[Viewpoint] Korea Incorporated

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[Viewpoint] Korea Incorporated

Much has been said about Dae-han-min-guk, or the Republic of Korea, as a miracle economy, having risen like the phoenix from the ravages of the 1950-53 war. Here is another analysis, but this time from a strategic management perspective of a firm that I have taken to fondly call Korea Incorporated.

If Korea were a business firm, it would surely turn heads in this global competition among nations. The performance indicators, whether quantitative or qualitative, are sometimes disputable but there is no gauge as sweet as success.

Armchair insights and theory-tied learnings are not sufficient though. One can only appreciate the following success factors if he or she has experienced the ways of this country, worked and caroused with them, as an outsider living in, so to speak.

Korea’s culture is Confucian. As with the Chinese and the Japanese (and already I can see some Koreans cringe at this thought), the planning orientation is long-term. It is the wiser and the elders among the strategists who are tasked with defining the vision. Such characteristics are implicit criteria, it seems, when the Koreans elect their leaders.

When this vision is cascaded down the ranks, there is a lot of quarrel on how to implement. And the bickering is raucous (whether in the parliament or the bars). But this all stops when the leader has heard enough and sets his or her foot down. All followers are then expected to follow.

The concept of a balanced scorecard is innate since they know where and how to back their programs with resources. Likewise, the orientation in the provision of resources is planned ahead of time, before they are needed. Again, the planning is long-term.

Their education and human resource development efforts always preceded, even if they were linked to, their industrial development. Basic education was in place so that low-skilled but literate workers were on hand when the economy was dominated by light industries. Vocational institutions, either state-run or industry-sponsored, had already produced graduates when they moved on to more complex, technologically-based operations. This may be a reason why efforts to more effectively and efficiently manage university-level operations could be considered rather belated as only lately has the world recognized the dawning of the knowledge economy.

Their courage as a people is intertwined with their propensity to take risks. A Filipino colleague’s lasting impression of Korea is that Koreans tend to start off in a very grandiose manner and scale. In support of these start-ups, highly specialized institutions are set up left and right. Down the road, they are plagued with a fixed asset-heavy balance sheet and an operations expense-laden income statement.

To their credit, however, they make the adjustments. The heavy and chemicals industry (HCI) era is a very poignant example. Firms in this arena were set up in wild abandon; valuable credit was provided cheaply to the detriment of other non-anointed firms; and learning curves were too steep. While the economy overheated, over-capacity ensued and inflation stepped in, the industrialists were quick to adjust and government did not abandon them. Today, HCIs are a backbone of the economy. Korea is among the top five petrochemical product exporters and is the envy of oil-exporting countries.

Throughout their industrialization experience, government in Korea has proven to be a flexible chief executive officer that is aware of the worldwide trends - and pressures - but not afraid to craft its own route.

Government has swayed with the proverbial winds, appropriately taking the role of entrepreneur-initiator at the start, loyal business supporter along the way and neoliberal market forces enforcer when the industries were deemed able to stand on their own.

Of course, into the present era, they do seem averse to seeking WTO restrictions for particular products and industries. It was very difficult for the present government to stare down the protestors, prior to and upon the signing of the bilateral trade treaty with the U.S., and ask them what their beef was with American beef. But this is expected as this country steps into a more mature position as member of the OECD.

If anything, Korean leaders, both in politics and industry, have grappled with the Taylorian rationality that still dominates today’s business thinking and its conflict with the benevolence expected from a traditional hierarchical leadership, so common in Asian countries. It is indeed exasperating perhaps for a professional middle manager to come up with an empirically derived recommendation only to be overturned simply because the old man upstairs has seemingly whimsically decreed so.

Alas, leadership must forever tango with followership and both the Korean leaders and followers beget each other, draw energy from each other. There is this enviable love for country that, despite modern-day cynicism, still exists today amongst Koreans. I have always expressed doubts as to whether the wives of my own country’s congressmen would have readily turned in their jewelry to help the country during the 1997 Asian crisis.

Western management students have recognized and been fascinated by the Korean miracle but continue to scratch their heads on how this can be emulated. They do not realize, methinks, that it is not a topic that can be read out of a management textbook.

Rather, the factors of success are deeply ingrained in Korean culture. It is a privilege to have experienced this country’s best practice at an intimate level. And perhaps understood it better simply because of the common Asian heritage.


*The writer is a professor of Pan-Pacific International Studies at Kyung Hee U. and member of PhilRPG.

by Manuel Dioquino
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