Linking Innovation Barriers to Innovation Activities: Evidence from South Korea’s Manufacturing Sector

Myungkoo Song
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Myungkoo Song: Korea Institute for Industrial Economics and Trade

Industrial Economic Review from Korea Institute for Industrial Economics and Trade

Abstract: This study assesses the evolving innovation climate of South Korea’s manufacturing industry by examining the relationship between perceived innovation barriers and innovation activities. Using firm-level microdata from the Korean Innovation Survey covering the period from 2020 to 2024, the analysis reveals a post-pandemic paradox: a heightened perception of innovation barriers has coexisted with a significant increase in overall innovation activity.

However, this aggregate trend masks a critical divergence based on technological intensity. For firms in the low-technology sector, the results support a “revealed barrier” effect, in which heightened barrier perception stems from persistent engagement in innovation.

Conversely, for firms in the high-technology sector, barriers act as genuine “Deterrents,” with financial and market constraints significantly reducing innovation success rates. These findings suggest that a one-size-fits-all policy approach is insufficient. The study concludes that innovation policy must be bifurcated: focusing on de-risking financial and market uncertainties for high-technology sectors, while addressing operational and capability frictions for low-technology sectors.

Keywords: innovation; innovation activities; barriers to innovation; innovation policy; technology; technology adoption; technology policy; research and development; R&D (search for similar items in EconPapers)
JEL-codes: L60 O31 O32 O38 (search for similar items in EconPapers)
Date: 2026
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Published in KIET Industrial Economic Review Vol. 31 No. 1

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