Structuring technology strategy and interfirm collaboration: Empirical study on Korean high-tech small firms in telecommunications industry

Inter-firm collaboration as a technology-sourcing decision of Korean high-tech small firms receives great attention as its strategic importance to the technological innovation and economic growth of Korean economy is growing immensely. However, there exists no extensive data and in-depth analysis of under what conditions the decision-makers actually choose technology alliance, or vice versa. This question remains unanswered because existing studies fail to specify cases under which technology-sourcing decision is employed as well as the scope of technological collaboration. This study is the first attempt to tackle these problems by providing a comprehensive framework to guide decision-makers in making appropriate technology strategy. As a first step, this study investigated how and whether the existing decision-makers would have a clear set of decision rules between in-house development and technology alliance and equity alliance and non-equity alliance. To achieve this, extensive literature reviews were undertaken and some consultation from industry experts was carried out. Then, this study developed a two-staged contingency model which denotes that the decision-makers are likely to go through two sequential and contiguous steps until they reach their final decision. Drawing on the decision-makers' perception of their firms' internal condition, external environment and technology projects, 11 factors and 5 factors were identified as determinants in stage One and in stage Two respectively. The result shows that, in the first stage of decision-making, in-house development was preferred when the firms perceived that their technological capability was strong; while technology alliance was preferred when they perceived that they were more entrepreneurially-oriented, when the projects required specialised asset investment and the technology project was highly risky. In addition, the pressure for social legitimacy influenced their decision to undertake technology alliance. In the second stage of decision-making, equity alliance was preferred what the firms perceived that the scope of the cooperative project was wider, while non-equity alliance was preferred when they perceived some degree of mutual trust with potential partners. Apart from identifying the determinants, this study found that technology cooperation is not widely adopted as a technology-sourcing method compared to in-house development; only one in five responding firms is adopting it. That is beca