assembles the core components of the region and coordinates the planning, development and the growth of the network. The regional innovation system pulls together community resources such as human capital, technologies, financial resources, know-how, and the international network to increase the frequency of innovation by narrowing the barriers between technology development production systems and business support.  The center of the regional innovation system is the strategy of using technology commercialization to rapidly connect innovation with commercialization.

Ⅲ. The Process of Developing Regional Innovation Systems

in Daeduck Valley

1. The Role of Innovative Agents in the Development Process of Innovation Systems

In the effort to propel an export-oriented economic policy after 1960, Daeduck Science Town, the heart of the Daeduck Valley, was designed to maximize the effectiveness of research results by concentrating research institutions in a designated region and recognizing the importance of scientific technology.  For this reason, in 1973, the government started to develop the Daeduck Science Town which emphasized education and research but de-emphasized the role of production.

In 1997, Daeduck Science Town was completed and covered an area of 27.5 □ and was comprised of seven governmental organizations related to scientific technology, sixteen governmental research institutes, twenty-five private research organizations and four educational organizations. In total, there are fifty-two organizations which employ approximately 17,000 people. All of these research institutions together function as the largest and best domestic research development organization of advanced industry and has also been recognized as an excellent research complex of science & technology internationally.

In December 1999, the guidelines for Daeduck Science Town were revamped and the existent research town was redirected to the high-tech industry. On September 28, 2000, the president of Korea proclaimed the region as Daeduck Valley. After the late 1990's, many ventures were born and the volume of exports, sales, employment and patents registered was rapidly increasing, therefore; Daeduck Science Town, a university affiliated science park, evolved into Daeduck Valley. The region developed from a research institute complex and Daeduck Science Town to a cluster of ventures and Daeduck Valley. The roles and activities of every sector that influenced the development process of the regional innovation system among industries, universities, research institutes and government are addressed below.

The first sector is that of technology development which is composed of research centers and universities. Among the governmental research institutes, Electronics and Telecommunications Research Institute (ETRI) has been a leader in the business incubator industry for venture companies.  ETRI, the largest research institute in Daeduck Science Town, supported many venture companies' efforts to commercialize the results of their research on a small scale since 1989.  To further support ETRI's mission, an office was established within ETRI called the headquarters of Technology Promotion for Medium and Small-Sized Enterprises, which provides support services for venture companies.  ETRI has been operating a business incubator inside KAIST since 1999.  Also, ETRI is training high-quality human resource and is organizing a cooperative program between universities and research institutes by establishing and running the University of Information & Communication.  As a result of ETRI's efforts, 220 ventures have been established since January 2002, sixty percent of them are operating in the Daejeon area.

Besides ETRI, KAIST and CNU as higher educational organizations have played an enormous role in the building of Daeduck Valley. KAIST has supported small ventures by establishing a business incubator in 1992, called Body for New Technology Creation. KAIST provides ventures with many services including space for their business, the joint use of research labs, computer systems, and advice for fundraising and management. Specifically, KAIST is actively planning to connect with the various sectors of production systems. Also, by training high quality researchers and developing the evaluation center for technology competitiveness, KAIST is setting up marketing targets and direction to ventures by presenting an accurate technology map of the relevant technology.  This map demonstrates a rational criterion for investment to angel and venture capitalists.

At the same time, CNU is promoting education for technology creation and innovation by establishing the venture comprehensive support center, techno-mart center, information support center, practice room for business creation, and joint facility center inside the cooperation center for industry, university, and research Institute. The purpose of these efforts is to keep in close touch with areas of technology development and production systems. Also, CNU is operating a program to train workers for future opportunities with new ventures.

The second sector is the production system which is composed of large enterprises and medium and small-sized enterprises. Daejeon Metropolitan City has a weak manufacturing base compared with other metropolitan cities; the bulk of Daejeon's industry is service related. The manufacturing base in Daejeon diminished significantly during the 1990's dropping from 33.6% in 1990 to 22.9% in 2000, while service industries increased from 64.5% to 76.6% during the same period. In addition, international trade is a very small component of Daejeon's business activity; Daejeon only accounts for 0.5% of Korea's total exports. This percentage is well below the 2.3% rate of GRDP (Gross Regional Domestic Product) of Daejeon, thus demonstrating that the local economy of Daejeon is inordinately dependent upon domestic demand. In recent years, however, the number of high-technology ventures increased in Daejeon, government has become more supportive of ventures, local universities have stimulated business creation and Daeduck Science Town has grown; preparations are in place to reverse this trend.

Since the start of Daeduck Valley as a university-affiliated science park in the 1970's through 2000, no production facilities had existed in the area. Not until the proclamation of Daeduck Valley in 2000 had the regional innovation system begun to form around the ventures. Despite the recession experienced by the venture industry due to the economic depression, Daeduck Valley reported 3,680 million won in annual sales in 2001, a 1.1% increase over the previous year. At the same time, sales of KOSDAK registered ventures increased by 51.4%, ordinary income rose to 9.2%, and the self capital rate rose to 49.4%.  These figures greatly exceeded the manufacturing industry average in Daejeon.

The third sector is that of business support.  The Daeduck Valley Venture Association, the Daeduck Club, and the Daeduck IT Forum are playing important roles for developing private support. The central government and the local autonomous organizations such as the Daejeon Metropolitan City and the Yuseong District are also playing a critical role in providing government support.

The Daeduck Valley Venture Association (DVVA), which is composed of ventures from the central region and small economic development organizations, was organized in 2000 to encourage the exchange of information, technology innovation and networking among member companies, as well as to contribute to national economic development. At present, approximately 300 member companies are active in the Daeduck Valley Venture Association.  Major activities thus far at the DVVA include the following:  the proclamation ceremony of Daeduck Valley, support of the munitions mart, a strategic coalition with Daeduck Net, host of visitors to Daeduck Valley including important representatives from other science technology cities, the signing as a special member of DVVA with Chohung Bank, Chungcheong Hana Bank, Jipyung Judicial Corporation, and Angun Accounting Corporation, the dispatching of a group to Silicon Valley to attract investment to the Daeduck Valley and meeting with large enterprises, venture companies, and out-sourcing businesses. The Daeduck Club, founded in 1995, keeps active in the business community with activities such as holding monthly lectures and publishing policy reports. The objective of this club is to foster an active exchange and dissemination of scientific technology information. The club consists of principal researchers (both former and current) of Daeduck Science Town. The Daeduck IT Forum has established a network among industries, universities, research institutes and governmental organizations in the information technology field in the Daeduck Valley areas and functions as a hub for the domestic IT industry. The Daeduck IT Forum was established in September 2001 as a cooperative model to build a new level of community. The Forum is a reinforcing collaboration with relevant organizations of the IT field in Daeduck Valley.

) Reinforcing collaboration with relevant organizations of IT field in Daeduck Valley

- Academic Sector : ICU, KAIST, CNU, Paichai University, Hanbat University, Daeduck College

- Industry Sector :  Daeduck Valley, Venture Technology Association, Daeduck Venture

- Research Sector :  ETRI, IITA, KITIA

- Others : Support Organization for Business Creation, Financial organization,

Trade Association, KOTRA, Baekma Venture Club, etc.

Daeduck IT Forum also supports Daeduck IT-NET and its collaborations by : building a global marketing network, by operating Daeduck IT Forum and Internet Broadcasting (Soit-TV) which focuses on IT companies in the Daeduck Valley area and by holding a venture investment mart and recruitment fair.

) Collaborative network with IT related organizations from other cities

□The first year (2001) : Promotion Center for Cheju Knowledge based Industry, Cheju IT Forum

- Linkage Propulsion for Creation Industry of International Free City & Attracting

a Research Center (Planning Part) to Cheju

□The second year (2002) : Promotion Center for Daegu Digital Industry, Daegu IT Forum

- Propulsion for joint marketing

□The third year (2003): Jeonju, Busan, Gwangju, Anyang, Chungbuk etc  Practical Program

Government support can be divided into two segments, the central government and local autonomous organizations. The impact that the central government has made on Daeduck Science Town has been enormous.  Examples of these impacts include:  the creation of Daeduck Science Town (1973) that is the former incarnation of the Daeduck Valley, the improvement of the research environment due to the development of a government research institute, the inclusion of the administrative district of Daejeon Metropolitan City (1983), the conducting of the Daejeon EXPO (1993) and the funcitonal change from pure research and education to advanced industry (1999). Meanwhile, Daejeon is providing many services to support the production systems including: consultation and problem solving for medium and small-sized enterprises, provision of information, support for new technology development, joint exhibitions, sales and operation of business incubators through a comprehensive support center for medium and small-sized enterprises. Daejeon city's major contribution is its support for business creation and its commercialization which is facilitated by many services including operating general consulting rooms, running business creation centers, participating in investment associations for new technology and operating venture towns. (Dasan Center, Jang Young-sil Center).  The second major contribution is the provision of marketing support for local products which is facilitated by operating TJ Mart, providing local exhibition areas for selling products and supporting cyber P.R. for new technology and new products.  The third major contribution is the 119 operating businesses which support companies, manage software promotion zones, support the development of medium and small-sized companies, hold information competitions, publish Kachi Communication, a guide for small and medium-sized ventures and run a university for medium and small-sized enterprises.  These contributions play a very important role in the support of medium and small-sized ventures.

Daejeon is providing broader support to production systems through the establishment of the Daeduck Venture Techno Valley (DVTV).  DVTV developed a plan on the location and support of growth states, operated an investment association for ventures, established an angel mart, created an evaluation center for technology competition and implemented a technology credit guarantee.  As a means to support the need for marketing of venture activities, DVTV operates the Munitions Mart, the Technomart and the Cyber Mart, and aids access to overseas markets by actively using the WTA Technomart which connects the member cities of the WTA.  Also, DVTV has dispatched a ground-breaking group to overseas markets, which supports the participation in domestic and international venture fairs.  Through the Daeduck Valley, where Daejeon City, Hanhwa and Korea Bank developed together in three sectors, DVTV is planning the internationalization of the Daeduck Valley by connecting research results with production facilities.  Since Yuseung District in Daejeon, where Daeduck Science Town is located, exercises its right to permit the new construction or extension of housing and commercial facilities within the research complex, DVTV is closely involved with the issues of construction and landscaping and also manages the basic urban services such as water, sewage and road systems.  Using this authority, Yuseung District is trying to create a comfortable environment for the urban infrastructure to develop.

2. The Role of Networking Between the Agents of Innovation in the Formation of Innovation Systems

As the cooperation between industry, universities, research institutes and government organizations has improved, Daeduck Valley has developed into a cluster of high-technology ventures. But, Daeduck Science Town, the nucleus of the Daeduck Valley, is still in the early stages of development in regards to networking between agents of innovation necessary for the creation of innovation systems.  The current condition of the network between these agents exhibits many weaknesses.  The weaknesses can be divided into two groups which are the infrastructure weaknesses for networking and the networking weaknesses themselves.

The first infrastructure weakness for networking is that the Daeduck Valley has a lack of societal-based infrastructures for expansion of innovation. When there is not a conflict among the sectors of technology development, production systems, and management support, all can recognize the value of the expansion of innovation through the commercialization of a new technology. However, within and between each sector of the innovation systems as well as the local community, there are different views for the optimal path for the commercialization of innovation in the Daeduck Valley.  The lack of mutual understanding and trust of the business climate and a shortage of entrepreneurship among research institutes, universities, ventures, government organizations and in areas of business support has led to conflict and indifference; therefore, the growth of innovation is not as robust as it could be.

In the case of the local community, the people, who participate and benefit from regional innovation, have little interest in innovation.  Since the citizenry of Daejeon are the true local people, their participation is very important and can lead to the practical support and participation of the local city council which to this point has shown little interest in Daeduck Valley.

Non-governmental organizations (NGO) that speak on behalf of the local people have also expressed little interest in the Daejeon economy, particularly in Daeduck Valley. Further, the societal-based infrastructure for innovation expansion, the basic factor of a regional innovation system, has not been yet established. These conditions are the result of disconnection between the Daeduck Valley and the industries most of the people are involved in. Daeduck Valley concentrates on R&D and the commercialization of new science and technology and lacks a network with industries in which most local people are employed; therefore, most of the local people cannot share the benefit of the wealth created by Daeduck Valley. In addition, ventures acquire much more information regarding innovation from companies exclusively and not from universities and research institutes.  The exchange of ideas in R&D and technology is lacking relative to more developed countries. The result is that the areas of technology development and production systems don't share the full value of technical innovation.

The second infrastructure weakness for networking is that the sources of venture financing are insufficient. The number of ventures in Daejeon in late 2001 was at 4.4% in the whole country and the demand for venture funding has grown rapidly.  Unfortunately, the supply of funds is not sufficient to support all of the promising ventures because venture capital companies cannot provide enough funding.  Currently, banks, credit organizations and the Angel Club provide funding to early stage start-ups and this funding is sufficient to get these companies started.  But, as ventures move towards the growth stage with commercialization and exploitation of new markets, large-scale venture funding is required.  However, only a few venture capital sources such as the New Technology Business Finance Corporation, the Venture Investment Company, and the Venture Investment Association are available to provide such funding.

The third infrastructure weakness for networking is that the market does not have a enough base of large enterprises to support start-up companies. Large enterprises play a critical role in the supply and demand of products and services from venture companies. But, there are no large enterprises within the Daeduck Valley and many growing ventures are moving to the capital region. Therefore, it is not easy to sustain the creation of businesses within Daejeon and to attract external high-technology businesses.  This difficulty arises from the basic limit of current ventures and reflects on the importance of educating the public on the importance of commercialization of technology and the need to have a well-trained pool of workers available to these businesses.  To understand the educational needs, it is important to note that 85% of venture businessmen had specialized in natural science and engineering and less than 10% in humanities and social sciences.  The most common occupations of venture businessmen prior to creating their business were R&D or technical work with very few involved with management or sales.  Those who create businesses most commonly come from universities and research institutes with very few coming from private companies.  People coming from universities and research institutes tend to have limited business networks and management capabilities and are therefore constrained on being able to be effective with sales and marketing.  As a result, venture businessmen in the Daeduck Valley lack the ability to tap into their business networks to market their products and services.

The fourth infrastructure weakness for networking is the shortage of people with talent and experience in technology commercialization.  Specifically, very few people have the specialized knowledge of how to create and grow ventures.  A particular need is for people who understand both technology and management because such people are required to transfer basic research to production.  Daeduck Valley attained its high technology competitiveness through its effectiveness in research.  The next step requires different skill sets.  If experts with technology commercialization knowledge are cultivated to develop high technology ventures, external high technology ventures will find Daeduck more attractive, more businesses will be created within the region and the image of Daeduck Valley will be enhanced. A pool of managers adequately trained in technology commercialization can fill an important talent gap at Daeduck Valley.

The first networking weakness is that the linkages between the research infrastructure and regional industry are deficient. Industry zones in Daejeon are mainly occupied by small to medium-sized enterprises that are oriented towards traditional industries.  The latest research results from the Daeduck Valley are applied to the oil chemistry, machine, and electronics industries. These industries have been controlled by a few enterprises which prefer to cooperate with businesses which are located in other regions.  Clusters in any of the industry fields are not being formed so frequently, newly established companies are moving to the capital region. As a result, it is difficult to attract high-technology businesses from the capital region and from abroad.

The second networking weakness is the lack of synergy among research institutes within clusters. As the complexity of technology so rapidly progresses, the collaborative research among industry, universities and research institutes becomes increasingly critical and the research institutes set up by the government within the Daeduck Valley respond by extending their roles. This extension of their roles is most clearly illustrated in the areas of basic research, technology development and valuation of capacity.  But now, little is being done to establish an effective system to ensure that such work is being done most efficiently, that research is shared between diverse research institutes within the Daeduck Valley through mutual cooperation, and that the unnecessary duplication of R&D is avoided between public and private sector laboratories which have different sources of control from each other. Consequently, while the ventures in Daeduck Valley have an excellent technology infrastructure, they do not enjoy a synergistic benefit which can make technology commercialization more efficient and can make the Daeduck Valley more attractive to external R&D companies.

The thrid networking weakness is the poor international network.  After the 1997 IMF crisis, the creation of ventures was more than the anticipated amount because of the extreme support provided to ventures in the interest of employment creation and protecting industries. At the beginning, ventures exhibited rapid growth by producing substitutes to current exports. However, as the number and scale of ventures increased, the supply increased without a corresponding increase in demand and consequently, they could not find enough opportunities to market abroad.  Except for a few of the outstanding ventures, most of the ventures competed as a substitute to current imports based on an inferior technology and a lower cost, and as a result were facing a crisis in overseas markets due to intense competition.

High technology products cannot be created using only one technology, therefore; it is important to acquire information on other innovations so that products and services can be improved with diverse technologies.  Also, high technology ventures sometimes acquire information on innovations from overseas and sometimes must tap into overseas markets for technology, talent, networks and marketing expertise. The delay in internationalizing ventures and the low international profile of the Daeduck Valley act as a large barrier to building an innovation system in the Daeduck Valley.

Ⅳ. The Future Direction for Development of Regional Innovation Systems in the Daeduck Valley

In the current environment of rapid globalization and growth of knowledge, the economic agents of Daejeon devote all their energies to the development of the Daeduck Valley and clusters of high technology ventures. After the 2000 proclamation of the Daeduck Valley, its development has continued due to the active creation of ventures and a favorable governmental policy. Unfortunately, as start-up ventures mature to the growth phase, they are encountering limits on their ability to develop further. This limit is evident by the number of ventures at this stage falling into bankruptcy and relocating to more favorable regions. This result illustrates the deficiencies of the regional innovation system.  In this environment, Daeduck Valley needs a regional innovation system of high technology clusters which can evolve into worldwide venture clusters.

The first step to achieve this goal is to get the local population and the city council engaged on the idea of a regional innovation system. Daeduck Valley, NGOs and the local population need to have more open communication, create a favorable business climate and learn to trust each other. Specifically, the sectors of technology development, production systems and business support must overcome the conflicts, indifference and lack of understanding.

The second step is to increase access to financial markets for regional ventures.  To address the issue of fund-starved ventures in the growth stage, a venture capital industry must be cultivated to increase the capital supply.  To successfully develop a venture capital industry, a pool of experts skilled in the areas of venture capital, high technology and financial systems must be established.  These people must also understand the specific situation in the Daeduck Valley and must have a general understanding of the Daejeon economy.  To maintain a continuous influx of funds, venture capital firms need to attract domestic investment organizations and overseas venture capital by demonstrating strong venture capital management, increasing management efficiency and organizing venture marketing fairs. Regional banks have an important role in that they hold the currently available capital. These banks should support growing ventures with funds by enhancing their capacity to verify the financial quality of ventures and by expanding the amount of capital invested in growing ventures. Also, regional finance companies should build efficient linkages with the investment markets including equity markets and merger and acquisition markets to ensure a greater flow of capital.

The third step is to expand the infrastructure for goods and information so as to reduce barriers to collaboration in high technology clusters. To minimize product cost, production labor must be implemented efficiently for ventures in Daeduck Valley and other regions concerned with the competitiveness of their products. Also, because internet businesses are performing a major role in future industry, government organizations should make an effort to improve the internet infrastructure by expanding broadband networks between large cities and by establishing a plan to build an information infrastructure. To accomplish this goal, cooperative relationships between self-governing organizations are needed. A development association of high technology clusters may be required to unite cities and other territories around Daeduck Valley.

The fourth step is to improve the quality of life around the Daeduck Valley to make the area attractive to workers who have a choice as to where they may live. The high technology industry complex at Daeduck needs to attract skilled workers such as researchers, accountants, licensed tax accountants, lawyers and investors. These people are predominately in a high-income bracket and they place a high value on education, culture and other learning opportunities. Daeduck Science Town currently does not have enough cultural facilities to satisfy their desires. Therefore, cultural facilities need to be developed in collaboration with Daeduck Science Town.

The fifth step is to aggressively enforce the policy to accept foreigners. The number of foreigners engaged in ventures within the Daeduck Valley has been increasing.  To encourage this trend, a living complex for foreigners should be constructed to help them live comfortable lives.  Venture workers should be comfortably accommodated by providing living places for them near the venture facilities and research institutes.  When accommodations are prepared for foreigners to facilitate research, meetings, and educational and industrial activities conveniently, a comfortable living environment will exist.

The sixth step is bringing in experts in technology commercialization and venture creation and growth. To attract the necessary technology commercialization specialists, it is necessary to establish a graduate school and education training institutes for technology commercialization. These efforts will stimulate researchers and venture workers to create businesses and be a great draw for attracting specialists in the fields of consulting and business creation.

The seventh step is to raise the international standing of the Daeduck Valley. An important component to this step is the establishment of a network center for technology commercialization. An international network center would raise informational competitiveness by attracting foreign workers that will improve the level of research and raise the management capacity in technology commercialization. By strengthening the international network system, the flow of information can be improved and the area will be more attractive to professionals in the areas of education, research, and management of technology commercialization.

Ⅴ. Conclusion

This paper reviewed the process for the development of innovation systems in the Daeduck Valley. The Daeduck Valley was originally Daeduck Science Town, an early education/research zone which was transformed into the current cluster of ventures in the conceptual framework of a regional innovation system. The paper also considered the direction for the development of regional innovation systems in the Daeduck Valley by examining the roles and networks of the major subjects in the process.

The development processes of regional innovation systems are divided into four stages, the early stage, the formation stage, the growth stage, and the settled stage. Each area of the regional innovation system in the Daeduck Valley is considered to be in the formation stage. Because regional innovation systems in the formation stage are in many respects not completely developed as compared to the settled stage, it is required to continuously promote innovation and strategies for technology innovation should be established to invigorate technology commercialization in the regional economy.

When considering the regional innovation system of Daeduck Valley it is generally unsatisfactory. In the case of Daeduck Valley, it is particularly difficult to coordinate regional innovation with commercialization; therefore, effective technology commercialization is especially needed to invigorate the regional economy. An technology commercialization center is one example of an approach to link technology and commercialization.

The following types of innovation commercialization centers are available: Technology Commercialization Education Centers(TCEC), Technology Development Commercialization Centers(TDCC), Technology Commercialization Management Centers(TCMC), and Technology Commercialization Network Centers(TCNC). The functions and roles of these four centers are described below.

First, TCEC is an education institute for improving the capacity for technology commercialization. This program has the ability to discover and evaluate technologies, write and evaluate venture and business plans, analyze technology transfer, foster government support and network with venture capitalists. This center will significantly contribute to the training of regional experts for both technology commercialization and in the creation and cultivation of ventures.

Secondly, TDCC evaluates and assesses sophisticated technologies developed within universities and research institutes, analyzing the commercialization potential of products and processes. In addition, it reviews the efficiency of economic production processes.  Through these services, the technology development commercialization center can fill the role of transferring sophisticated technology and stimulating new business.

Thirdly, TCMC is focused on helping and creating newly emerging ventures from commercialized technologies as well as using venture capital to facilitate the efficient transfer of technology.

Finally, TCNC is divided into domestic and international networks and its main function is to establish and maintain networks for human resources, education, research and management.

When the technology commercialization center is constructed as a regional innovation strategy, the linking mechanisms, that bridge the gaps among sections of the regional community, will increase effectiveness and help build a strong regional innovation system.

In brief, to increase the capacity in each sector among technology development, production systems and business support, it is important for technology innovation to be involved in the promotion of the regional economy. But, the most important factor is strengthening the capacity of the linking mechanisms between the sectors of technological development, production systems, and business support.

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강병수(姜秉洙): 미국 미시간주립대학교에서 도시 및 지역계획학 박사학위(Relationship of Public-Private Partnership Activities in the Small Business Incubators in Michigan to Small Business Success, June 1991)를 취득하고, 현재 충남대학교 자치행정학과 교수로 재직중이며, 충남대학교 국제교류원장을 겸하고 있다. 연구 및 관심분야는 지역경제개발, 창업보육, 첨단산업, 테크노폴리스, 지역혁신, 기술상업화, 광역행정, 민관파트너쉽 등이다. 최근 발표된 논문으로는 □Incubator and Business Ventures in Korea: Expectation and Satisfaction"(2003), □Characteristics of Technology Transfer in Business Ventures: the Case of Daejeon, Korea"(2003)등이 있다. 현재 한국지방자치학회 국제학술교류위원장과 한국도시행정학회 부회장을 맡고 있다. <E-mail: kbs@cnu.ac.kr/논문접수일: 2004.7.15/심사완료일: 2004.8.11>