ABSTRACT

Abstract This study explores the impact of government support policy on the performance of SMEs in the regional industries in South Korea. We use the technology development assistance fund as a proxy measure of the Korean government support policies for SMEs in the regional industries. The performance of SMEs is measured by technological innovation and business performance. Before empirically testing the impact of governmental support policies on the performance of SMEs, this study reviews the literature concerning the performance of SMEs and the governmental support policies for SMEs in regional industries. Results from empirical models, which simultaneously control for factors that were thought to affect the performance of SMEs, indicate that a positive relationship exists between the technological development assistance by government and patent acquisitions and new design registrations of regional SMEs. Networks with universities also have a positive relationship with patent acquisitions and new design registrations of regional SMEs. In addition, this study suggests that there is a positive relationship between technological development assistance by government and business performance. The results of this study also suggest that there is an importance to the need to build a strong social relationship in today's networked economy.