Asia Pacific Business Review

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Is there innovation in the K-pop industry? A

theoretical perspective

Jangwoo Lee & Lynn Pyun

To cite this article: Jangwoo Lee & Lynn Pyun (2023) Is there innovation in the K-pop
industry? A theoretical perspective, Asia Pacific Business Review, 29:5, 1425-1447, DOI:
10.1080/13602381.2023.2264042

To link to this article: https://doi.org/10.1080/13602381.2023.2264042

Published online: 31 Oct 2023.

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ASIA PACIFIC BUSINESS REVIEW
2023, VOL. 29, NO. 5, 1425–1447
https://doi.org/10.1080/13602381.2023.2264042

Is there innovation in the K-pop industry? A theoretical

perspective
Jangwoo Leea,b and Lynn Pyun c

a
Success Economy Institute, Seoul, Korea; bSchool of Business Administration, Kyungpook National
University, Daegu, Korea; cGraduate School of International Studies, Ewha Womans University, Seoul, Korea

ABSTRACT ARTICLE HISTORY

This paper proposes a novel theoretical perspective which views Received 10 July 2023
the K-pop industry through the lens of M-ies model. To date, the Accepted 24 September 2023
innovative aspects of K-pop have been largely neglected by busi­ KEYWORDS
ness scholarship, in part due to the inadequacies of the existing K-pop industry; innovation;
theories to capture the dynamic nature of its development. To fill catch-up; creative
this gap, M-ies model is devised. It posits that innovators (i) were destruction; M-ies model;
critical in creating a sustained level of innovative momentum (M), as South Korea
they implemented strategies (s) to respond to the external environ­
ment (e). Using the M-ies model, we also explain how an intriguing
parallel can be drawn between a seemingly unlikely pair, the K-pop
and the semiconductor industry. In so doing, we point to the
significance of producer-innovators, and how private sector – in
particular, SM Entertainment as the first mover – was the main
agent of creative destruction.

Introduction
What are South Korea’s (hereafter Korea) representative products? Luxury watches are
Swiss, and France has perfume, but analogous examples for Korea remain somewhat
elusive. When pressed, Koreans often suggest semiconductors or smartphones, while
K-pop is frequently cited outside of Korea (Choe 2021). After all, semiconductors are
embedded in myriad products; smartphones are the quintessential hand-held; and K-pop
has captivated hearts at scale. Indeed, Korean-made products are seemingly everywhere,
occupying countless hearts, hands, and digital devices. However, despite having stirred
the affections of people the world over and credibly staking its claim as one of the most
successful products ever created, K-pop has been largely ignored by business scholarship
save for a handful of notable exceptions (Cho, Bian, and Lee 2023; Hwang, Oh, and Lopes
2023; Lee 2023; Lee and Heo 2012, 2013; Oh and Kim 2022; Oh and Lee 2013; Oh and Park
2012).
Widespread ignorance of K-pop’s progress as an innovative industry – Koreans not
excepted – may be partly to blame for this insufficient scholarly attention. In the case of
Korea, the history of successful innovation was initially centred around cutting-edge
manufacturing industries, with the semiconductor industry as a case in point. Most
noteworthy is that this innovation propagated into wholly opposite cultural sectors

CONTACT Lynn Pyun pyun@ewha.ac.kr

© 2023 Informa UK Limited, trading as Taylor & Francis Group
1426 J. LEE AND L. PYUN

including the K-pop industry, which proved to be an unprecedented sensation from

a nation seemingly ill-suited for the flourishing of popular music. To create such novel
industries from scratch and develop them to the point of worldwide success, innovation is
a must; and this very innovative capability is what ultimately determines the path of
national development.
This paper proposes a novel theoretical perspective which views the K-pop
industry through the lens of the M-ies model (Lee 2023). The dynamic process of
innovation through which K-pop, a completely new industry, could rapidly grow
cannot be adequately explained by the famed Porter’s Diamond Model (Porter
1985) due to its static nature. To overcome this limitation, the M-ies model is
devised which can better reflect the dynamic innovative processes in K-pop indus­
try’s development. Using M-ies model, we will also explain how an intriguing
parallel can be drawn between the seemingly unlikely pair of the K-pop industry
and the semiconductor industry, accounting for both their similarities and
differences.
Through this endeavour, the success factors of the K-pop industry will be further
clarified. It will in turn also enable the observers and stakeholders of K-pop to make
a valuable prediction on how the industry will continue to fare. In fact, contrary to the
claims of naysayers, the K-pop industry has been growing and expanding at a remarkable
pace ever since its inception in late-1990’s. We believe that any reasonable answer to the
near universal question of whether this trend will persist – or worse, regress – must be
derived from the very origins of K-pop’s success.

K-pop industry overview

Definition of K-pop
K-pop, short for ‘Korean Pop (Popular Music)’, simply means music enjoyed by the general
public in Korea, leading some popular music experts to use this term as a catch-all for
popular music in Korea. A more focused definition, however, might further specify
predominant genres such as dance, hip-hop, R&B, ballad, rock, and electronic music
(Lee and Heo 2013).
Nevertheless, such definitions offer little towards properly understanding the growth
trajectory of an inherently international phenomenon like K-pop (Lee 2016). The very term
comes not from within Korea but from without; ‘K-pop’ is an imported word, first devised
overseas by Japanese observers to readily distinguish popular, idol group music of Korean
origin from their home-grown popular music, J-pop. In other words, ‘K-pop’ was the
expedient designation for the popular, idol group-centric music from Korea that would
eventually reach global music markets in the 2000’s.
For these reasons, rather than fixating on musical characteristics or genre, a more
accurate definition of K-pop considers the world-wide consumption of Korean pop music
in all its various forms. This includes music source, albums, performances, and broad­
casting. Succinctly put, K-pop is most aptly described as the music of idol groups that
generates buzz and is consumed overseas. This definition is consistent with the findings
from Choi and Park’s (2015) KIET (Korea Institute for Industrial Economics and Trade)
report, and captures the salient aspect of K-pop: that is, only upon consumption by
 ASIA PACIFIC BUSINESS REVIEW 1427

foreign audiences, can popular music produced in Korea rightly be considered K-pop. This
distinction is essential to understanding the dramatic development of K-pop in the world
music market.
Indeed, established global media outlets emphasize K-pop’s transnational character as
a cultural export, a form of content imbued with an extraordinary uniqueness and new­
ness. Furthermore, K-pop has penetrated the world market in ways previously unim­
agined by utilizing the information technology infrastructure, an advantage plied from
the onset of its pioneering product, H.O.T. Consequently, this successful innovation
rewrote the rules of the Korean music market (Oh and Jang 2022).
Neither instantly nor fortuitously, not by the hand of any single artist or lone producer,
K-pop is the fruit of systematic innovation at the corporate level. Moreover, this innova­
tion has been implemented through replicable technology and in combination with art,
an established domain built on individual creativity and musical experiences. As a result,
popular art has been transformed into a sustainable industry by K-pop’s decisive and
innovative contributions (Cho, Bian, and Lee 2023).
Under this rubric, H.O.T., for whom the term ‘idol’ was first used in Korea, can be
considered K-pop’s first bona fide product. Over the 20 years following H.O.T’.s 1996
debut, a steady stream of creative producer-innovators collectively built a sustainable
ecosystem of K-pop by injecting innovation to the production, distribution, and con­
sumption cycle of the music industry. This development enabled the resultant profusion
of idol groups. By the end of 2019, roughly 370 idol groups have been produced,
spanning from first to third generations, further burnishing K-pop’s status as an indepen­
dent genre within the global music industry.

A brief history of K-pop

The past 20 years witnessed K-pop’s breathless pace of development, beginning in 1996
with the debut of the first idol group H.O.T. at the core of this whirlwind activity.
Innovations in the production, distribution, and consumption of differentiated contents,
all resulted in the final product, namely the idol groups. Embodying these innovations,
numerous idol groups took centre stage and achieved remarkable feats. Roughly by
decade, around 150 idol groups debuted from 1996 to 2010, while from 2011 to 2019,
the rate of debut accelerated with the addition of 223 groups. Extrapolating from these
figures, more than 370 idol groups have been produced in the K-pop industry over the
past 20 years, even when only official debuts are counted.
Figure 1 contains the analysis of idol groups classified by generation. Generations fall
naturally into 8-year cycles: H.O.T., the originator and representative of the first genera­
tion; TVXQ who led the second generation; and BTS and Exo who are at the forefront of
the third generation. For example, H.O.T., S.E.S., Fin.K.L, BoA, Psy and Rain all belong to the
first generation, which spans the period of 1996 to 2003.
The first generation touched off a boom in the domestic market for idols, enabled by
building an orderly idol production system and competitively pursuing innovative activ­
ities. Critically, in the course of trying to overcome the limitations of the home market,
they successfully entered Japan, the second largest music market in the world. Despite his
debut as a first-generation idol, Psy is the lone exception among this group, belatedly
1428 J. LEE AND L. PYUN

Figure 1. The history of K-pop idol groups.

tasting global stardom, at the onset of the third generation in 2012 with <Gangnam
Style>.
The second generation covers 2004 to 2011 and includes TVXQ, Super Junior, Big Bang,
Shinee, Wonder Girls and Kara. During this period, more competitive content was being
created by systemizing the cooperative network of composers and producers from
around the world including those in Europe. Additionally, Social Network Services such
as YouTube, Instagram and Twitter extended the reach of marketing of K-pop beyond
Asia, Europe, the U.K. and the U.S. <Sorry Sorry> by Super Junior, in particular, eventually
gained huge popularity in Latin America. All these contributions to the globalization of
K-pop set the foundation for later success in the U.S. market for beneficiaries like Psy and
others.
2012 marks the start of the third generation, and Exo, BTS, Twice, NCT, Blackpink and
SuperM are among the principal innovative outputs from this period. Most of these idol
groups built a global brand for themselves, maximized profits through world tours that
include the U.S. and U.K. markets, and ranked competitively on the Billboard Charts.

History of innovation in Korean economy

Definition of innovation
The Korean translation of the word innovation is hyuk-shin (革新). Its dictionary definition
is ‘to completely transform old customs, traditions, organizations or methods’ (The
National Institute of the Korean Language 2023). However, innovation here is used in
the sense Joseph Schumpeter employed in economics: the technological change which
enhances value for producers and consumers, and increases economic wealth
(Schumpeter 1934). This classic characterization of innovation is helpful in understanding
what kind of transformation and value K-pop created in the music industry.
Schumpeter defined innovation as (1) developing and producing a new good, (2)
introducing a new method of production, (3) pioneering a new market, (4) applying
a new type of raw materials or parts, and (5) raising productivity by a new organization.
Applying this Schumpeterian idea, K-pop innovation qualifies as innovation in at least
three different ways. First, K-pop transformed music from an object of listening to ‘music
to be watched’, therefore presenting it as a new product. Next, K-pop enabled continuous
 ASIA PACIFIC BUSINESS REVIEW 1429

supply of diverse cultural products by the production system that integrates all processes
of talent discovery, training, music producing and marketing. Lastly, as for pioneering new
markets, K-pop took full advantage of digital platforms to cultivate an overseas niche
through marketing activities, and to create consumer space – fandom - both online and
offline (Brassier 2023; Chung and Koo 2023; Oh 2017). Through these innovations, K-pop
induced not only cultural advancement but also expanded into global music markets and
opened the doors for many related personnel to participate in creating music.
Notwithstanding Schumpeter’s classic definition and evaluating by more practical
contemporary standards, K-pop undertook a significant innovation facing the global
music market. Companies routinely engage in innovative activities in order to develop
technologies and create added value. Considering all the actual meanings involved in the
course of innovating, the following definition appears to be appropriate: ‘the act of
creating value for both companies and consumers by taking risks and realizing certain
ideas’.
This definition implies that although innovation starts from ideas, they need to be
realized in the ways that consumers find valuable. Therefore, commercial success is the
premise of innovation. This is to be differentiated from invention, which primarily con­
cerns itself with technical criteria regarding new technology and product functions.
Innovation hence indicates realizing something novel in a practical fashion, which is
different from the creativity that deals with newness and originality. Through this, fresh
value can be acquired for companies in terms of profit, and for consumers, in greater
functionality and lower price.
Innovation brings upon ‘creative destruction’ in the market, as it pursues novelty and
ingenuity that defy the status quo (Schumpeter 1934). Moreover, innovation goes beyond
simply product and technology, and includes a ground-breaking change in organization,
management method and business model (Utterback and Abernathy 1975).
Consequently, innovation frequently indicates not only transforming products, but also
factory systems or even the market itself. Seen this way, K-pop sought to revolutionize
more than merely music itself, but the production system, distribution, business model
and market development.

From imitation to innovation

The Korean economy started from the age of ‘simple imitation’ in the 1960’s and 70’s,
when the country lacked any technological foundation and financial base (Kim 1997).
Simple imitation is a strategy developing countries with low wages inevitably employ in
the early stages in industrialization, and involves unauthorized replication of products
from developed nations or making copies through reverse engineering. Imitation strategy
tends to take place in the industries easily secured from overseas and imitated as the
technology at hand is in the maturing or declining stages. This strategy proved effective in
the early days. The Korean economy developed labour-intensive industries such as textile,
garment, wig, toy and plywood from the mid-1960’s, and rose to the challenge of entering
shipbuilding, steel, electronics and construction in the 1970’s (Amsden 1992).
In the period of twenty years in 1960’s and 70’s, Korea pursued an economy of scale
strategy centred on large business groups, the companies otherwise known as Chaebols.
To this aim, powerful government support policies were introduced, such as the Act on
1430 J. LEE AND L. PYUN

Promotion of Special Industrial Cases. Companies focused on labour-intensive products

by imitating matured technologies from advanced nations, utilizing well educated labour
forces with a strong work ethic. The origin of Korea’s electronics industry is a case in point:
LG electronics started assembling radios by employing a German technician. Afterwards,
through imitation strategy that eventually led to product development, Korea began
producing fans, refrigerators and TVs without foreign technical support. Hyundai Motors,
established in 1967, expanded the localization ratio of cars from around 20% initially to
60% in 1972 and 92% in 1981, riding on the government’s push for localization. During
this period, Hyundai Motors could transition from semi-finished assembly to assembly of
finished products through imitation strategy, based on reverse engineering (Amsden and
Hikino 1994).
However, as Korean companies commenced attempts to acquire transitional technol­
ogies with some lingering strategic implications for developed nations, leading foreign
companies refused to share their patented technologies. Moreover, advanced countries
such as the U.S. began imposing pressure at the national level to block reverse engineer­
ing via simple imitation. In response, the Korean government attempted to transition
from labour-intensive to technology-intensive industries by lessening the intervention
and strengthening the market incentives. Relatedly, during this time, Korea set off various
policies encompassing an anti-monopoly act, trade liberalization, financial liberalization,
small and medium enterprise development, foreign investment liberalization, and inno­
vation promotion (Ungson, Steers, and Park 1997).

First generation innovation

After the 1980’s, the Korean economy started to break away from the age of imitation to
enter the age of innovation. That is, astounding levels of learning through R&D invest­
ment and knowledge creation activities were undertaken. These innovative activities
continued to the mid-1990’s and fashioned the first-generation innovation, characterized
by quickly acquiring technologies from developed nations and creatively imitating them.
Therein lies the reason why the Korean economy is often called a ‘fast follower’. Linsu
Kim’s seminal work, Imitation to Innovation (Kim 1997), gives a detailed analysis on how
the Korean economy is built on this type of innovation that stemmed from ‘creative
imitation’.
On the other hand, there was a symbolic incident in the Korean economy that signalled
the new era of actual innovation – namely, the Tokyo Declaration made by Samsung
chairman Byung-Chul Lee in 1983. The declaration proclaimed ‘Samsung’s advancement
into semiconductor’, which displayed their resoluteness for innovation to radically break
away from the economic structure depending on assembly and to accumulate its own
technological capabilities instead (Moon 2016). This unwavering stance on innovation
sent out shockwaves to the business world at the time, and the declaration is seen as
a historical event that boosted the Korean economy (Mathews and Cho 2000). A major
newspaper company, Dong-A Daily, chose this as one of the ‘100 Quantum Leaps That
Transformed Korean Economy’ (Kim and Yeom 2019).
‘Creative imitation’ refers to adding new functions creatively on top of imitation. It
therefore encompasses various activities such as benchmarking, reverse engineering and
strategic alliance, but can still be termed as innovation as it involves significant levels of
 ASIA PACIFIC BUSINESS REVIEW 1431

learning and knowledge creation through actual R&D investment. The Korean govern­
ment passed the New Industry Promotion Act in 1986, providing a powerful incentive to
innovative activities like R&D and human resource development. Thanks to such policies,
private R&D increased markedly in Korea. As a result, private R&D which was merely 2% of
all R&D investment in 1963 reached 84% in 1994. Korea’s R&D expenditure as a proportion
of GDP was 0.32% in 1971, but multiplied to 2.01% in 1994, surpassing that of the U.K.
Thanks to the first-generation innovation, it became possible for Korea to export
technology-intensive products such as computers, semiconductor memory chips, video
recorders, automobiles and industrial plants. Consequently, in 1994, Korea ranked second
in shipbuilding and home appliances, third in semiconductor memory, fifth in petrochem­
icals and electronics, and sixth in automobiles and steel in the world.
Samsung Electronics embarked on independent development of semiconductor mem­
ories in 1983, gradually closing the technological gap with the industry leaders: the gap
was 4 years for 64K DRAM, which decreased to 2 years for 256K DRAM. By the time 4 M
DRAM came out, Samsung could mass produce the chips almost simultaneously with
Japanese counterparts. Effectively, Samsung leaped forward from a company that
engages in simple assembly to a major supplier in a mere span of 10 years. By 1994,
semiconductor became the largest export category, with over 13% of all Korean export
coming from this single product.
In the meantime, Hyundai Motors established the Advanced Engineering Research
Centre in 1984 and started to independently develop engines and transmissions. After
this, a number of other R&D centres were established one by one, promoting innovation.
As a result, Hyundai achieved 10 times growth in productivity every 10 years, and
managed the feat of manufacturing a million cars annually in 18 years. In comparison, it
took Toyota 29 years and Mazda 43 years to reach the same point.

Second generation innovation

Starting from the 1990’s, Korean companies gradually entered more technology-intensive
industries, such as semiconductors, information technology and bio-related fields. This
shift entailed competition on an equal basis with counterparts from more developed
nations. Industries using technology in fluid stages are strategically important for
advanced nations, thus demanding a higher level of innovation. At this stage, the need
to create novel knowledge precedes imitating advanced technologies, and to that end,
additional activities such as strengthening of independent R&D, establishing advanced
R&D bases overseas and forming M&A/strategic alliances are required. The same pattern is
found in the trajectory of Japanese economic development in how technological cap­
ability has been accumulated in Japanese firms (Odagiri and Goto 1996). In the past
century, the Japanese economy first imported technology and knowledge from overseas
(simple imitation), then converted them using the country’s strength and engaged in
learning through trial-and-error (1st level innovation), and gradually moved on to making
efforts at independent innovation (2nd level innovation).
The event that marked second-generation innovation in the Korean economy was
‘New Management Initiative’ in 1993 declared by Kun-hee Lee, the late Samsung
Chairman. Following the previous Chairman Byung-Chul Lee’s Tokyo Declaration which
marked the first-generation innovation, Samsung Electronics was at the centre of second-
1432 J. LEE AND L. PYUN

generation innovation, generating the most significant innovation outcomes in the

Korean economy. For instance, starting from successfully developing the 256 M DRAM
in 1994, Samsung Electronics surpassed Intel, the top semiconductor company, to take
the industry lead in 2017. Moreover, in TV industry, the company overtook previous #1
Sony in 2006, and took the top spot in the cell phone industry in 2012 by beating Nokia.
Along with Samsung’s managerial initiatives, the events that epitomize second-
generation innovate are the founding of Korea Venture Business Association (KOVA),
a gathering of small and medium tech ventures in 1995, and the establishment of the
KOSDAQ market in 1996. Afterwards, IT and internet-based industries could flourish
through innovative activities by tech-intensive venture firms in the Korean economy.
Interpark, the first online shopping mall was established in 1996, and Naver’s search
service was launched in 1999. In 2010 and 2011, mobile messenger services Kakaotalk and
Line were released, respectively (Table 1).
The number of venture companies in Korea reached 37,000 in late 2018, and when all
the companies that received venture certifications are still surviving are counted, the
number increases to 70,000. Aggregated sales of the venture firms are 168 billion USD or
14.5% of the GDP in 2017, which is in the middle of that of Samsung Electronics
(193 billion USD) and Hyundai Motors (121 trillion USD). The market capitalization of
Naver, the representative of IT ventures, was 26 billion USD in May 2020, overtaking that
of Hyundai Motors, the leader of manufacturing-based companies (approximately
15 billion USD).
Additionally, cultural contents companies must be considered as yet another
agent of second-generation innovation. As is well known, in recent years, cultural

Table 1. Key events of the second generation innovation.

Year Sector Innovative Events
1993 Established Company Chairman Kun-hee Lee’s ‘Declaration of New Business’
1994 Established Company Samsung Electronics developed the world’s first 256 M DRAM
1995 K-pop SM Entertainment established
Venture Company Daum established
1996 Venture Company KOSDAQ established
Venture Company Interpark (first online domestic shopping service) established
Venture Company Nexon developed the world’s first graphic online game
K-pop H.O.T.‘s debut
1998 Established Company Samsung Electronics’ TFT-LCD topped the global market
1999 Established Company Hyundai Motor started 10-Year 100,000-Mile Free Warranty in the U.S.
2001 K-pop BoA’s debut
Venture Company Naver changed its corporate name to NHN, starts service
2002 Established Company LG operated the world’s first 5th Generation TFT-LCD production line
2006 Established Company Samsung’s TV business surpassed Sony to become the world’s #1
Established Company Samsung Electronics’ Nand Flash recorded #1 in the world
2007 K-pop Girl’s Generation’s debut
K-pop Big Bang’s debut
2011 Venture Company KakaoTalk embarked service
2012 K-pop Psy’s Gangnam Style recorded a runaway hit
K-pop Exo’s debut
Established Company Samsung Electronics’ mobile phone sales topped the global market
2013 Established Company LG Display enabled world’s first mass production of large OLED panels
Established Company Samsung Electronics developed V Nand for the first time in the world
2017 Established Company Lotte Word Tower, the highest building among OECD countries, opened
2018 K-pop BTS topped the Billboard Chart
2019 Established Company 5 G was commercialized for the first time in the world
K-pop SuperM topped the Billboard Chart
 ASIA PACIFIC BUSINESS REVIEW 1433

contents including game, hallyu drama and K-pop, emerged as new export products
for Korea. All the while, not much policy attention was paid to the cultural contents
industry due to its small size. However, such products have a unique ripple effect.
According to one estimate, the economic ripple effect created by 1 USD of K-pop
exports is estimated to reach 17.7 USD (KEXIM 2019). K-pop’s significance is ever
more increasing since it is the industry that enhances creativity and innovation for
the whole country and has the greatest impact on the national brand (Byun 2011;
Choi and Park 2015).
As seen in Table 1, the K-pop industry has shared the zeitgeist of second-generation
innovation with manufacturing conglomerates and IT venture firms. To illustrate, SM
Entertainment was founded in 1995, which was the year when Korea’s first email service
company, Daum Communications, was established. H.O.T. debuted one year later in 1996
and in 2001, BoA entered the Japanese market. From 2004 to 2007, TVXQ, Super Junior,
Big Bang and Girls’ Generation made their debuts. In 2012, Psy’s <Gangnam Style> was
a global phenomenon and Exo debuted in the same year. In 2018 and 2019, BTS and
SuperM topped the Billboard Chart. These fruits of K-pop innovation need to be counted
as a part of second-generation innovation in the Korean economy, alongside the innova­
tive outcomes of semiconductor, IT venture, and manufacturing industries.

Success factors of K-pop: explanations by innovation theory

Trends of Korean popular music industry
In his book <A Small History of K-pop>, a music critic Sung-min Kim proposed late Ok-
yoon Gil as the representative case of simple imitation (Kim 2018). Ok-yoon Gil was
a composer and performer who epitomized ‘Korean popular song’ from the 1960’s to
1980’s. He started his career in 1946 as a Jazz Saxophonist at an American military base in
Korea, and moved over to Japan in the 1950’s. Following his return, Gil became a legend
in Korean pop music by composing over 3000 songs and even taking the position of
music director of the 1988 Seoul Olympics.
Mid- to late-1980’s is generally regarded as when Korean popular music entered the
stage of ‘creative imitation’. Especially due to the rise of the middle class, teenagers
became the main and drastically younger consumers of music. The wave of democratiza­
tion, liberalization and globalization that swept through Korean society after the 1988
Seoul Olympics, ushered a revolutionary break from the past in the music market. At this
time, an official agreement was signed with the World Copyright Association to protect
intellectual property in music. In cinema, the screen quota policy shielding local films was
abolished and Hollywood movies began their direct distribution. The private broadcasting
network was also liberalized in 1990.
In step with the environmental changes, law and institutions related to the popular
music industry were changed to strengthen freedom of expression. Consumers increas­
ingly preferred more innovative music. On this, Kim explained that the Korean music
industry grew out of one-sided imitation of Japan and the U.S. after the mid- to late-
1980’s, and started to innovate in the ways to create an independent music through active
harmonization and variation (Kim 2018). That is, in the language of innovation studies,
remarkable levels of learning and knowledge creation through actual R&D activities
1434 J. LEE AND L. PYUN

began to take place. This is a typical characteristic of ‘creative imitation’ which corre­
sponds to the first-generation innovation in the Korean economy.
Meanwhile, as was the case with other industries, second-generation innovation for the
music industry in Korea got under way after the mid-1990’s. ‘Seo Taiji and Boys’ was the
band that embodied this. They made their debut in 1992, and shocked the Korean
popular music world with a radical style of music to the point that older generations
found it to be distressing. As their moniker ‘Culture President’ suggests, they are widely
regarded as having indelibly impacted Korean popular music despite disbanding in 1996.
The rise of second-generation innovation in K-pop were coupled with changes in the
global pop scene. The establishment of the Hip-hop and Rap awards at American Music
Award in 1989 heralded the mainstream arrival of black-oriented hip-hop culture. Young
musicians in Korea eagerly assimilated the this new trend in their bid to create something
aggressively new. Younger, so-called X-generation consumers, ardently supported these
efforts, eventually: becoming a central consumer segment willing to absorb new types of
media such as colour TV, video, internet and cell phones. K-pop innovation, which started
with SM Entertainment’s establishment in 1995 and H.O.T’.s debut in 1996, took place in
the context of how Korean popular music has been changing.

Examining success factors of K-pop

Various analyses exist on the success factors of K-pop, which grew to become a strategic
export industry in surmounting a troubled domestic market. For example, the Korea
Creative Content Agency (KOCCA) cited as reasons the competitiveness of the contents
themselves, digital distribution and marketing (KOCCA 2018), Korea’s changing status and
rapid growth of the Asian cultural consumer market. To this, Hyundai Research Institute
(Kim 2011) added training system for singers, differentiated dance music and impressive
group dance. Furthermore, Samsung Economic Research Institute (Seo et al. 2012) pro­
posed four factors from the perspective of production, consumption and distribution,
which are orderly production system, marketing through social media, social network
service-based proactive consumers and ‘triple time’ of song, dance and appearance.
Relatedly, a report from the Korea Industrial Economics and Trade (KIET) titled ‘Policy
Measures for Strengthening the Competitiveness of K-pop’ summed this up into the
following three factors (Choi and Park 2015).

(1) Orderly Production and Training System. The first differentiated competitiveness of
K-pop was the step-by-step production and distribution system, composed of
‘casting → training → producing → marketing & overseas promotion’. Unlike the
U.S. and Japan, the most important reasons for success were discovering talent and
raising them up long-term. Building on this system, K-pop could produce idol
groups and penetrate overseas markets.
(2) Social Media Based Promotion & Marketing. Based on social media platforms such
as YouTube, Facebook and Twitter (now X), K-pop could engage in promotion and
marketing geared towards not only Asia but also U.S. and Europe without much
investment. For instance, spearheaded by SM Entertainment, JYP and YG were the
first music companies in the world to instal official channels on YouTube, utilizing
them for disseminating and marketing musical contents. Afterwards, an exclusive
 ASIA PACIFIC BUSINESS REVIEW 1435

channel for K-pop was established, enabling the global expansion of K-pop free
from cost pressures.
(3) Sophisticated Musicality and Appearance. Idol groups who were successful in the
global market have the reputation of being exceptionally attractive, exhibiting
stylish choreography and chic fashion on top of their considerable singing abilities.
Sufficiently differentiated contents required not only the employment of accom­
plished composers and producers in Korea but collaboration with professionals
from Europe, the U.S. and Japan. In particular, even from the very inception stage of
K-pop, SM Entertainment imported S.E.S’. hit song <Dreams Come True> from
a Finnish composer, strategically building an international network through
which the company could secure and create sophisticated contents proven to be
globally competitive.

Putting the above analyses together, the success of K-pop can hardly be attributed to the
policy support from the Korean government as some foreign media report. Rather, from
the late-1990’s, the music market which was already suffering from the aftermath of IMF
financial crisis, a situation actually exacerbated by the lukewarm policy response towards
online piracy and copyright issues.
Consequently, companies in music-related fields were cornered in a situation where
their survival was at stake without foreign expansion. At that time, no conglomerates or
financial institutions were interested in the music industry, making it difficult for compa­
nies to secure necessary financial resources. The KOSDAQ market which opened in 1996
was the only resort. The first company in the music industry to be listed there was SM
Entertainment in April 2000, enabling the company to access large-scale finances.
Allegedly, the company only passed the review first failing due to the widespread
scepticism surrounding SM’s business model, which was heavily dependent on income
generated by a single group – H.O.T. - at the time.
However, the above reasons for success tend to be based on superficial analyses,
drawn from an ex-post perspective in the wake of K-pop’s breakout success. In this
sense, they do not adequately explain the process of K-pop’s development towards that
success. In other words, if the above factors told the whole story, other countries should
be able to replicate the success and create the second K-pop boom in their respective
nations. Yet, it would be impossible to reproduce the success by simply copying from
K-pop the orderly training system, social media marketing, cool music and attractive
appearances. In order to accurately explain K-pop’s success, the process of how the
industry rose must be analysed, focusing on its underlying and interacting factors.
KIET’s aforementioned report proposed the explanation from the perspective of inno­
vation theories. In other words, it interprets the achievements of K-pop as the fruit of
innovative activities, and attributes the success to forward-looking firms such as SM
Entertainment that created additional value and trailblazed the K-pop market through
unprecedented management originating from fresh ideas. It goes on to highlight
Producer Soo-man Lee and his SM Entertainment as the first-movers among agents of
innovation, since it was Lee who introduced idol production system, advancement to the
overseas market, horizontal and vertical integration, and One-Source-Multi-Use (OSMU) to
various aspects of the music business. Through this, the company swiftly grew to be the
dominant player in the market. Late entrants like JYP and YG started to compete and
1436 J. LEE AND L. PYUN

expanded the industrial ecosystem and systemized the innovative structure afterwards
(Choi and Park 2015).
In conclusion, through the lens of innovation theory, K-pop could achieve success
thanks to the innovative entrepreneurs with original ideas creating a novel business
model and thus securing a new engine of growth, despite the internet hastening the
demise of the music album market. This implies that in order to correctly understand
K-pop’s success, the following needs to be analysed: innovators (or innovative entrepre­
neurs), environmental changes they faced, and the strategies they employed to respond
to such changes. M-ies model proposed in the next section is devised to provide the
framework that enables understanding the factors of success and their interactions, which
in turn leads to an in-depth understanding of the process behind K-pop’s success.

K-pop innovation analysed using the M-ies model

K-pop’s success is an innovative feat attained amidst a threatened and collapsing domes­
tic record industry. Applying the aforementioned classic definition of innovation, K-pop is
a result of innovative activities creating new values by doing things differently from
before. In particular, innovation was applied to create new value in terms of new product,
new production methods and pioneering new markets.
The process of any industry to take its form and rapidly develop is not accomplished by
a certain individual or a breakthrough event. Rather, we need to understand the innova­
tive momentum that led the K-pop industry to consistently grow in the past two decades.
The focus, again, needs to be on the driving force behind incessant innovative activities.
M-ies Model in Figure 2 depicts the concept of this momentum as the driving force, along
with the individual factors and their interactions.

Figure 2. M-ies model: the momentum that created K-pop innovation.

 ASIA PACIFIC BUSINESS REVIEW 1437

Schumpeter proposed innovation as the ultimate driving force of economic

development, and entrepreneurs as the main agents who practice it (Schumpeter
1934). As the actions undertaken by entrepreneurs are centred around companies
in certain industries, innovation is analysed in the context of companies and
divided into three perspectives in the traditions of management scholarship: first,
business idea and leadership of the innovators, second, environment that sur­
rounds the company, and third, strategy with which companies respond to the
environment.
New industries, new technologies, and new business phenomena can be invariably
traced back to innovators. To name a few cases in chronological order, direct current was
brought about by Thomas Edison, mass production system by Henry Ford, smartphone by
Steve Jobs, Windows OS/eradication of polio by Bill Gates, and last but not least, ChatGPT
by Sam Altman. The same holds for the K-pop industry and the global syndrome it set in
motion. This innovation originated from innovators (I), spearheaded by Producer Soo-man
Lee, who in the face of ever-changing environment (E), implemented strategies (S) to
transform crises into opportunities.
However, it is difficult to properly explain the innovation process when discussing
innovator (I), environment (E), and strategy (S) in isolation. These factors produce results
while interacting with one another as time goes by, rather than impacting the perfor­
mance independently. Therefore, in order to adequately understand the process of
continuous innovation, a dynamic approach is required as opposed to a static one.
Therefore, how K-pop companies accumulated innovative energy and grew at an
accelerated pace should be examined from a dynamic perspective with passing time.
From this, the formation and evolution of innovative momentum, together with the
foundation of growth, should be analysed. In other words, the focus will be on the vision
and leadership of producer-innovators, the enveloping environment, and interactions
between the strategies in play. Only then, can the series of innovative processes regarding
pioneering overseas markets that led up to high profit by K-pop companies be duly
considered.
When applying the M-ies model to understand K-pop’s innovative process, first
analysing SM Entertainment’s case as the trailblazer of K-pop innovation will be most
effective. This company is the most representative innovative firm in the industry since it
was founded by producer Soo-man Lee, the innovator behind the first idol product.
While H.O.T. debuted successfully in 1996 and forged the path to the Chinese market
with much fanfare, Soo-man Lee was faced with the environmental change where illegal
music download was rampant and the record industry was in decline. In response, he
undertook continuous innovation aiming to advance to foreign markets. For one, he
moved away from a grab-bag management approach, and introduced a novel business
model.
More specifically, the product to sell was re-defined as ‘idols’, departing from the
previous paradigm of perceiving only ‘music’ contained in albums, and a sustainable
supply of idols was ensured through a unique production system (idolization). With OSMU
strategy, idols could create value in various genres, ranging from commercials, talk shows,
movies and musicals, which also extended their life cycle (diversification of profit sources).
As the middle class expanded across the world, music consumption by the younger
generation increased. Also, with the development of social media such as YouTube and
1438 J. LEE AND L. PYUN

Facebook, not only Japan, the second largest contents market in the world, but other
Asian markets could be captured as well. Among them, the most noteworthy market was
China, which apparently has an immense growth potential (globalization).
These innovative activities secured SM Entertainment’s swift ascendency within the
K-pop industry. In short, facing the threat of declining domestic music market, the
company risked an innovative strategy of idolization, diversification of profit sources
and globalization, which resulted in a new opportunity in the overseas market. Again,
innovators are the ones who can transform threats to opportunity (for a more detailed
account on SM Entertainment, refer to Cho, Bian, and Lee 2023). Innovative momentum
thus triggered in K-pop by producer Soo-man Lee was expanded as latecomers such as
Ho-yeon Lee, Jin-young Park, Hyun-suk Yang and Si-hyuk Bang joined, who in turn
sparked further innovation creating a virtuous cycle. As a result, the K-pop industry
could overcome threats from the home market and take advantage of opportunities
conferred by the digitalization of the global music industry and increasing overseas music
consumption.
Meanwhile, recent Korean cinema and classical music are also achieving remark­
able results thanks to the efforts of many innovators. In February 2020 at 29th
Academy Awards, <Parasite> directed by Joon-ho Bong won four awards, including
the Academy’s highest honours, Best Picture and Best Director. In addition, in the
fourth week of March, 2020, pianist Roo-ma Lee’s album ranked first place for six
consecutive weeks at Billboard Classical Chart. These examples show how innovators
outside of K-pop are also emerging in other creative industries, producing globally
acclaimed results. However, if these achievements are to contribute to the develop­
ment of the industry as a whole, a steady stream of emerging innovators is required
and their activities must be structured in the context of companies so that strategic
investment can reproduce such innovation on an enlarged scale. In other words,
rather than innovations cropping up in isolated patches, a sustained momentum
must be created for innovation to be perpetuated and expanded as the M-ies model
emphasizes.

Semiconductor and K-pop: a comparison

Differences & similarities in innovation
Semiconductor and music are two industries that are diagonally opposite to each other.
To begin with, they are vastly different in size. As well recognized, the semiconductor
industry is one of mid- and large-sized manufacturing that involves grand scale invest­
ment. Since 2018, semiconductors export surpassed 100 billion USD for the first time for
a single product, which led to this industry alone accounting for over 20% of the total
exports from Korea. In contrast, the K-pop music industry is incomparably small, since the
music industry is fundamentally a small-scale business. Even in the U.S. where the music
industry is the most developed in the world, music consumption per capita remains less
than 0.1% of the GDP, and less than 0.2% of the population works in the music industry
(Kreuger 2019). The world average for music consumption per capita, including Korea, is
smaller than this with 0.06% of GDP. That is, for every 10,000 KRW, only 6 KRW goes into
purchasing music-related goods and services.
 ASIA PACIFIC BUSINESS REVIEW 1439

Another difference between the two is that while music creates emotional con­
nectedness across people based on consumers’ sentiments and sensibilities, semicon­
ductors create value based on electronic information that operates via silicon
materials. Music is a source of human emotional power and happiness, arousing an
enormous ripple effect in individuals and the society at large. In contrast, semicon­
ductors intellectualize machines and support humans’ logical tasks by retaining and
processing information. In particular, semiconductors spearhead digitization as the
core element of transforming industries and societies to become more digitally
based. Interestingly, music is, in turn, an object that is most affected by this digitiza­
tion. For instance, through the advancement of digital media such as Spotify and
YouTube, music consumption increased sharply. This has hastened the end of album
sales era, and induced a more service and subscription-oriented transformation to the
music industry.
The above suggests that it will be a challenge to find any commonality between the
two industries. Nevertheless, when we focus on the concept of innovation, there are more
things in common than not. Although one represents manufacturing as a core compo­
nent in digitization and the other represents culture that influences human emotions, the
following points are common denominators in the process of innovation for these two
industries.

Innovation in the production system

It could be argued that both the semiconductor and K-pop industries acquired compe­
titiveness from innovating technology used in the production process. For example, in
the pursuit of the U.S. and Japan, the memory industry in Korea squeezed itself into the
division of labour of the global value chain based on the low-cost structure. Afterwards,
through a continuous innovation of the production system, it attained the global lead
overtaking Japan in terms of competitiveness. Semiconductor design is notoriously
complex and requires a high degree of creativity. However, the production system is
rather simple, as the structure is nothing more than layering micro devices and metal
on top of silicon. It puts together different steps of lithography, etching, ion imple­
mentation, oxidization, cleansing and evaporation, and repeats the integrated pro­
cesses over and over. Similarly, although the contents in the K-pop industry are
complex and creative, the structure of the idol production system composed of casting,
training, producing, managing and marketing is relatively simple. The semiconductor
and K-pop industries thus share an emphasis on continuous innovation of production
systems with relatively simple processes.

Vertical integration strategy

Both industries implemented a ‘vertical integration’ strategy of consolidating core
functions. This was the chosen method to provide the products and services that
customers desire rapidly and efficiently by reading the market and reflecting new
values. In the case of Samsung Electronics, the entire processes of coming up with
new products and releasing them to the market, development → production →
distribution, achieved a perfect vertical integration. All the major developmental
functions were internalized accordingly, which maximized efficiency.
1440 J. LEE AND L. PYUN

This integration is in the same vein as K-pop companies’ total management strategy,
which combines the complete production system ranging from idols’ casting, training,
producing and marketing under one roof.

Redefinition of business model

The definition of innovative output was distinct from the past in both industries.
Competitiveness in the semiconductor industry is gained through driving the cost
down in manufacturing cutting-edge products, enabled by an immense R&D investment.
Yet Samsung Electronics did not set the standards for the latest technology as reaching
the highest levels in function and reliability. Instead, they redefined what state-of-the-art
technology is, by emphasizing speedily and cheaply realizing the level of quality that
customers desire.
Similarly, K-pop innovators changed the very definition of the cultural product of
music. If ‘music’ materialized in the form of an album was the core product previously,
K-pop then redefined idols who perform music as the key to creating profit, eventually
building a system capable of producing a variety of idol groups in a sustained and stable
fashion.

Market structure of winner-takes-all

Both industries are characterized by a winner-takes-all market structure where competi­
tion is fierce and the nature of the business is high-risk, high-return. In the semiconductor
industry, it is widely known that the degree of competition is truly cut-throat. In the
memory semiconductor business where Korea became the global top, over 20 manufac­
turers went out of business in the past two decades, leaving only three companies
surviving as of 2019. The intensity of their competition is well illustrated by the example
of 1 MB memory. The price of a memory chip was 6.5 USD in 1980, but became 0.0042
USD in 2015 (Jeong 2019), falling 1,500 times. The ensuing competitive structure is that
only the companies with the highest level of technological capability can produce the
semiconductors that have the highest performance and lowest cost, resulting in bloody
competition.
Likewise, winner-takes-all polarization continues to intensify in the music industry. For
instance, the share of profit from performances taken by the top 1% artists shows a large
increase in the past 30 years, from 26% in 1982 to 60% today. At present, the polarization
continues to worsen, with 85% of the total revenue from performances going to the top
5% artists. Especially superstars at the top 0.1% are known to take over half of all album
sales and digital streaming (Kreuger 2019). This phenomenon is expected to further
strengthen as digital streaming brings down national borders and homogenizes the
global music market.

Conditions in technological learning

Ultimately, industrial development hinges on companies. Only when companies accumu­
late technological capabilities and attempt innovation, can technological change and the
creation of added value take place. Although the actual technologies employed by these
two industries are completely different, they share highly similar patterns of technological
learning and accumulation.
 ASIA PACIFIC BUSINESS REVIEW 1441

Technological capability denotes not only the absorptive capacity to learn

existing knowledge, but also the ability to create new knowledge. To develop
this capability, companies should accumulate both explicit knowledge codified on
documents through words, and more importantly, tacit knowledge that is difficult
to express (Kim 1997). Only then, can the most essential technological capability
be built up. A well-known argument in innovation studies claim that for companies
to learn technology efficiently, high levels of prior related knowledge and intensity
of effort are required (Cohen and Levinthal 1990). Those two factors are relatively
strong in the semiconductor and K-pop industries.
In the case of both industries, prior related knowledge reached a certain level as
they went through the era of creative imitation in the 1980’s, and the intensity of
effort was exceptionally high under the initiative of the innovators. Both led to
rapid increase in innovative activities as well. For example, the Korean economy
has built a substantial technological foundation since it first entered the semicon­
ductor industry in the mid-1980’s through innovative activities based on creative
imitation. Moreover, it has employed a considerable number of scientists and
engineers who were educated and had working experiences in the leading
U.S. institutions (Kim 1997; Pyun 2021). In similar fashion, going through the
Korean music industry’s golden era of New Generation dance music from late
1980’s to early 1990’s, technological foundations were strengthened and musicians
became highly dedicated.
Similar patterns in innovative process in the semiconductor and K-pop industries since
the mid-1990’s are explained above through the five commonalities, despite the inherent
differences between the two. That is, both semiconductor and K-pop made major con­
tributions in upgrading the Korean economy as the first-mover, through driving
the second-generation innovation characterized by ‘new knowledge creation’. As
a result, these two industries rewrote the history in the Korean economy as in the
following.
In-Seong Jeong argued that for the first time in Korean history as a single
product, semiconductor export surpassed 100 billion USD, making up for more
than 20% of the total export and positioning itself as the unquestionable export
product of Korea. From what was once a heap of ashes without any industrial
foundation, the country was transformed into a high-tech industrial nation by
semiconductor (Jeong 2019).
A similar point is made for the K-pop industry. Jangwoo Lee writes that three
albums by BTS and one by SuperM released in 2018 and 2019 chartered number
one on Billboard, and music by other K-pop idol groups has spread globally,
including to the U.S. and U.K. This feat has greatly enhanced the national brand,
the first time ever since the establishment of the Korean government. Thanks to
such achievements, the cultural contents industry in Korea became the 13th largest
export product from Korea, surpassing the consumer-electronics industry. The flag­
ship product that transformed the country, which had always envied the cultural
products and potential of the U.S. and Japan, into a cultural powerhouse was none
other than K-pop (Lee 2023).
In conclusion, by putting together the innovation cases of semiconductor and K-pop, it
becomes evident that the innovative momentum sparked by innovators has been a highly
1442 J. LEE AND L. PYUN

significant factor. Much of the success of a certain company or industry can be explained
by this innovative momentum. In particular, a country that aims to create a next-level
industry in the rapidly changing world economy must strategically manage this innova­
tive momentum.

Discussion
By and large, we believe that this paper has significant implications both for academics
and practitioners who are interested in innovation taking place in the context of cultural
industries. The specific theoretical and practical contributions we aim to make through
the study are detailed below.

Theoretical implications
This study contributes to the scholarly literature by analysing K-pop industry through
a dynamic framework, the M-ies model, to explain the development of a novel
industry and its path of growth. This approach has the merit of explicating the process
by which competitiveness of a nation emerges and fortifies. Existing theories on
competitiveness find their origins in Porter’s 5 Forces or Diamond frameworks,
which lead to the tendency to analyse a company’s competitiveness within
a particular industry, or a particular industry’s competitiveness at the national level
respectively. However, this perspective is unavoidably static, limiting its ability to
enhance the collective understanding on how a new industry comes into existence
and moves forward. Alternatively, based on Schumpeter’s innovation theories, the
M-ies model attempts to elucidate how innovation creates the competitiveness of
an industry that did not exist beforehand. To reiterate, innovation arises when inno­
vative entrepreneurs, imbued with vision and risk-taking spirit, come up with and
implement strategies to transform threats into opportunities in response to the ever-
changing environment. In turn, as this innovation snowballs, innovative momentum
forms, and will not only establish an industry but will become an engine to sustain its
further growth as well.
This paper also attempts to enrich the body of innovation theory and expand its
geographical scope. Most innovation theories are developed and applied based on
industries and enterprises from the developed countries. Notable exceptions
include works by Kim (1997) and Amsden (1992) who explored developing coun­
tries’ cases, such as those in Korea. Yet this line of research covers only up to
innovations until late 1990’s, and does not empirically deal with the crucial case of
Korea after 2010, when it officially became the only country that transitioned from
a developing to a developed nation by every standard. The lack of research from
this angle is indeed problematic, as this phase of development is uniquely char­
acterized by being propelled mainly by the innovative capabilities of the private
sector, with governmental policies playing a decidedly supplemental role. We aim
to fill this gap by explaining the series of innovations in Korea that unfolded since
the 1990’s, focusing on the K-pop and semiconductor industries, to illustrate that
innovation was the key for Korea attaining the aspirational mantle of leading
nation.
 ASIA PACIFIC BUSINESS REVIEW 1443

Lastly, we applied innovation theory to the music industry, while the overwhelm­
ing majority of innovation studies are on manufacturing or high-tech industries, and
on cutting-edge clusters such as those in Silicon Valley and the Greater Boston area.
Conversely, the movie industry in Hollywood or art/cultural industries in New York
have not received due attention from academic circles. Although there have been
popular works such as Rockonomics (Kreuger 2019), which inspired the oft-
mentioned term Swiftonomics (Jericho 2023; Kennedy 2022) in the media these
days, they are descriptive in nature rather than prescriptive, explaining the workings
of the music industry to the general public. When it comes to K-pop, to the best of
our knowledge, no other work has attempted to apply established innovation the­
ories to the industry or create a conceptual tool derived from it that is grounded in
innovation literature.

Practical implications
To begin with, this study informs managers and practitioners as the necessity to skilfully
manage innovators, environment, and strategic factors at the national level is demonstrated
through spelling out how K-pop’s success must be ascribed to the formation and spread of
innovative momentum. In particular, it needs to be emphasized that supporting visionary
innovators ready to challenge the status quo is far more effective than simply rendering
financial support in order to sustain and further this momentum. Therefore, to create appro­
priate social milieu and institutions that can best encourage their activities is what is most
imperative.
In addition, this paper points to innovation and the sustained momentum it creates to
be the most fundamental sources of competitiveness at the firm level. SM Entertainment
is an illustrative case of how the innovative founder’s vision and leadership, when
combined with organizational capability and implementation of transformational strate­
gies, can bring upon continuous strategic learning (Cho, Bian, and Lee 2023).
Finally, through providing a conceptual model called M-ies, it became possible to
analyse and even predict the future of K-pop from the perspective of industrial
innovation. There has been substantial scepticism surrounding K-pop’s future pro­
spects. While it is true that many external factors threaten K-pop industry’s continued
success – lack of win-win ecosystem, global barriers, new competitors, and weariness
of the consumers, to name a few – innovators who convert threats to opportunities
through novel strategies are also actively responding. For instance, online K-pop
concerts held during the COVID pandemic for the first time in the world, and digital
technology such as Metaverse is proactively being utilized to engage with the fans all
over the world, which are all encouraging signs for K-pop to reach new heights in the
global entertainment industry.

Limitations and future research

The main limitation of this study is that it is based on a single-country, Korea. Although
a considerable level of the M-ies model’s validity is secured through illustrating how it can
be applied to two discrete industries, and by covering 95% of value-added activities in the
K-pop industry, the arguments presented in this paper still cannot fully guarantee that the
1444 J. LEE AND L. PYUN

model will work equally well in other country settings. Hence, future research is called for
to extend the effectiveness of the M-ies model in other contexts, and through applying
alternative methodologies from what was employed in our study. For instance, conduct­
ing a longitudinal data analysis after collecting relevant data, or attempting to explain
a completely different industry’s dynamic growth process from its inception to maturity
could be possible topics of further research.

Conclusion
Owing its past success in foreign markets to a series of innovative content, K-pop depends
on sustaining that very flow of differentiated products for its future. As the supply of
cultural contents products will always lead its demand due to its nature, the innovative
capabilities of K-pop groups are the decisive factor of the industry’s competitiveness.
Obviously, negative issues in the market such as anti-hallyu sentiment can have an
impact, so the content must be sufficiently innovative to overcome downward market
trends.
This insight is confirmed by the downturns experienced by J-pop from Japan
and by the Noir films from Hong Kong, both of which enjoyed global popularity for
a time. The international success of K-pop will encounter the same fate if steady
stream of innovative contents comes to a halt. Until the early 2010’s, Korean music
critics had been troubled by K-pop’s limited ability to create a sustained level of
demand given its tepid reception outside of Asia up to that point. Traditionally in
the music industry, unlike dramas, hit songs must continuously be produced and
incorporated into the performers’ image and brand since the impact of any given
song is rather small. Hence, historically, it has been difficult to generate content
and global stars who will be embraced by the U.S. and U.K. music markets from
postcolonial nations such as Korea.
However, K-pop overcame this limit through innovation in its contents. The
U.S. pop market, which has been indifferent towards K-pop unlike the Asian
market, has started to warm, as demonstrated by the #1 in the Billboard chart.
Innovative contents featuring high-quality music, impeccable performances, music
videos with optimal visual effects and the charisma of idol group members, whose
attitude and message come across as authentic, has raised the calibre of K-pop to
eventually overcome its limits once again.
For K-pop, an already successful entrant in the global pop market, the only
fundamental solution to keep and even extend its current level of competitiveness
is to continuously create innovative contents. With the home market saturated at
present, no longer able to contain K-pop’s scale, new foreign markets must be
captured through innovative content. For this to happen, innovative momentum
needs to be reproduced at greater scale. That is, an ample flow of content that
produces new values must keep flowing based on this innovative drive. However,
due to the accelerated digitization of music, customer loyalty for any given type of
music is diminishing. Hence, there is a clear limit to creating value solely through
music source-centric products. In the future, expanding contents to performances
and merchandizing that involves the performing artists who actually perform the
music is critical.
 ASIA PACIFIC BUSINESS REVIEW 1445

Contents that assimilates new technologies such as AI, robotics, and augmented reality
must be developed, and these integrations are poised to bring about an immense change
in the existing music market. New opportunities will surely arise, as K-pop will breach the
boundaries of the music industry to become part of the global entertainment industry.
Based on our analysis using the M-ies model, there seems to be more reason to be hopeful
for the industry’s future than otherwise.

Disclosure statement
No potential conflict of interest was reported by the author(s).

Notes on contributors
Jangwoo Lee is the Director of Success Economy Institute, an Emeritus Professor of Management at
Kyungpook National University, the current President of World Cultural Industry Forum (WCIF), and
the vice president of the Korean Federation of Science & Technology Societies. He was the President
(2014/2015) of the Korean Academic Society of Business Administration (KASBA) and a non-
executive director of the Korea Foundation. He has written extensively about issues related to
strategic management and innovation, including the most recent K-pop Innovation (2023).
Lynn Pyun is Associate Professor of International Business at Ewha Womans University’s Graduate
School of International Studies in Seoul, Korea. She is interested in the institutional forces as they
shape firm behaviour, and has been researching how this plays out in the realms of human resource
management, innovation and gender issues. She is also currently serving as a Regional Editor of Asia
Pacific Business Review.

ORCID
Lynn Pyun http://orcid.org/0000-0001-7375-5680

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