Supporting Laws for Developmental Stages of Small-Medium Enterprises in South Korea

Abstract

Ⅰ. Purpose and Scope of Research □ With the accomplishment of the rapid economic growth for the past decades after the Korean War, Korea has been set as one of the model countries to study and to benchmark for development by many Asian countries. As the Small and Medium Enterprises (“SMEs”) taking the majority of the economic vehicle in Korea, reviewing and sorting out relevant laws and regulations on SMEs would certainly shed lights in assessing effectiveness of those laws. □ According to the developmental stages of SMEs, each supporting law’s specific provisions and their effectiveness are reviewed and assessed.

Ⅱ. Contents □ Supporting laws for small-medium enterprises can be classified into three developmental stages: (i) Establishment Stage, (ii) Growth Stage, and (iii) Conversion Stage. □ For establishment stage of small-medium enterprises, there are several support laws including ‘Support for Small and Medium Enterprises Establishment Act’, ‘Act on Special Measures for the Promotion of Venture Businesses’. □ Consumer cash loan, policy financing, and funding through the Fund for the Establishment and Promotion of Small and Medium Enterprises based on Small and Medium Enterprises Promotion Act are available for start-ups. □ For growth stage of small-medium enterprises, supporting systems include ① Support for R&D, ② Support for manpower, and ③ Support for development of their markets, and related supporting laws are ‘Framework Act on Small and Medium Enterprises’, ‘Act on the Promotion of Technology Innovation of Small and Medium Enterprises’, ‘Act on the Promotion of Collaborative Cooperation between Large Enterprises and Small-Medium Enterprises’. □ During the conversion stage, ‘Special Act on the Promotion of Business conversion in Small and Medium Enterprises’ is considered most helpful. □ Support for funding as well as business operations and managements are available throughout the developmental stages by various laws.

Ⅲ. Expected Effects □ For each stages, establishment, growth, and conversion, laws provide methods to assist financially and also with management. These systematic support throughout the developmental stages of enterprises has been effective in having the SMEs survive, if not thrive, in Korea, and the same system may be utilized, with modifications based on each country’s political and societal circumstances, by developing countries and transition economies.