Strategic Capabilities, Innovation and Economic Development: Evidence from Korea’s Defence Industry

This study examines how companies in South Korea’s defence industry supply chain, a sector that drives the technological frontier of the national manufacturing industry, can strengthen their global competitiveness. It identifies the key determinants from an organisational capability perspective and analyses their relationship with firm performance. Building on this, the study examines whether these factors enhance corporate competitiveness and influence the development of the sector and national economic growth. Whereas prior research has tended to focus on external conditions or policy environments such as government support, this study adopts an integrated view that combines Porter’s diamond model, dynamic capabilities theory and endogenous growth theory, and proposes four dimensions of internal organisational capability: technological innovation, customisation, supply chain (SC) resilience and differentiation. Methodologically, the study employs a parallel design that combines Analytic Hierarchy Process (AHP) analysis and panel regression, thereby integrating qualitative and quantitative approaches. The AHP results show that technological factors are ranked as the top priority, while the panel analysis finds that R&D investment and DQMS certification exert a significant positive effect on firm performance. Interestingly, the results highlight a gap between the expert expectations and economic trade-offs faced by firms. Taken together, these findings suggest that Korean defence firms can secure global competitiveness when they embed continuous R&D investment and quality management into their organisational routines and, on this basis, provide customised defence solutions for their clients. By integrating theoretical perspectives and applying a parallel methodological design from a multidimensional angle, this study offers academic and practical implications for the sustainable growth strategies of Korean defence firms.