The software industry is the core of information industry and it can give developing countries good chances to strengthen their national competitive power. The purpose of this thesis is to examine the competitive structure and strategic type in the Korean software industry. This thesis also attempts to find the differences in technological innovation characteristics performances among the strategic types, through an empirical analysis. A high growth rate, lack of special firms, unstable business basis, and high reliance on foreign firms are some characteristics of the Korean software market. The results of structural analysis of the Korean software industry by competitive forces can be summarized as follows. First, the entry barriers of the Korean software industry are low which brings new entrants into the market. But the barriers will be high in the future. Second, the strong bargaining power of software professionals will remain unchanged due to the shortage of skilled manpower. However, the bargaining power of buyers will be weaker than now with the progress of the information society. Third, the government plays an important role in the software industry, and an active supporting policy is needed to develop software technology and compete with advanced countries. Fourth, the relative strength of competitive forces is different according to the software product type. This competitive structure makes firms take different strategies with regard to their internal abilities. The Korean software firms can be categorized into four strategic types: 'market leaders,' 'overseas dependents,' 'innovators,' and 'imitators.' Several hypotheses were tested empirically, based on the research model which includes the four strategic types, the stage of industry life cycle, firm's internal ability, technological innovation characteristics, and performance. The major findings of this empirical test are as follows. First, in the introduction stage of the industry, there were more 'imitators' than 'innovators' that needed a heavy investment in R\&D. As the industry progressed to its growth stage, technological innovation capability became a critical strategic factor of competition. Thus, the 'innovators' became a major strategic type in the Korean software industry. Second, four strategic types shows differences in technological innovation behavior. Especially in technological innovation strategy, 'innovators' usually use offensive strategies in technological innovation, compared that 'imitators' use defensive strategies. Third, the innovation strategies of the whole industry also change as the industry progressed from the introduction stage to growth stage. In 1987, 43\% of the sample firms took the following strategies as their major technological innovation strategy. In 1992, however, 46\% of the firms used the offensive strategy. Fourth, there was no difference in business performance among the four strategic types, except that 'market leaders' showed high technological performance in absolutely assessed measures. These findings provide several implications as follows. First, in the view of theoretical contribution, this study gives a new approach to examine software innovation which has different characteristic from hardware innovation. And in the theory of industry life cycle, this shows that the important competitive factors changes from the product price to the product quality as the industry grows, that is different results compared to other studies in advanced countries. Second, in the practical implication, this study provides software firms the directions of long-range planning with regard to their strategic position. Finally, the following six strategic directions of the software industry in developing countries are also suggested. (1) Early acquisition of advanced software technology (2) Creation of demands and activation of market (3) Training of highly skilled professionals (4) Strategic alliances between large firms and medium or small firms (5) Strategic utilization of repatriates and foreign resources (4) Consideration of entering into foreign markets
