Emergence of Regional Entrepreneurship Through Hometown Tax Donation - Unique Regional Development System: Implications from Development of New Products and Improvement in Business Capabilities by Gift Providers -

Hometown Tax Donation is designed to bolster regional economies through the provision of reciprocal gifts by local businesses, and can be regarded as a unique SME policy which is not reliant on subsidies, but instead, offers businesses the incentive to develop attractive products and yields better results when businesses and municipalities collaborate closely. To assess its effectiveness, we surveyed certain gift providers on their efforts in new product development and advancement in business capabilities. Results showed that the gift market is sowing the seeds for development of new products and businesses in rural areas, and is also boosting business capabilities in many cases. Meanwhile, certain companies have earned large revenues from gifts or are overdependent on gifts. It is therefore necessary to make Hometown Tax Donation function as a viable SME policy which incorporates an exit strategy.