Asian Business

Asian Business

Asian Business Tutorial 7 Week 8
(m) How would you characterize and explain the process of decision making in Korean companies?  
(n) What changes have taken place in management in Korean companies since the crisis of 1997?
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(m) Owing to the strong influences of family traditions, there is a tendency for Korean corporate leaders, especially founders, to manage on the basis of principles governing the family or clan system. In the traditional Korean family, the father is the unquestioned and respected head. He has almost absolute power to wield if he so wishes. The traditional Korean father also has full responsibility to feed the family and to decide the future of his children. One legacy of such a family tradition for business leadership in Korean companies is the strong authoritarian style of superiors in the managerial process. A top-down decision-making style is fairly typical among Korean companies. Usually, 80% of the authority lies in the upper management level, with middle or lower management having very limited authority. Authoritarian leadership has been a well-accepted managerial norm under the centralized structure of Korean companies. The passive attitude of the subordinates is further conducive to the authoritarian style. The traditional decision-making pummi style (proposal submitted for deliberations) was used more to diffuse responsibility than to reach consensus.
Nevertheless, the authoritarian style is not despotic. Corporate leadership in Korean companies is also heavily influenced by a key value of Korean behavior, inhwa, which is defined as harmony. Inhwa emphasizes harmony in rank, power and prestige. Korean managers cherish good interpersonal relationships with their subordinates and try to keep the needs and feelings of subordinates in mind. Another aspect of inhwa is that each party has responsibility...

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