What determines the openness of a firm to external knowledge? Evidence from the Korean service sector

This paper examines the factors that influence a firm's openness to external sources of knowledge in the Korean service sector. Related literature suggests the following factors: a firm's appropriability strategy, absorptive capacity, startup and size. Using the 2006 Korean Innovation Survey of service industries, I test whether and how these factors influence the degree of openness for Korean service firms. I find the following: first, a firm becomes more open to external sources by about 0.04 units when the appropriability strategy becomes tighter in one additional scale. Second, a firm becomes more open by 0.513 units when the share of highly educated employees increases by 1%. A startup is less open than an established firm by up to 0.457 units. As firm size increases in terms of employment by 1%, the firm becomes more open by 0.02 units. In Korean service industries, having highly educated employees and being a startup seem to be more influential factors for a firm's openness.