This study is designed to grasp factors determining Korean firms' types of advancing into the North Korea market on the basis of a corroborative analysis, to present strategic suggestions as to the determination of Korean firms' types of entering the North Korea, and to offer basic materials necessary for the government establishing desirable policies related to its economic cooperation with the North Korea. The findings can be summarized as follows.
According to the discriminating analysis, the firms' inside factors influencing the types of export(simple trade, simple processing trade) and investment(equipment-supplied processing trade, direct investment) turn out to be comprised of firm scales, management capacities, financial capacities, technical expertise, and C.E.O.'s views on management, while the firms' outside factors turn out to be production factors, political danger, and systematic inducement. The firms' inside factor which fails to have an influence turns out to be product features and the firms' outside factors which fail to have an influence turn out to competitive structure, market scale, and social infrastructure.
An analysis of t-test verifying the differences among the types of advance into the North Korea market related to factors influencing the types of entering into the market shows that the inside factors of firms such as their scale, management capacities, technical expertise, and C.E.O's views on management, and the outside factors of firms such as producing factors, political risks, and systematic inducement make a significant difference among firms advancing into the North Korea market. On the other hand, there is no significant difference in the product quality of the firms' inside factors and in the competitive structure, market scale and social infrastructure of the firms outside factors among firms with different styles of advance into the North.
This research can draw the following suggestions from the findings of t-test and discriminating analysis.
First, the types of advance into the North Korean market tend to be determined by the firms' inside factors rather than their outside factors, which seems to be ascribable to the uncertainty of the environment of the North Korea market.
Second, product quality among the inside factors of the firms turns out not to influence the determination of the types of advance into the North Korea market, and there is no significant difference in the choice of the behavior of advance. This is attributable to the fact that the North Korea market has yet to be mature enough, and that the firms have entered the North Korea with similar products regardless of the features of products.
Third, competitive structure turns out not to serve as one of the major variables influencing and determining the type of advance into the North. This is due to the fact that there is little competition among industries since a few firms only have entered the North Korean firms on account of the low economic level of North Korea.
Fourth, market scale among the outside factors of the firms turns out not to serve as one of the major variables influencing and determining the type of advance into the North. This can be attributable to the fact that the North Korea market fails to be activated in addition to the uncertainty of the potential power of market growth.
Fifth, social infrastructure turn out not to serve as one of the major variables influencing and determining the type of advance into the North. This can be attributable to the fact that the North Korean infrastructure as a whole is dilapidated and fails to work as one of the factors determining export and investment.
Sixth, systematic inducement among the outside factors of the firms turns out to serve as one of the variables with the highest difference in the determining the types of advance. This means that South Korea's firms can further advance into the North Korea market if positive incentives are provided in relation with the improvement of the given conditions in cooperation between the South and the North and enterprise designed for advancing into the North.
The Korean firms and the government are advised to take the following countermeasures.
The former should determine the types of advance into the North Korea market with a long-term vision in consideration of the security of the North Korea market and advance into nations such as China and Russia, determine the types of advance into the North Korea in varying fashions in accordance with the advancing industries and give priority to the area which can expand and consolidate the inferior infrastructure of the North in case of choosing direct investment.
The latter should minimize unnecessary systematic restrictions impeding procedures for improving advance into the North so that the firms may be given maximum self-regulation in determining the types of advance into the North Korea market, provide the firms with information and materials related to North Korea so as to help them decide on the rational type of advance into the North Korean firms, give safety devices in preparation for political danger and work out the government's policies for supporting enterprise and come up with various kinds of measures with a view to expanding and consolidating the inferior social infrastructure of North Korea.
This study is limited by the following factors due to a variety of restrictions, which future researchers are required to explore.
First, this study fails to clearly distinguish export and investment, the very types of firms advancing into foreign nations, by grouping equipment-provided processing trade into direct investment since there are only a few firms entering the North Korea market. Accordingly, it is necessary to conduct corroborative study on the determination of the types of advance if the number of firms making an investment in the North is on the increase.
Second, this study fails to shed light on factors determining the firms' advance into the North by industry due to the small-sized parental body of the subjects. If advance into the North increases in the future, a lot of studies should be made on the choice of the types of real advance by industry.
Third, this study fails to make a corroborative analysis of the achievements of the subjects due to the short period of advance. It is necessary that more far-reaching corroborative studies should be made when the results of advance into the North can be measured.
Despite these kinds of limits, this study will hopefully contribute to the establishment of policies on economic cooperation with the North for it has come up with strategic suggestions on the determination of the types of advance into the North.
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