This document discusses social capital in the context of regional innovation clusters in Korea. It defines social capital as the intangible resources embedded in social relationships and networks. Social capital is important for innovation clusters as the innovation process requires communication and cooperation. The document presents case studies of two Korean innovation clusters, in photonics and medical industries, and analyzes their social capital at the firm and regional levels. It finds that purposeful networks leading to innovation communities can accelerate cluster development, but more work is needed to strengthen social capital, such as through entrepreneurship and collaboration. Fostering innovation communities should be a focus of cluster policy.

1. Structure and Functions of Social Capital
in the Regional Innovation Cluster: Korean Cases
Mi-Ae Jung
Science and Technology Policy Institute,
Korea
3.1_Cluster Dynamic Research, Implications on Cluster Performance and Business Competitiveness

2. What is Social Capital?
Bouridieu(1986)
─ Aggregate of the actual or potential resources which are obtained from a
durable network of more or less institutionalized relationships of mutual
acquaintance and recognition
Coleman(1988)
─ Functions that facilitate social structure and specific actions of its agents
─ Productive parts that work together to achieve particular goals that seem to
be impossible without the resources
Putnam, Leonardi, and Nanetti(1994)
─ Characteristics of social organizations that facilitate conciliation and
cooperation for reciprocal benefits such as networks, norms
Thomas(2000)
─ Abstract intangible capital that allows members of a society to form a mutual
aid system to attain a common goal
 Social capital is the intangible asset embedded in the social relations,
which has a productive role in social/economic performance
2

3. Social Capital at the Firm Level
Social capital can be found in the social relations of members of a
firm, between the members of a business, and between the firm and
the external actors
Source: Westlund(2006), p.52
Class Contents
Related to
Production
Activities
- Social capital lies in relationships between factor providers, customers of goods, and a business
Related to
Markets
-Social capital is engaged in relationships between consumers and businesses, not for
exchanging information, but to boost “confidence” in business and arouse “positive expectation
for goods”
- Social capital can be activated by consumers’ awareness through brands or trademarks that repr
esent a corporation, making it possible to commercialize, with activities such as trademark licen
sing trading
Related to
Local
Environment
-Social capital lies in regional corporations or R&D centers that are easily accessible due to a
short distance; they are not directly related to production activities, though. In addition, social
capital can be found in relationships with a policy-making body on the location environment,
and relationships between a civic organization and a citizen in that area
-Social capital can be formed by relationships that a corporation establishes for profit making,
however, when the corporation selects the location, it will evaluate whether the social capital
can be used potentially in that area. In other words, the corporation prefers an area that provides
a friendly atmosphere for business activities, knowledge or information, and culture
3

4. Why is Social capital important in the innovation cluster?
The innovation process is an interaction process between
innovation actors and various knowledge sources
─ requires communication and cooperation through social relations (Asheim and
Gertler, 2005; Kline and Rosenberg, 1986)
In order to develop a cluster into an innovation cluster, the
environment for collective learning through knowledge exchange is
essential(Capello, 1999)
Korea has encouraged regional innovation through governmental
support for regional institutions and clusters for STI since early
2000
─ A policy model of Korean regional innovation is to form regional institutions
like a techno park sponsored by a central and local government, and to
develop the geographical cluster with an adjacent industrial complex
─ It is designed with an expectation that physical integration and linkage will
realize functional connections
4

5. Why is Social capital important in the innovation cluster?(2)
The facilities and institutions constructed through Korea’s regional
innovation policy have limitations
─ In acting as a structural foundation of a regional innovation ecosystem; and in
contributing to a region’s economy
Spontaneity-based cooperation and reformed network effect are
needed, and studies on functions of social capital and dynamics
should be conducted to understand the conditions for innovation
cluster
 Social capital serves as a space for collective learning (Ionescu, 2005)
 Social capital allows knowledge and resources to be distributed without
much cost, and plays a role in drawing synergy effects, resulting in
contributing to dynamic efficiency (Jeong, et al. 2005)
5

6. Approach to the Social Capital
Aspects of Social Capital
─ Micro vs. Macro perspective
• Micro-perspective: To explain performance deviation of personal or
individual agents, to focus on whether it has an edge in collecting
resources or knowledge over other agents
• Macro-perspective: To explain a difference or performance deviation of
the aggregation of individual agents (social group), to focus on culture or
social characteristics involved in organizations
─ Structure vs. Cognitive vs. Productive attribute
• Structural attribute: Objective social structure that is observable from the
outside
• Cognitive attribute: Subjectively-recognized values or beliefs
• Operative/Productive attribute: Resources obtained from a social
substructure, or operation state
Structural Aspect Cognitive Aspect
Operative/Productive
Aspect
Macro-perspective
(group level)
Ex. governance, rules
Ex. sense of community, mutual
trust, norm of reciprocity
Ex. collective behavior
Micro-perspective
(individual level)
Ex. network, meetings Ex. credibility(reputation)
Ex. information and resource
access/exchange
6

7. Research Framework
Approach to structural, cognitive, operative/productive aspect of
social capital at a micro-/ macro-level
Study the state of firm’s social capital and region-wide social capital
as a business environment and micro-macro dynamics
Firm-level
Innovation Capability
Firm-level
Knowledge Capital
Firm-level
Social Capital
Regional-level
Social Capital
Innovation Cluster
7

8. Research Framework(2)
(1) Pre-investigation
─ Focal point: Understanding of the boundary and history of the cluster; key
agents in the cluster development history; decision making contents of the
cluster and governance (policy)
(2) Macro-perspective approach
─ Focusing on social capital in macro-perspective, survey through interviews
with main agents
(3) Micro-perspective approach (firm survey)
─ Focusing on social capital in micro-perspective, questionnaire targeting firms
(4) Comprehensive analysis
Structural
Social capital
Cognitive
Social capital
Firm
innovation
and growth
Micro-level innovation
Region-wide
Social capital
Productive
Social capital
Policy
Regional innovation
8

9. Case 1: Gwangju Photonics Industry Cluster
Background
─ The photonics industry produces and sells a variety of advanced goods by
using properties of light.
─ As a regional economy based on the auto industry was on the verge of
collapsing due to the financial crisis of 1997, university professors in the
region formed a research community where they researcherd emerging
industries of the future
─ With the launch of the Kim Dae-jung government, on the basis of political
support, plans to support the photonics industry were adopted
University
Business
supporting
institute
Research
institute
Hi-tech
Science
Complex
9

10. Case 2: Wonju Medical Industry Cluster
Background
─ Wonju, which has a weak industrial foundation, searched for a development
model to overcome the image of itself as a military city
• Yonsei University Wonju Campus opened the Department of Medical
Electronics for the first time in Korea in 1979; as departments of
biomedical engineering were opened at other universities in the
metropolitan area, which raised crisis awareness as a local university,
Wonju Campus and Wonju-city sought development strategy at a local
government level.
─ Failing to get support for a regional innovation project from government in
1997, Wonju-city and the Medical Engineering Institute played a key role in
establishing a medical device business incubator, which was the beginning of
the cluster development
Business
supporting
/research
institute
• (재)강원Technopark
• (재)강원지역사업평가원
• 강원 바이오∙메디칼 펀드조합
• 기술신용보증기금
• 한방의료기기산업진흥센터
• 의료기기개발촉진센터
• 연세대학교 세브란스기독병원
• 의료기기임상시험센터
• 연세의료공학연구원
• 프라운호퍼 공동연구센터
• 한국산업기술시험원
• 한국산업단지공단
University
• 강원대학교
• 강릉원주대학교
• 관동대학교
• 상지대학교
• 상지영서대학
• 송호대학
• 연세대학교
• 한국폴리텍Ⅲ대학
• 한라대학교
• 한림대학교
• 경동대학교
10

11. Results and Implications
Path 1
A purposeful network toward
regional innovation
evolve as innovation
communities, drawing
resources from
local/regional/central
government
accelerate institutionalization
through establishing STI
supporting organizations and
space for business; developing
network and cluster policy
 nourishing entrepreneurship
and collaboration culture
Structural
Social
capital
Cognitive
Social
capital
Firm
innovation
and growth
Micro-level innovation
Macro-level
Social capital
Productive
Social
capital
Regional innovation
Path 1Path 2
Path 3
11
Path 2 & Path 3
 stimulating entrepreneurships
 start-ups develop new linkages and new success cases of
collaboration and new value sources
* Structural equation modelling analysis with firm survey
results would be conducted to confirm the paths between
social capital and firm performance

12. Results and Implications(2)
Policy Implications
─ Innovation community is very essential for cluster development;
─ Generating and fostering more innovation communities should be the focal
point for innovation cluster policy
─ Need to expand and improve social capitals
• Rate of respondents with high value of various social capital aspects (e.g.
who are satisfied with current network formation, trust fully each other)
are less than 50%
─ Need to enable positive social capital
• Indicators of productive social capital shows it is less than structural and
cognitive social capital
─ Need to monitor and encourage positive collective actions for cluster
development and promote as region-wide culture and norms
12

13. Thank You
miaejung@stepi.re.kr