대기업의 내부거래가 중소기업에 미치는 영향 = Effects of Large Business Group’s Intra-Firm Transaction on Small and Medium-sized Enterprises

다국어 초록 (Multilingual Abstract)

Korea initiated its industrial policy in the 1960s. The main focus of Korean industrial policy in the late 1970s shifted from light industry toward the heavy and chemical sector. This sector needed the integration of the supply chain in order to produce final goods because many parts, components and materials are combined into its products. Generally, small and medium-sized enterprises (SEMs) produce intermediate goods, and then supply those to large enterprises (LEs). LEs, meanwhile, produce final goods, and then export those to the world market. As a result, the increase in exports of LEs leads to an increase in turnover of SMEs which supply intermediate goods to LEs. This virtuous circle has continued for the last forty years. We call this a trickle down effect by the vertical integration between LEs and SMEs.
According to Adam Smith, the vertical integration facilitates both division of labor and specialization because the economic unit has a tendency to trade and exchange his own things with others. Also, he addressed that in order to accomplish division of labor and specialization, external transactions by contract are more effective than intra-firm transactions in the group.
However, fair distribution by LEs has not been well implemented. LEs have more benefits than SMEs. Meanwhile, as the global market becomes more competitive, LEs need higher quality parts and materials. For this reason, LEs tend to procure parts and materials through intra-firm transaction in large business group rather than external vertical transaction with SMEs. This purchasing behavior of LEs is to minimize transaction cost and maximize utility, theoretically based on Ronald Coase’s ‘The Nature of the Firm’ which introduces the concept of transaction costs to explain the nature and limits of firms.
Thus, the government entered the market and began to regulate ‘winner takes it all’ and intra-firm transaction. Over the past five years, intra-firm transactions of LEs have declined, not because of government regulations, but because of the decline in turnover of LEs. On the other hand, LEs use intra-firm transactions as a means of expedient corporate succession rather than utility maximization.
Intra-firm transactions in large business group have a negative impact on the business and management environment of SMEs. As results of analyzing the influence of internal transactions of LEs on SMEs, the number of enterprises and employees decreased by 63 and 25,738, respectively when intra-firm transactions of LEs increased by 10%. Meanwhile, the turnover of SMEs increased by about 8 trillion won.
However, the increase on turnover of SMEs reflects the industrial speciality of heavy and chemical industries. If LEs increase intra-firm transactions with their affiliates, LEs have to source the necessary parts from outside. LEs will have to source the necessary parts from outside. Eventually, the increase in intra-firm transactions of LEs leads to the increase in production of SMEs in heavy and chemical industries. But, conversely, SMEs in light industry have severe consequences of reducing turnover and closing down.
The government should now enter the market, seeking to curb intra-firm transactions of LEs and maximize market utility. In this regard, Germany’s ordo liberalism has great implications. According to ordo liberalism, a free market economy can be formed when it is organized and managed by the government. In order to realize this, competition policy is necessary to operate a market function, to create an environment of fair competition, to maintain a balance of society, and to compete for a society dominated by individual responsibility and ethics.

참고문헌 (Reference)

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