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.
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This World Business Culture profile is designed as an introduction to business culture in South Korea only and a more detailed understanding needs a more in-depth exploration which we can provide through our training and consultancy services.