This study is an attempt to measure the efficiency of Korean venture companies and to find the determinants on the efficiency change of them.
For this, in this study, we limited the range of venture company and selected 30 companies as research cases, mainly in manufacturing industry. Based on the time series data for 10 years, from 2004 to 2013, the changes of their efficiency were measured, and we tried to compare the changes for 5 years before the financial crisis and those after the crisis.
Subsequently, we enlarged the range of study cases and utilized the survey data of our country's venture companies. We measured the efficiency of these venture companies , and extracted the factors which affected the efficiency of them. With this, we tried to understand the nature of our venture companies by multiple regression analysis.
This study shows as follows :
First, in case of venture companies listed on KOSDAQ and non-venture companies, their efficiency in CRS was rather increased in general for 10 years.
Second, in economy of scale, the efficiency to scale of venture companies and non-venture companies, both listed on KOSDAQ, was increased considerably.
Third, comparing the efficiency of the three groups, the efficiency of KOSDAQ listed venture companies increased most rapidly in CRS. This is because the acquisition of technology is so fast in any venture companies, which is the characteristics of venture companies. This means the venture companies we think win competitiveness by technical progress.
Fourth, when we compare the efficiency before 2008 with the efficiency after 2008, the rate of efficiency increase for three groups was slight low before 2008 but it was much significant after 2008 for three groups respectively.
Fifth, in case the size of a venture company was small, the returns to scale was increased. The returns to scale was decreased if the size of the venture company was big. Accordingly, as the size of the company is bigger, the increase of the returns to scale is getting smaller.
Sixth, in case of venture companies, the returns to scale was decreased during a rapid growth period and a mature stage but it was increased in a beginning period and a decline period.
Seventh, the number of venture companies gives a negative impact. This is because factor inputs is to be done intensively in the beginning of a company. The technical efficiency of a company can be getting lower as the company is getting older, which means that the power of technical development can be much stronger in the beginning stage of a company.
Eighth, intellectual property rights give positive effects to the efficiency. As the company which has many intellectual property rights has stronger power of technical development, it can have a high efficiency rate.
Ninth, the success rate of attracting venture capital has positive impact. The fact that a company can attract venture capital means that the company has a high technical skills, which gives positive impact to the efficiency.
Tenth, the number of company gives negative impact. As the number of company increases, the competition in the market becomes more severe, so this affects negatively to the efficiency.
Eleventh, the rise of consumer prices contributes to increase the efficiency rate. When consumer prices rise, company activities increases as well. The power of technical development is getting higher when company activities in high, which can be interpreted as the phenomena that the efficiency rate is getting higher.
Twelfth, the rise of unemployment rate seems to give positive impact on the increase of efficiency. This shows the tendency of counter-cyclical business cycle, meaning that the efficiency rate increases as a recession gets deeper. We can interpret this as the phenomena that the company gets more effective in a recession.
Though, this study has the following limits :
First, the efficiency rate needs to be measured with the other methods except DEA method. Second, in the analysis of impact factors, the length of time series data, currently 3 years, needs to be extended and those extended data needs to be analyzed. Third, the efficiency of venture companies measured and compared in this study is relative but a method to measure the absolute value of efficiency needs to be utilized.
In spite of the above mentioned limits, this study gathered the data of the venture companies in Korea and tried to measure the efficiency of them for recent several years. An agreement on policy could be made with that result, which is the meaning of this study. If this study can be improved in the future, it is being expected that it provides policy implications with regard to Korea's venture business development, and, help policy authorities establish and practice future-oriented development strategies in order to develop venture companies in Korea.