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2025 South Korea Top Ten Trends for MSMEs

ICSB Leadership

2025 South Korea Top Ten Trends for MSMEs

By Kichan Kim

Professor of Business Administration, The Catholic University of Korea Chair of the Board, International Council for Small Business Visiting Professor of Management, GW University

Introduction: Challenges for Innovation

“SMEs are the backbone of South Korea’s economy, and startups are its driving force of innovation. As we approach 2025, SMEs must adapt and innovate amidst major changes such as AI-driven digital transformation, globalization, and the fight against bureaucracy.”

Key Task: Overcoming the Greatest Enemy of Entrepreneurship – Bureaucracy

“Bureaucracy is the enemy of innovation.”

01

Intensification of Bureaucracy and Decline of Entrepreneurship

  • Significance: AI is vital for decision-making, supply chain optimization, and personalized customer experiences.
  • Issue: Delayed AI and digital adoption could result in missed opportunities in the Fourth Industrial Revolution.
  • Key Message: “AI is a survival necessity for SMEs.”
  • Solutions:
    • Accelerate the adoption of AI technologies and platforms.
    • Maximize collaboration between humans and AI.
  • Action Plan:
    • AI Adoption Fund: Provide government-supported financing for SMEs to integrate AI solutions.

02

Transition to the AI Era: Enhancing Productivity and Digital Innovation

  • Significance: AI is vital for decision-making, supply chain optimization, and personalized customer experiences.
  • Issue: Delayed AI and digital adoption could result in missed opportunities in the Fourth Industrial Revolution.
  • Key Message: “AI is a survival necessity for SMEs.”
  • Solutions:
    • Accelerate the adoption of AI technologies and platforms.
    • Maximize collaboration between humans and AI.
  • Action Plan:
    • AI Adoption Fund: Provide government-supported financing for SMEs to integrate AI solutions.

03

Humane Entrepreneurship: Balancing High-Tech and High-Touch

  • Significance: Humane Entrepreneurship fosters a workplace culture that values creativity and employee engagement, ensuring global competitiveness.
    • Combines Gary Hamel’s ‘Humanocracy’ and Ayman & Kim’s ‘Humane Entrepreneurship.’
  • Key Message: “Innovation thrives when people are at the center.”
  • Solutions:
    • Develop talent and encourage creativity through employee mentoring programs.
  • Action Plan:
    • Talent Development Programs: Establish tailored training and mentoring systems for workforce empowerment.

04

The Galapagos Syndrome: Overdependence on Domestic Markets

  • Issue: SMEs are increasingly reliant on shrinking domestic markets due to low birth rates and aging populations.
    • Parallels with Japan’s economic stagnation in the 2000s.
  • Key Message: “Overdependence on domestic markets limits innovation.”
  • Solutions:
    • Focus on global market expansion through marketing innovations.
    • Promote disruptive innovations to boost international competitiveness.
  • Action Plan:
    • Global Expansion Support Centers: Provide consulting, networking, and funding for SMEs venturing abroad.

05

CFO-Led Management: Insufficient Investment in Technology Innovation

  • Issue: CFO-driven strategies prioritize short-term profits over long-term innovation, putting SMEs at risk of lagging behind global competitors like China.
  • Key Message: “Invest in innovation for long-term growth.”
  • Solutions:
    • Foster entrepreneurial leadership.
    • Develop long-term investment strategies for technology advancement.
  • Action Plan:
    • Innovation Tax Incentives: Offer tax benefits for SMEs investing in long-term R&D projects.

06

Strengthening Brand Power and Global Customer Trust

  • Issue: Lack of customer experience innovation and declining global trust weakens competitiveness abroad.
  • Key Message: “Global customer trust is the key to brand success.”
  • Solutions:
    • Build trust and strengthen customer-focused marketing strategies.
  • Action Plan:
    • National Branding Campaigns: Government-led initiatives to enhance the global image of Korean SME products.

07

Decline of Entrepreneurship Among Third-Generation Leaders

  • Issue: Third-generation leaders often focus on financial tools rather than core business competitiveness, threatening sustainability.
  • Key Message: “The entrepreneurial spirit of future generations ensures sustainability.”
  • Solutions:
    • Introduce leadership education and programs to reinforce entrepreneurial values.
  • Action Plan:
    • Next-Generation Leadership Programs: Develop training centered on innovation and sustainable business practices.

08

Declining Competitiveness of Platform Monopolies

  • Issue: Platform companies lose user trust and long-term competitiveness by prioritizing short-term profits post-IPO.
    • Example: Kakao’s monopolistic practices have eroded its reputation.
  • Key Message: “Short-term profit leads to long-term trust loss.”
  • Solutions:
    • Expand into future industries like fintech, healthcare, and AI.
  • Action Plan:
    • Platform Ethics Regulations: Strengthen oversight to protect user trust and promote competition.

09

The Evolution of Women Entrepreneurs: Sustained Support Needed

  • Issue: Gender pay gaps, lack of mentorship, and limited access to funding hinder the growth of women-led businesses.
  • Key Message: “Women entrepreneurs are a hidden force driving economic growth.”
  • Solutions:
    • Expand investments in women-led businesses.
    • Build inclusive entrepreneurial ecosystems.
  • Action Plan:
    • Women Startup Funds: Provide targeted funding and mentorship for female entrepreneurs.

10

Welfare-Oriented SME Policies and Weakening Innovation Ecosystems

  • Issue: Welfare-driven policies undermine entrepreneurship and innovation ecosystems.
  • Key Message: “Welfare is essential, but innovation ensures sustainability.”
  • Solutions:
    • Shift resources toward growth-oriented policies and innovation ecosystems.
  • Action Plan:
    • Innovation Ecosystem Transition Program: Redirect welfare budgets to technology development and startup support.

Conclusion: Preparing for a New Leap

“In 2025, the future of South Korea’s SMEs and startups depends on overcoming bureaucracy, embracing AI and digital transformation, expanding globally, and fostering Humane Entrepreneurship. Together, governments, businesses, and startups must collaborate to achieve sustainable growth and innovation.”


“Bureaucracy is the enemy of innovation. AI is a survival necessity for SMEs.”

 

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