Korean companies have traditionally been characterised by a high degree of both centralisation and vertical hierarchy.
Most large chaebols (large business conglomerates) have been family affairs with the founder’s family continuing to exert a great deal of direct executive authority. This has led to a system where most decisions are executed at the top and delegated downwards along strong lines of authority.
Basic Confucian tenets of respect for age, seniority and family have ensured an adherence to, and acceptance of, this system. The introduction of modern, western management theories (often introduced by American-educated Koreans) will obviously add new tensions to this approach and the recent economic problems and corporate scandals have added impetus to the calls for reform of Korean company structures and dependencies.
As well as the formal hierarchy which often stresses specialisation of function and task, those dealing with Korean companies would do well to try to gain some insight into the informal structures which are often the real internal power mechanisms. These informal structures are usually dependent upon a complex web of personal relationships and loyalties and can be difficult to see or understand without the help of a local guide.
Written and Produced by Keith Warburton
This country profile has been produced to give a short overview of some of the key concepts to bear in mind when doing business with contacts in South Korea. It is intended to be an aid to business people who have commercial dealings with counterparties in the country but should not be seen as an exhaustive guide to this topic or as a substitute for more substantial research should there be a need.
With this in mind, we have covered the areas which are key to a better understanding of the cultural mindset underpinning business dealings in South Korea and which are, quite often, extremely different from the approach and thought processes associated with business in other parts of the world.
Therefore this briefing note is broken into short, bite-sized sections on the following topics: