Korean Business & Management: Establishment of Korean Companies I. Week 2

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Korean Business & Management:
Establishment of Korean Companies I
Week 2

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1.The Purpose
What are the foundations of the Korean
companies?
- Understanding some of the seeds and backbone of
Korean companies
- Understanding the sources of Korean capitalism and her
management
- Understanding the role of Confucianism, Japanese
influence, American influence and military-led
industrialization to the foundation of Korean companies
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Contents
Understanding the foundation of the Korean
companies
Confucianism
Influence of Japan
Influence of US
Military led industrialization
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Public statement by Korean
business leaders
“My dream is to develop a company and contribute to
building national wealth. It is a businessman’s social
responsibility and obligation to make a company
profitable”
Lee Byung Chull, Late founder of Samsung Group
“Some men live without thinking. Other men with positive
thinking achieve ten or one hundred times as much as
ordinary people”
Chung Ju-Yung, Late founder of Hyundai Group
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Public statement by Korean
business leaders
(cont.)
“The incentive system is the greatest invention of the
century, turning the tide favorable for capitalism”
Lee Kun-Hee, Chairman of Samsung Group
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The Foundations of Korean
Capitalism & Companies
Some of the foundations are..
- Confucianism
- Influence of Japan
- Influence of US
- Military-led industrialization
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1.Confucianism
Confucianism is one aspect of Chinese
culture and philosophy
-Confucianism is the idea and Philosophy of Confucius, who
is a Chinese scholar lived in China around 500BC
- It was introduced in Korea about 1,000 years ago
- It had a strong shaping influence on Korean society during
the past 1,000 years
- During its settlement, Korea developed its own
interpretation much stricter way than in China itself.
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1.Confucianism
(cont.)
Five cardinal relationships
- The relationship between farther & son
- The relationship between monarch & subject
- The relationship between husband & wife
- The relationship between elder brother & younger brother
- The relationship between friend & friend
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1.Confucianism
(cont.)
Confucianism emphasizes the strict
observance of human relationships in order to
maintain order and harmony within a society
It is strictly hierarchical in nature
Everybody has a well-defined position and
has to obey to individuals who are ranked
higher
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1.Confucianism
(cont.)
Determinants of culture
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1.Confucianism
(cont.)
Dominant religions
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1.Confucianism
(cont.)
Religious & Ethical systems
-Religion: a system of shared beliefs and rituals that are
concerned with the realm of the sacred
-Religions with the greatest following are
Christianity (1.7 billion adherents)
Islam (1 billion adherents)
Hinduism (750 million adherents)
Buddhism (350 million adherents)
Confucianism also influences behavior and shapes
culture in many parts of Asia
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1.Confucianism
(cont.)
Christianity & work ethics
Christianity is the most widely practiced religion
common throughout Europe, the Americas, and other
countries settled by Europeans
Question: What are the economic implications of
Christianity?
Answer:
In 1904, Max Weber suggested that it was the Protestant
work ethic (focus on hard work, wealth creation, and
frugality) that was the driving force of capitalism
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1.Confucianism
(cont.)
Islam & work ethics
Islam is an all-embracing way of life that governs one's
being
Muslims believe that there is one true omnipotent God
Question: What is Islamic fundamentalism?
Answer:
Islamic fundamentalism is associated in the Western media
with militants, terrorists, and violent upheavals,
the vast majority of Muslims claim that Islam teaches
peace, justice, and tolerance
fundamentalists have gained political power in many
Muslim countries, and have tried to make Islamic law the
law of the land
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1.Confucianism
(cont.)
Islam & work ethics
Question: What are the economic implications of
Islam?
Answer:
Under Islam, people do not own property, but only act
as stewards for God and thus must take care of that
which they have been entrusted with
Islam is supportive of business, but the way
business is practiced is prescribed
businesses that are perceived to be making a profit
through the exploitation of others, by deception, or
by breaking contractual obligations are unwelcome
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1.Confucianism
(cont.)
Hinduism & work ethics
Hinduism - focuses on the importance of achieving spiritual
growth and development, which may require material and
physical self-denial
practiced primarily on the Indian sub-continent
Question: What are the economic implications of Hinduism?
Answer:
Hindus are valued by their spiritual rather than material
achievements
Promotion and adding new responsibilities may not be the
goal of an employee, or may be infeasible due to the
employee's caste
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1.Confucianism
(cont.)
Hinduism & work ethics
Hinduism - focuses on the importance of achieving spiritual
growth and development, which may require material and
physical self-denial
practiced primarily on the Indian sub-continent
Question: What are the economic implications of Hinduism?
Answer:
Hindus are valued by their spiritual rather than material
achievements
Promotion and adding new responsibilities may not be the
goal of an employee, or may be infeasible due to the
employee's caste
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1.Confucianism
(cont.)
Buddhism & work ethics
Buddhists - stress spiritual growth and the afterlife, rather
than achievement while in this world
found mainly in Central and Southeast Asia, China,
Korea, and Japan
Question: What are the economic implications of Buddhism?
Answer:
Buddhism does not support the caste system, so individuals
do have some mobility and can work with individuals from
different classes
entrepreneurial activity is acceptable
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1.Confucianism
(cont.)
Confucianism & work ethics
Confucianism - teaches the importance of attaining personal
salvation through right action
the need for high moral and ethical conduct and loyalty to
others is central
practiced mainly in China
Question:What are the economic implications of Confucianism?
Answer:
Three key teachings of Confucianism - loyalty, reciprocal
obligations, and honesty - may all lead to a lowering of the cost
of doing business in Confucian societies
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1.Confucianism
(cont.)
The Nature of Confucianism in Korea
- The importance of relative ages of individuals
- Strong family orientation
- Strong emphasis on the value of education
- “Chung”
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1.Confucianism
(cont.)
The Nature of Confucianism in Korea
- The Confucianism has dominated Korean society and
social behavior of Korean people
- Created strict hierarchical manner based on age & position
- However, such Confucianism-based value appears
outdated and Korean companies have faced increasing
challenges due to this
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