[Viewpoint] Successful successionsThe world has always been driven by the generation of the day. The past is history and the future a mystery. The heroes of the present world are those living it now. A person’s wealth and background should not affect his or her ability to shape today’s world. Yet some still affix the title “the third” or “junior” in the names of a select people because their ancestral heritage has been that influential.
Next February will mark a century since Samsung Group founder Lee Byung-chull was born. Lee and his contemporary entrepreneurs were the first generation to raise the country from postwar ashes to precipitate one of the world’s fastest-ever economic recoveries. Without them, we wouldn’t be enjoying our status in the world today. The next generation fared equally well. It obligingly tended the corporate seeds their fathers planted and made them blossom and bear fruit.
The third generation is now taking over the helm. They now command the driving seats of conglomerates such as Samsung, Hyundai and the Shinsegae Group. They have inherited family businesses that take up mighty places in our economy, so we are always interested in who takes over management duties.
Their ability to steer their inheritance is more than just a family affair, though. Their work has a profound influence shaping our economic future. Are they as capable as their fathers and grandfathers? If not, our entire economy is at risk because we rely extensively on these sprawling business groups.
Do these young entrepreneurs possess the same innovative minds, diligence, creativity and perseverance as their ancestors? Or will they indulge themselves in their free ride? The entire nation is curious to know.
The three-generation management succession is controversial in two primary ways. First is the matter of equality and social fairness. The offspring of the founders of the country’s major conglomerates have inherited special privileges. The title “the third” has royal and feudal connotations, sounding antiquated in a modern democratic society. But whether a business group keeps management control within the family or recruits chief executives from outside depends on the corporate situation and society. Our society has witnessed how the second generation of entrepreneurs flourished their businesses and contributed to economic prosperity. Given our experience, we don’t object to giving the third generation a try. But at the same time, we must consider whether such tolerance is justified in terms of social equality.
After all, the system may appear as if we are letting a baseball player whose family has been playing the sport professionally for three generations to skip two bases no matter how he hits the ball.
Our economy runs on the principles of capitalism under which personal wealth is an individual entity entitled to inheritance. Without a safeguard for individual wealth, there is no stopping the tyranny of political power. Moreover, no one will be willing to strive for a better society if private wealth cannot be passed down in the family. This why we cannot criticize an estate bequest that faithfully pays inheritance taxes according to the law. Inheritance tax is meant to enforce social equality.
Second, doubts linger over whether the new entrepreneurs born with silver spoons in hand have the ability to command. Their ability cannot be assessed until tested. They had the best education on offer at home and abroad and have entrepreneurship genes in their body. But they still lack real experience. A corporate leader must be capable of quickly digesting a pool of information and ferreting out underlying threads. He or she has to employ discretion but discretion is bred by experience. People from privileged families are often too proud and self-assured, making them reckless. Pride will be their handicap. At the beginning, people tend to work strenuously and live modestly to build wealth, but once enough wealth has been accumulated, they are swept away by profligacy and self-indulgence. Whether it be an individual, corporation or state, it is important to remain modest. These third-generation entrepreneurs can succeed if they maintain those virtues.
Democracy offers equality in opportunity, not outcome. The doors should be open to anyone. Over the last decade, only 21 companies grew big enough to staff more than 1,000 employees. Just 12 ascended to the large-business category, which excludes public corporations and companies affiliated to conglomerates.
Success stories have become rare in our society, suggesting opportunities have become scarcer. Society is becoming rigid and closed. Part of the social flow includes conglomerates keeping management within the family.
In order for a society to develop, fresh water must be supplied. We need corporate leaders like Lee Byung-chull and Chung Ju-young. With more opportunities, we can develop talent and sustain social prosperity.
*The writer is a senior columnist of the JoongAng Ilbo.
by Moon Chang-geuk