[Editorial] Regulations Must Be Refined So Firms Can Escape 'Peter Pan Syndrome'

A nation needs many high-growth companies to strengthen its competitiveness. The problem is that the share of such firms in Korea has been steadily declining. According to a report released on the 24th by the Korea Development Institute (KDI), the proportion of high-growth companies among mid-sized firms aged 8 to 19 years fell from 14.4% in 2009–2011 to 7.8% in 2020–2022, effectively halving. The backbone that should carry the future of the Korean economy is becoming thinner.
Companies around the world are no longer content with their domestic markets and are competing for global markets. If Korean firms fail to scale up and remain confined within the boundaries of small and medium-sized enterprises, they will not even qualify as competitors on the world stage. The shrinking size of companies directly translates into an erosion of national competitiveness. This is because global supply chain restructuring, competition over advanced technologies, and diversification of export markets are all closely tied to the scale and capabilities of a country’s firms.
It is therefore essential to actively identify promising startups and support them with tailored strategies throughout their life cycle so they can grow in size and gain global competitiveness. As a first step, attention should be paid to the sector-specific support measures proposed by KDI. Artificial Intelligence (AI) adoption, export capacity, Research and Development (R&D) investment, and patents are the key drivers of high growth in manufacturing.
In contrast, for the service sector, design rights, trademarks, and intangible assets play a greater role. Yet current government support is heavily concentrated on R&D subsidies. It is effectively applying the same prescription—R&D support—to all companies. From now on, policymakers must distinguish the characteristics of each industry and introduce customized growth policies that can provide the right momentum for expansion.
Diversifying support methods alone, however, is not enough to drive corporate growth. There is another barrier that blocks scale-up: the various institutional boundaries drawn between small and medium-sized enterprises and large corporations. Regulations aimed at big business, such as the SME-Suitable Industry Reservation Policy and Restrictions on Large Retail Stores’ Opening Hours, paradoxically undermine companies’ willingness to grow. Because many benefits are available only while they retain SME status, firms often abandon the path to becoming large corporations. This has led to a widespread "Peter Pan Syndrome." It is not that these companies lack the capacity to grow; rather, they calculate that expanding in size would actually put them at a disadvantage.
A scale-up strategy cannot be achieved through one-off policies. A support system tailored to the growth characteristics of each industry must be built, while at the same time dismantling institutional regulations that fuel Peter Pan Syndrome. Only when both tracks move together will the policy be effective. As global competition intensifies, it is worrying to see Korean companies becoming increasingly small and fragile.
If this continues, Korea will inevitably fall behind in the race for future high-tech industries, and its foothold in global markets will steadily shrink. The government must design policies that reflect on-the-ground corporate realities and reform institutions so that firms do not fear growth, thereby restoring a virtuous cycle of innovation and expansion.