Japan, Korea twist Silicon Valley model through conglomerate-startup connections

The traditional Silicon Valley model, characterized by disruptive startups challenging established industries, is well-known. However, this model doesn’t work universally, especially outside of the United States. The economic structures of countries like Japan and Korea prevent the disappearance of successful, internationalized companies through disruption.

Instead, these countries encourage collaboration between startups and large conglomerates. This open innovation model combines the resources and expertise of established giants like Hyundai, Samsung, and Toyota with the innovative ideas of young startups. This collaboration is facilitated by the government, acting as a matchmaker between entrepreneurs and leading conglomerates.

Startups benefit from the mentorship, expertise, sales channels, and capital provided by conglomerates. In return, conglomerates get access to new ideas and products, helping them maintain their competitive edge and avoid becoming outdated like Motorola or Nokia.

This collaboration is crucial for the economies of Japan and Korea. It drives innovation, creates quality jobs, and brings manufacturing abilities back onshore. The success of this model has led to its adoption by other countries, including the United States, European Union, and China, as part of their industrial policies.

However, critics argue that this level of collaboration stifles competition. Yet, policymakers in Japan and Korea continue to support this relationship, viewing startups as essential drivers of growth and innovation. The traditional Silicon Valley model of startup capitalism isn’t dead, but it is no longer the only viable approach. The adoption of collaborative models like the Japanese and Korean model is becoming increasingly prevalent in the global economy.

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