Since the end of 1980's, a series of environmental changes has threatened the competitive position of Korean small and medium sized enterprises (SMEs). This thesis attempts to identify viable strategic options for the Korean SMEs by inductive and deductive studies of their strategic change behaviors. At the initial phase of the study, based on the existing literature from different perspectives, this thesis deductively develops an integrative framework to explain the causes and consequences of strategic change. And also, inductive case analyses at the firm and industry levels are performed in the Korean ceramic tile industry and in the Korean electronic industry. At the second phase, several hypotheses are derived from the conceptual framework and the results of case studies and empirically tested by analyzing strategic changes of 137 SMEs in the Korean electronic component industry for the period of 1990-1995. At the final phase, as an additional inductive study, dynamic analysis of strategic group change is conducted for the 115 SMEs in in the Korean electronic component industry.
Major findings of this thesis can be summarized as follows: 1) The likelihood of SME's strategic change are positively correlated with perceived environmental uncertainty (PEU), technological capability, product/market scope, organizational professionalism, organizational integration, and the diversity of top management team composition. 2) Firm size has an inverted U shape relationship with the likelihood of strategic change. 3) There are three dominant evolution paths in SMEs' strategy. First path is to evolve from a subcontractor or petty imitator group with the narrow product/market domain and the low level of accumulated resource/capabilities into an innovator group by accumulating technological capabilities. Second evolution path is to diversify from a subcontractor group into a generalizer group by simply adding product lines. Third path is to move from a subcontractor group into a production focus group by investing in production capabilities. 4) The most outperforming group is the innovator group that has accumulated superior technological capability in a limited product segment and serves various customer groups. Even though it is not statistically significant, incumbent firms have a tendency to produce higher performance than new entrant firms in all strategic groups. However, there are no significant differences in economic performances among the three different evolution paths, at least, in terms of short-term profitability and sales growth rates. 5) An in-depth case analysis shows those who succeeded in technological learning are managed by CEOs with technological expertise and strategic vision as well as establishing an innovation support management practice, such employee educational program, performance based reward system, TQM, etc. The successful firms also aggressively pursue diverse external linkages with outside technology sources to learn product and process technologies.
Finally, theoretical and practical implications of this study are discussed. And managerial and policy alternatives are suggested.