The impact of government sponsored loan programs for SMEs in IT: With a focus on case studies in Korea

Abstract

This study examined the frameworks of government sponsored loan programs in four advanced countries to see how the countries established special policies and structures to increase the efficiency of the usage of the government sponsored loans in order to support the technological innovation and development in IT SMEs. Then ten companies that were the beneficiaries of such sponsored loan programs in Korea were explored using Michael Porter's Diamond Model and Value Chain Model to see how government sponsored loans were effectively used to create competitiveness in the IT industry. The study attempts to find out how much important role the government sponsored loans in Korea played in promoting IT development and technological innovations in the Small and Medium Enterprises (SMEs). The analyses on the cases revealed that government-sponsored loan programs in Korea had a positive effect on strengthening the competitiveness of the companies in the industry and improving the development and management of IT in the companies. The result of the analyses also indirectly indicated that the government sponsored loan programs should be expanded to help various categories of applied IT technology.