[Inside Chodong] What Should We Call Our Small but Precious SMEs?

"When I called his name, he came to me and became a flower." Naming a subject carries significant meaning. In social sciences and natural sciences, naming and defining unprecedented phenomena, concepts, or objects is an important activity and achievement in academic research. In our daily lives, the importance of naming is frequently encountered. Think about how a well-chosen movie title or product name can be a major factor in success.

Choosing a name that easily conveys an appropriate meaning is also important in the public domain, such as government policies. Looking at the small and medium-sized enterprise (SME) sector, although the government's intention to foster and support is clear, the terminology used for the subjects is often mixed and unclear.

Small and medium-sized enterprises (SMEs) and mid-sized enterprises are the most basic terms distinguished according to independence criteria such as company sales, asset size, and investment ratio as defined in the Framework Act on Small and Medium Enterprises. On the other hand, venture companies, called startups or venture businesses in English, refer to newly established SMEs that attempt to commercialize new technologies and ideas with high risk but potentially high returns if successful. Originating from Silicon Valley in the United States and widely known domestically due to the venture startup trend, the government provides various support measures such as scale-up support targeting venture companies with less than three years of operation.

Among SMEs and mid-sized enterprises, the term 'Gangso Company (Gangso Gieop, ?小企業)' is also used to refer to capable companies with growth potential. Meaning 'small but strong companies,' this name was coined by the media. The Ministry of Employment and Labor selects and supports Gangso Companies based on criteria such as companies without wage arrears and those with credit ratings below BB-.

'Hidden Champion' is a term coined by German management scholar Hermann Simon, referring to companies that are not well-known but rank 1st to 3rd in global market share in their respective fields or 1st in their continent, with sales under 4 billion USD. Similar to Gangso Companies, it stimulates curiosity like a 'hidden master of a strong competitor' and is preferred by many institutions because it is an easily relatable English term. The Export-Import Bank of Korea has promoted the 'Korean-style Hidden Champion Development Project' for a considerable period, and the Ministry of SMEs and Startups as well as the Korea Federation of SMEs also use this term.

Under the Ministry of SMEs and Startups, there are two companies with somewhat confusing names. One is Inno-Biz companies, combining Innovation and Business. These are SMEs with technological capabilities belonging to the Inno-Biz Association (Korea Association of Technology Innovation for SMEs). The other is MaIn-Biz companies, combining Management, Innovation, and Business. These are SMEs recognized for their management capabilities and are members of the MaIn-Biz Association (Korea Association of Management Innovation for SMEs).

Both share the commonality of being SMEs certified for 'innovation' by the Ministry of SMEs and Startups, whether technological or managerial innovation. Recently, the two associations have advocated establishing an 'Innovation SME Federation' by merging to attract more government support, so a name like 'Innovative SMEs' might emerge.

In 2015, the National Institute of the Korean Language decided to refine 'Hidden Champion' to 'Gangso Company' stating, "If public language becomes easier, the time and effort citizens spend understanding and accepting policies will decrease accordingly," but both terms are still used interchangeably. Each government ministry and association uses various names for companies according to their own standards and purposes. We hope for SME policies that assign consistent conceptual names to our small but competitive and precious companies and provide practical support.