Emerging Technologies

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Manufacturing Firm Diversification into Industry 4.0 Technologies: Evidence from Korea

(Washington, DC: World Bank, 2023-08-22) World Bank

This report leverages patent data and relatedness analysis to identify the factors that affect the technological transition of firms toward industry 4.0 technologies by looking at the technological trajectories of Korean manufacturing firms. Based on a unique dataset of Korean manufacturing firms’ patents and their financial and market information, the research follows the Principle of Relatedness to trace a firm’s footprint in a technology space. The technology space can help identify how previously accumulated capability in firms can positively affect technological diversification and developing I4 technologies. The research further analyzes the impact of public R&D support in I4 technology development. The analysis finds that public support is relatively more effective for firms that possess low technological relatedness and less so for firms that already have accumulated related technologies. This research is expected to inform policy design supporting firm diversification towards I4 transition.