1. Introduction. Abstract. Chang-Jae Lee * and Yen-Yoo You

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1 Indian Journal of Science and Technology, Vol 9(41), DOI: /ijst/2016/v9i41/103857, November 2016 ISSN (Print) : ISSN (Online) : Effects of Corporate Technological Innovation Activities on Technological and Management Performance - Focusing on Government Supported Convergence Consulting - Chang-Jae Lee * and Yen-Yoo You Department of Knowledge Service and Consulting, Han sung University, Seoul, Korea; gaudi0720@naver.com, threey0818@hansung.ac.kr Abstract Objectives: The purpose of this study is to identify the effects of utilization of technological innovation, Foundation for technological innovation, and technological innovation capability on technological performance and effects of technological performance on management performance and the indirect effects of technological performance for Small Medium-sized Enterprises (SMEs) who have had experienced government supported consulting services. Methods/Statistical Analysis: This study conducted survey with SMEs who have experienced government supported convergence consulting as the targeted audience and performed statistical analysis such as SPSS22.0 and AMOS 22.0 to conduct exploratory factor analysis and measurement model in order to identify interrelationship among the utilization of technological innovation, technological performance and management performance. Findings: The results of our study are as follow. Firstly, utilization of technological innovation has positive effect on technological performance. Secondly, establishing the foundation for technological innovation has positive effects on technological performance. Thirdly, Technological Innovation capability has positive effect on technological performance. Fourthly, technological performance has positive influence on management performance. Finally, technological performance acts as a mediator variable between the utilization of technological innovation and the management performance. Improvements/Applications: These results suggest that government supported consulting services for SMEs regarding their utilization of technological innovation are effective and should be continued. Keywords: Foundation for Technological Innovation, Management Performance, Technological Innovation Capability, Utilization of Technological Innovation 1. Introduction Considering the number of Small Medium-sized Enterprises (SME) and the number of their employees, SMEs play an important role in the national economy 1. However, there are still many improvements to make in terms of maximizing their volume of outputs and value added. In order to solve this problem, the government has continually pursued financial support and consulting service program and policies for SMEs 2. We decided to execute this study as there have not been many studies on the significance of such policies and program on companies management performance. In their study on SMEs technological competence, claims that how good SME utilizes external assistance from a third party determines their level of performance 3 and 4 that more advanced technological innovation 4 tends to yield better technological performance 5. In 6 Swanson s study showed technological capability s positive impact on management performance 6. In 7 researches showed foundation of technological innovation s positive impact on management performance 7. Lee Su Tae insisted on holistic approach to evaluating technological performance. However, there have not been many studies that evaluate the effect of government support for early stage SMEs on their technological and management * Author for correspondence

2 Effects of Corporate Technological Innovation Activities on Technological and Management Performance - Focusing on Government Supported Convergence Consulting - performance. Thus, another purpose of our research is to evaluate the cost and benefit and expanding government financial support program. Moreover, we conducted this study, focusing on those SMEs who have had received financial support from the government, to identify the effects of utilization of technological innovation, Foundation for technological innovation and Technological Innovation capability on technological and management performance, and to provide insights whether to expand or continue the government support program and policies. 1.1 Technological Innovation Activities According to In 7 research, the foundation for technological innovation, which comprises technological excellence technology intensity, technology commercialization capability, has notable effect on technological performance 7. Companies technological innovation activities can be defined several ways. One way would be to see them as changes that happen within the companies such as manufacturing innovation and product innovation. Another way is that they are active process from basic research to commercialization and also accumulated experience earned while utilizing technology and knowledge. According to 8 study innovation capability that comprises R&D capability, which is defined as a company s ability to execute R&D and related strategy, function and function together, have significant influence on technological performance Technological Performance As many companies from China and other developing countries have increased market share with low production cost, domestic companies can no longer have price competitiveness; thus, domestic firms competitiveness should be evaluated based on their overall performance focusing on their efficiency. Thus, understanding business performance is essential for evaluating the company s competitiveness. So far, domestic companies performance has been measured mainly through financial criteria; however, in order to stay competitive in recent business environment, technological performance must also be considered when measuring companies overall performance. While analyzing companies performance in new product development 10,11 defined technological performance by their quality and performance of products, R&D expenditures, length of development period and number of patents 10,11. Also used similar definition of technological performance. Also, technological innovation capability influences companies performance 16 ; technology commercialization capability, which includes differentiation strategy and intensification strategy of technology, affects companies performance 17. Detailed product development plan and product quality improvement influences companies performance 18. In terms of technological performance, establishment of foundation for technological innovation, which includes technological excellence, technology intensity and technology commercialization capability, has positive effect on companies performance. In order to identify relationship between R&D collaboration activities and companies performance, and other scholars included intellectual property rights obtained after developing technology and any R&D activities involved from technology development until technology commercialization into technological performance metrics 19. In this study, based on the studies mentioned above, we selected utilization of technological innovation, foundation for technological innovation, and technological innovation capability as the key factors that affect technological performance. 1.3 Management Performance In 20 argued technological innovation realizes better management performance by producing products with better quality and cost advantage. Moreover, included rate of innovation 21 sales performance and product performance into performance metrics and empirically showed significant relationship between growth rate of number of employees and sales 22. Also, In 23 proposed brand awareness, which is one of the factors that define a product s quality and non-price competitiveness, as an influential factor for management performance. In this study, we defined management performance as sales and brand image (brand awareness). 2. Proposed Work 2.1 Research Model Based on past studies, we proposed a research model as demonstrated in Figure 1, to identify the effects of utilization of technological innovation on technological and management performance among SMEs that have 2 Vol 9 (41) November Indian Journal of Science and Technology

3 Chang-Jae Lee and Yen-YooYou experienced government supported consulting services, and to provide insights for government support program and policies. Figure 1. Research mode. 2.2 Research Hypotheses Relationship between Technological Innovation Activities and Technological Performance In 24 performed empirical analysis and identified that technological innovation and financial performance have positive effect on technological performance 24. In 7 claimed that establishment of foundation for technological innovation and Technological Innovation capability has significant effect on technological performance 7. According to 8 researches, Technological Innovation capability was identified to have positive effect on technological performance 8 and Technological Innovation capability, which include but not limited to R&D effort, R&D investment costs, R&D labor share have notable interrelationship with technological performance 25. In this study, based on the studies mentioned above, we formulated following hypothesis to identify technological innovation activities influence on technological performance. H1: Utilization of Technological innovation will have a positive impact upon technological performance H2: Foundation for technological innovation will have a positive impact upon technological performance H3: Technological Innovation capability will have a positive impact upon the technological performance Relationship between Technological Performance and Management Performance There are many past studies that show technological performance s significant influence on management performance. According to 26 the level of technology that a company own has significant effect on business performance 26. Moreover, conducted empirical research targeting 95 IT SMEs and identified positive relationship between sales growth and innovation performance, which is defined as the number of intellectual property rights obtained within 3 years 27. Finally, measured technological capability with R&D expenditures, number of patents, number of new products launched, R&D investment share and showed that technological capability has positive effect on sales growth rate (management performance) 6. In this study, based on the past studies mentioned above, following hypothesis was formulated to analyze technological performance s effect on management performance. H4: Technological performance will have a positive impact upon the management performance Mediating Effect of Technological Performance Eisingerich and Bell argued that mutual relationship between the quality of service product and According to past studies, Utilization of technological innovation, Foundation for technological innovation and Technological Innovation capability have positive effect on technological performance and technological performance has positive effect on management performance. Therefore, it can be inferred that technological performance has indirect effect on interrelationship among management performance, Utilization of technological innovation, Foundation for technological innovation and Technological Innovation capability. In this study, following hypothesis is formulated to analyze technological performance s mediating effect. H5: Technological performance will have indirect effect on interrelationship between management performance and Utilization of technological innovation (H5-1), Foundation for technological innovation (H5-2), and Technological Innovation capability (H5-3). 2.3 Methods Population and Sample Data Selection We selected SMEs that have experienced government supported consulting services as the subjects of study and conducted surveys for about a month starting from Vol 9 (41) November Indian Journal of Science and Technology 3

4 Effects of Corporate Technological Innovation Activities on Technological and Management Performance - Focusing on Government Supported Convergence Consulting - January The total of 184 cases of survey were collected out of 289 that were distributed and after eliminating those with missing entries, 174 of 184 cases were actually used in our analysis Measurement and Operational Definition of Variables For the survey utilized in this study, establishment of foundation for technological innovation is defined and measured by technological excellence, technology intensity and technology commercialization capability and technological innovation activities are defined by changes in manufacturing process and innovation in service (Total of 12 questions) 7, 10. Technological Innovation capability is defined as necessary capability for a company to utilize and learn knowledge and technology to develop innovative products. (Total of 4 questions) 7 In the survey, based on study 8, we included 11 questions for technological and management performance where technological performance is defined as product performance and quality enhancement, rapidness of R&D process, ripple effect of technology, cost reduction, patent and technology accumulation and management performance is defined as product s sales revenue and competitiveness 26, In 7. Entire survey comprises total of 27 questions where each can be answered on a scale of 1 to 5. 1 indicates strongly disagree and 5 indicates strongly agree. Table 1 summarizes the composition of the survey. Table 1. Composition of survey Measurement variables No of questions Preceding studies 1.Utilization of Technological Innovation 5 (24) (5) (6) 2.Foundation for technological innovation 7 (24) (5) 3.Technological Innovation capability 4 (25) (5) (6) 4.technological performance 6 (24) (25) 5.management performance 5 (24) and others Total Empirical Analysis and Hypothesis Testing Data Collection Table 2 summarizes the general characteristics of the population. Our study population is composed of many SMEs. All serve government related projects. Majority of them have less 50 employees and 70% of their technical personnel obtained masters or more advanced degree. Also, 77.1% of the products are still at the early stage of technology life cycle trying to develop new technology and prepare for the product launch with the government s financial support. Table 2. The Characteristics of samples Categories Fre-quencies % No. of Employees Technology life cycle phase R&D personnel category Less than 20 21~50 51~ ~200 More than Total R&D Phase Ascent Phase Growing Phase Maturity Phase Decline Phase Not Applicable Total Ph.D. or above Master s or below Bachelor s or below Others Total Validity and Reliability Analysis Prior to hypothesis testing, we conducted validity and reliability analysis. We performed exploratory factor analysis for testing the validity, and Varimax rotation method for factor selection and factor loading simplification process. Our analysis is based on those components with Eigen values greater than 1.0 and loadings greater than We decided to use all the components as all of them were found reliable and our 4 Vol 9 (41) November Indian Journal of Science and Technology

5 Chang-Jae Lee and Yen-YooYou Table 3. Exploratory factor analysis and reliability test MV FTI TP MP TIC UTI Cα FTI FTIQ FTIQ FTIQ FTIQ TP TPQ TPQ TPQ TPQ TPQ MP MPQ MPQ MPQ TIC TICQ TICQ TICQ UTI UTIQ UTIQ OV V% AV% REF 1) FTI: Foundation for Technological Innovation, REF 2) MP: Management Performance REF 3) TIC: Technological Innovation capability REF 3) UTI: Utilization Technological Innovation REF 4) Cα: Cronbach α REF 5) OV; Original Value REF 6) V%: Variance % REF 7) AV%: Accumulation Variance % factor analysis was able to explain % of the total variance. Based on past studies, 5 variables, which are utilization of technological innovation, Foundation for technological innovation, Technological Innovation capability, technological performance and management performance, were selected, and reliability testing was performed for each variable. As shown in Table 3, all the variables appeared reliable as their Cronbach α values were distributed within Measurement Model Analysis Prior to analyzing the hypothetical relationship among the variables, confirmatory factory analysis was conducted to test the unidimensionality of each measured variable. To assess the fitness of data we used CMIN/DF (<3.0, GFI AGFI CFI NFI TLI (>0.9), AGFI (>0.8), RMSEA (<0.8). In order to maximize measurement model s goodness of fit, any variables that violate acceptable level of SMC values were continually eliminated. Through such process of elimination, acceptable level of convergent validity was achieved with Standardized Regression Weights above 0.7, CR above 0.7 and AVE above 0.5. Ultimately, the measurement model shown in Table 4 was found to be most appropriate model. Also, as convergent validity is also achieved, we performed discriminant validity analysis of which results are shown in Table 5. Vol 9 (41) November Indian Journal of Science and Technology 5

6 Effects of Corporate Technological Innovation Activities on Technological and Management Performance - Focusing on Government Supported Convergence Consulting - Table 4. Confirmatory factor analysis and goodness of fit of measurement model MV SRW SE T p CR AVE SMC FTI FTIQ *** FTIQ *** FTIQ TP TPQ *** TPQ *** TPQ *** TPQ MP MPQ MPQ *** TIC TICQ *** TICQ *** TICQ UTI UTIQ *** UTIQ Goodness of Fit Measurement Model <Initial Model> Chi-Square = , df = 70, p =.000, CMIN/DF = 2.049, GFI = 0.896, AGFI = 0.844, CFI = 0.952, NFI = 0.911, IFI = 0.952, RMSEA = <Final Model> Chi-Square = , df = 69, p =.000, CMIN/DF = 1.777, GFI = 0.908, AGFI = 0.859, CFI = 0.965, NFI = 0.924, IFI = 0.965, RMSEA = 0.07 *1) SRW: Standardized Regression Weights, 2) SE: Standard Error, 3) CR: Composite Reliability, 4) SMC: Squared Multiple Correlation 5) AVE: Average Variance Extracted Table 5. Distinction validity analysis results TP TUI FTI TIC MP TP UTI FTI TIC MP Ref : Bolded values: AVE values From discriminant validity analysis among latent variables every latent variable s AVE value exceed its coefficient of determination (0.757 X 0.757). Thus it can be confirmed that all latent variables pass the discriminant validity test Goodness of Fit of Research Model Structural equation model s goodness of fit was tested according to the finalized measurement model s criteria in order to test research model s goodness of fit and Table 6 explains research model s goodness of fit. Table 6. Goodness of fit of research model Reference Measured Value Value Chi-Square Df - 69 P >.05 0 CMIN/DF < GFI > AGFI > CFI > NFI > IFI > RMSEA < Vol 9 (41) November Indian Journal of Science and Technology

7 Chang-Jae Lee and Yen-YooYou Basic Model Hypothesis Testing Results As research model is found appropriate, path coefficients, which are shown in Figure 2, were analyzed for more detailed hypothesis testing. Better awareness of utilization of technological innovation, establishment of foundation for technological innovation and Technological Innovation Capability leads to better awareness of technological performance (standardized coefficients β=.414, 0.254, 0.197, p<.001 p<0.1) and better awareness of technological performance leads to better awareness of management performance (standardized coefficients β=.881, p<.001). Table 8. The Results of Hypothesis Testing Hypothesis Hypothesis to Be Tested Result H1 Utilization of Technological Accept Innovation will have a positive impact upon Technological Performance H2 Foundation for Technological Accept Innovation will have a positive impact upon Technological Performance H3 Technological Innovation Capability will have a positive impact upon the Technological Performance. Accept H4 Technological Performance will have a Accept positive impact upon the Management PerformanceAccept H5 Technological Performance will have indirect effect on interrelationship between Management Performance and Utilization of technological innovation (H5-1), Foundation for technological innovation (H5-2), and Technological Innovation Capability (H5-3). Accept Figure 2. The Structural Path Indirect Effect Testing As Table 7 shows, using bootstrapping method, it was found that technological performance has indirect effect on the relationship between exogenous variable (utilization of technological innovation, Foundation for technological innovation, Technological Innovation Capability) and endogenous variable (management performance). Table 7. Indirect Effect Testing Results Category Indirect Effect p value UTI TP MP FTI TP MP TIC TP MP Technological performance s indirect effect turned out to be significant at p<0.05. The results of hypothesis testing are presented in Table Conclusion 3.1 Results and Implications The purpose of this study is to identify the effects of utilization of technological innovation, Foundation for technological innovation, and technological innovation capability on technological performance and effects of technological performance on management performance and the indirect effects of technological performance for SMEs who have had experienced government supported consulting services. Our results show that Technological Innovation capability, Foundation for technological innovation, Utilization of Technological Innovation are positively correlated to technological performance, and technological performance is positively correlated to management performance. Firstly, more active utilization of technological innovation allows better awareness of technological performance. Secondly, better Foundation for technological innovation allows better awareness of technological performance. Thirdly, better Technological Innovation capability allows better awareness of technological performance. Fourthly, better technological performance allows better awareness of management Vol 9 (41) November Indian Journal of Science and Technology 7

8 Effects of Corporate Technological Innovation Activities on Technological and Management Performance - Focusing on Government Supported Convergence Consulting - performance. Finally, technological performance has indirect effect on the interrelationship between management performance and utilization of technological innovation, Foundation for technological innovation, and Technological Innovation capability. It can be inferred from these results that it is necessary to continue government support program to improve corporate technological performance which has positive effect on their management performance. 3.2 Limitations and Future Research Directions This study has several limitations, which can be resolved as follows. Firstly, it is advisable to collect and analyze more data and include companies of different sizes into the study population. Secondly, as this study focused on SMEs, there may be some limitations in applying the same results for large companies. 4. 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