The Rise of Digital Companies and Strategies: Case Studies in the U.S. and Korea

Although Korea is home to globally competitive multinational enterprises (MNEs), it is hard to say there is a globally competitive digital enterprise from Korea. While large and well-known Korean MNEs such as Samsung Electronics, LG Electronics, and SK Hynix are globally known in the area of IT devices and components, when it comes to the digital sectors, including internet platforms, digital solutions providers, digital content platforms and e-commerce more broadly, it is hard to identify one as a truly global player. According to UNCTAD (2017), digital companies’ overseas sales accounted for 70 percent of their total global market value and about 50 percent of their global assets. Presumably, these firms’ businesses are largely globalized. However, while Korean IT companies have a higher ratio of overseas sales compared to other top 100 global companies, among these firms there are no large digital enterprises operating in overseas markets. The impact of digital companies is not limited to those firms’ industries or domestic markets; they also play a key role in expanding to global markets and creating new businesses or sectors. Investments in digital sectors will have a significant influence on productivity and employment both directly and indirectly across industries in the era of the fourth industrial revolution. As the recent expansion of digital companies continues across all industries in addition to the incumbent sector, an in-depth understanding and analysis of these trends is required. And in Korea especially, given its relatively small domestic market, it is necessary to enter and compete in global markets in the face of constant industrial change. While Korea’s historical development centered on large corporations, understanding the new dynamics in GVCs brought about by the digital sector will be essential to ensure the country’s continued participation in those very same value chains. Due to a lack of well-organized data, few studies on digital companies have been conducted in Korea. This also stems from the fact that digital companies are a relatively new concept. Basic concepts and tools to evaluate the status of digital companies objectively are needed, given the recent rise of those companies in the global economy. This paper is designed to provide a foundation and starting point to understand digital companies, to aid in the conduct of follow-up research and to frame future policies for digital industries.