Overhype of 4th Revolution, shared value
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By Park Hyong-ki
Korea has a tendency to overuse economic terms developed by scholars overseas without applying their true meanings and insights into local industries, analysts say.
Terms such as the Fourth Industrial Revolution and creating shared value (CSV) have been overhyped here since their emergence at forums and on business publications.
This is because of Korea’s economic nature of being a fast follower rather than a global leader, they said.
“As a small and open economy that has always tried to advance by rapidly catching up with others, Korea had to learn and digest the newest trend and emerging technology as fast as it could,” said Yun Chang-hyun, an economist at the University of Seoul.
“This fast-follower mentality has led it to overhype the terms like the Fourth Industrial Revolution and Industry 4.0.”
Klaus Schwab, the executive chairman of the World Economic Forum, introduced the Fourth Industrial Revolution through his book. The emergence of robots, self-driving cars, biotechnology among others will “fundamentally” change the market as they will get rid of the borders separating the physical and digital worlds.
The problem is that the term is not widely used in other countries and its details are not certain.
During his visit to Seoul in May, for example, famed U.S. journalist Thomas Friedman said that he is not used to the Fourth Industrial Revolution.
But so many politicians, bureaucrats, scholars and journalists use the term so frequently in Korea.
In April, the government said that it will issue 17 certificates related to the Fourth Industrial Revolution like robotic parts, software development and three-dimensional printing beginning late next year.
“It is nonsense. The Fourth Industrial Revolution lacks an agreed-upon definition yet. Then, how can the government measure something based on such a term to give state certificates?” asked a professor at a Seoul university.
In the case of CSV, it was first introduced by Harvard University professors Michael Porter and Mark Kramer via the Harvard Business Review in 2006. Porter is widely known in studies of competition and strategy.
They suggested that companies adopt new ways to create value by addressing social and environmental problems amid the failure of capitalism.
Companies must work with society to “redefine their purpose and share value” for social progress. For example, the professors gave an example of how Nestle worked with small and poor farmers to improve the quality and productivity of their coffee bean production.
This cooperation via shared value would further lead businesses to innovate and grow, they said. CSV is often confused with corporate social responsibility (CSR).
Korea is one of the very few countries that actively promote the Fourth Industrial Revolution and CSV.
Upside of overhypes
But some point out that the widespread use of these words by the public and private sectors here has increased the social awareness and importance of them.
“Like the creative economy in the former administration, the positive side is that they are raising the awareness of changes that are about to happen in society amid the rapid rise of these technologies considered a crucial part of the Fourth Industrial Revolution,” said Sun Dae-in, a local economist and head of SDInomics, an independent economic research center.
“On the other hand, the focus on the importance and impact of such terms has been unclear in driving the next path in certain areas such as jobs.”
Sun noted that Schwab’s book sold more copies here than in European countries such as Germany and Switzerland.
As Yun said, Korea, as a follower, is highly sensitive to external factors and trends, Sun added.
Yun concurred saying that the positive side is that Korea is always willing to learn anything new as fast as it can so that it would not fall behind.
However, the government has tried to lead in adopting new trends, not the private sector, unlike in Germany.
Germany’s Industry 4.0 is a policy similar to the concept of the Fourth Industrial Revolution.
But Germany’s private sector, especially its small- and medium-sized enterprises, has been in the forefront.
In contrast, Korea introduces regulations within which the private sector is confined to operate and practice newer things, Yun said.