An Exploratory Study on the Transition from OEM to OBM: Case Studies of SMEs in Korea

Keun Lee (), Jaeyong Song and Jooyoung Kwak

Industry and Innovation, 2015, vol. 22, issue 5, 423-442

Abstract: This study investigates how the transformation of latecomer small- and medium-sized enterprises (SMEs) in emerging economies from dependent or subcontracting original equipment manufacturing (OEM) firms into independent or original brand manufacturing (OBM) firms is possible to achieve a significant catch-up in their share of regional or global markets. Given that SMEs are rarely able to make such a transition, we elaborate this dynamic process by performing case studies on eight Korean SMEs. These SMEs created their own paths instead of following their forerunners. These paths are neither entirely new nor take the form of leapfrogging, but are characterized by new combinations of existing paths. We identify several risk factors, such as counterattacks and intellectual property lawsuits, that latecomer SMEs face from incumbent SMEs. In addition, we emphasize the importance of cultivating firm-specific knowledge by engaging in a continuing process of trial and error type in-house experiments.

Date: 2015
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DOI: 10.1080/13662716.2015.1064257

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