The growth gap between large and small enterprises is widening in terms of both productivity and investment. While large companies in advanced sectors like semiconductors and artificial intelligence (AI) lead in investments, small businesses struggle to find resources in funding, workforce, and technology.
According to the National Statistical Portal (KOSIS) on November 12, the manufacturing production index for small enterprises in the third quarter was 90.9 (based on 2020=100), which is 38.3 points lower than the index for large enterprises at 129.2. The production index for large enterprises has shown a steady increase this year, rising from 121.1 in the first quarter to 127.5 in the second quarter, while small enterprises have experienced fluctuations, with indices of 86.9 and 94.2 in the first and second quarters, respectively.
The gap in manufacturing production indices between large and small enterprises continues to grow. In 2022, the annual production index for large enterprises was 112.2, compared to 101.3 for small enterprises, a difference of 10.9 points. This gap has widened to 15.7 points in 2023 (large enterprises at 111.1, small enterprises at 95.4), 21.9 points in 2024 (large enterprises at 117.1, small enterprises at 95.2), and 29.8 points in 2025 (large enterprises at 122.3, small enterprises at 92.5). Analysts suggest that the benefits of the export boom are concentrated among a few large companies, limiting the overall impact on small enterprises.
There is also a significant disparity in technology investment. A survey by the Korea Chamber of Commerce and Industry found that the utilization rate of generative AI is 66.5% for large enterprises and 52.7% for small enterprises. In the manufacturing sector alone, the gap is 24.2 percentage points, with small enterprises in the metropolitan area utilizing AI at a rate of 57.3%, compared to 47.8% in non-metropolitan areas. Researchers warn that the short-term gap in utilization rates could translate into long-term productivity disparities.
As the productivity benefits of AI gain attention, the gap in AI utilization between large and small enterprises is expected to significantly affect future labor productivity. According to the Small and Medium Business Administration, as of 2022, labor productivity for small enterprises was only 29.0% of that of large enterprises in manufacturing and 46.7% in services.
In response to the growing disparity between large and small enterprises, the government introduced a 'Win-Win Growth Strategy for Large and Small Enterprises' in January. This strategy includes a 1.7 trillion won win-win financing initiative funded by large companies and financial institutions, along with a plan to establish a cooperation fund of over 1.5 trillion won by 2030. The number of AI-based smart factories under this initiative has increased from eight last year to 20 this year, with the government’s share of funding rising from 30% to 50%. Additionally, 100 AI factories for collaboration among large, medium, and small enterprises are planned by 2030.
The government is also taking steps to eliminate unfair practices. The application of the delivery price linkage system will be expanded to include energy costs, and incentives will be provided to exemplary companies by exempting them from mandatory investigations.
Policies aimed at creating a growth ladder are also underway. The economic growth strategy announced in July includes provisions for special tax reductions for small enterprises transitioning to medium-sized enterprises. The Ministry of SMEs and Startups plans to supply 4.4313 trillion won in policy funds this year and support AI transitions for 6,000 companies by 2030. The Financial Services Commission aims to allocate 41.7% (106 trillion won) of its 252 trillion won policy financing to local areas, while the Bank of Korea has expanded its lending support limits for local small enterprises.
The challenge lies in whether these policies effectively reach the ground level. As the criteria for policy fund assessments shift from collateral to evaluations of technological capability and growth potential, there are concerns that companies with shorter histories or lacking technology certifications may face higher barriers.
A representative from the Small and Medium Business Research Institute stated, "We need to go beyond merely increasing the scale of funding to ensure that small enterprises willing to invest can actually access these resources. Relying solely on a recovery in investment centered around large enterprises will not invigorate the overall economy; thus, creating a structure where investment reaches local areas and small enterprises is a key task for current policies."
* This article has been translated by AI.
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