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Journal of Productivity Analysis

, Volume 34, Issue 2, pp 133–149 | Cite as

Analysis of Korean IT startups’ initial public offering and their post-IPO performance

  • Yunhee Kim
  • Almas HeshmatiEmail author
Article

Abstract

Since the financial crisis in Korea, by focusing on core technology, IT startups have played an important role in the recovery of Korea’s economy through innovating technologies and creating new jobs. Even though there are many startups, it is not very common to reach the point of the initial public offering (IPO) and the post-IPO performance of the firms is mostly declining. Since it is rather difficult to apply conventional performance measures to very young firms, IPO has been used as a tool for performance evaluation. This study adopts the IPO as an early-stage measure for the performance of high technology startups. It is important to find out whether an earlier IPO of firms leads to a better performance and capability of firms. We investigate the relationship between the time to IPO of firms and their post-IPO performance for 3 years after their IPO by adopting samples of 79 information technology hardware firms founded after 1996 and listed between 2000 and 2004 in the KOSDAQ. Four determinant factors, including entrepreneurs’ experience, venture capital investment, startups’ technology sourcing, and technology portfolios which determine the firm’s time lag to getting to the IPO, are identified. The findings contain several results. First, the patent has positive effects on the firms’ performance after an IPO and on the firms’ growth before the IPO. Second, a faster technology acquisition via technology alliance has a positive influence on the firms’ IPO regardless of internal technologies. Third, concentrating on core technology, instead of diversifying can mature the startup firms faster. These indicate that a startup’s efficient initial strategy is critical for its performance and it enhances the credit and confidence of the market.

Keywords

Technology strategy Initial Public Offering (IPO) Technology sourcing Venture capital Technology portfolio 

JEL classification numbers

C23 C51 L10 M20 O30 

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Copyright information

© Springer Science+Business Media, LLC 2010

Authors and Affiliations

  1. 1.Technology Management, Economics and Policy Program, Colleague of EngineeringSeoul National UniversitySeoulKorea
  2. 2.Department of Food and Resource Economics, College of Life Sciences and BiotechnologyKorea UniversitySeoulKorea

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