If you listen to Korea’s policy debate, you might think online platforms are mostly a problem to be managed: new regulations, algorithm fines and worries about “unfair practices.” But as Rob Atkinson and Sejin Kim write in The Korea Times, what often gets lost is something more basic. For many of Korea’s small firms, digital services are not peripheral; they are the main way they find customers, manage costs and stay alive.
Globally, small and medium-sized enterprises (SMEs) face four chronic constraints: less capital, bigger skills gaps, access to markets and lower productivity. McKinsey research shows that in advanced economies, SMEs operate at roughly 50 percent of large-firm productivity.
In Korea, OECD firm-level data indicates a much wider gap, with SMEs averaging about 30-40 percent of the productivity of large firms — one of the biggest gaps in the developed world. Yet SMEs employ the majority of workers and generate close to half of value added in OECD economies. If SMEs remain low-productivity and low-tech, the broader economy inevitably follows.
That is why a recent ITIF analysis from the Information Technology and Innovation Foundation (ITIF) stresses that digital services are no longer optional for small firms. Cloud computing, artificial intelligence (AI)-based tools, digital advertising, e-commerce platforms and online human resources systems have become the most practical way smaller firms close the capability gap with larger competitors.
Read the full column.
