Inspire the entrepreneurial spirit

The South Korean corporate environment is seriously flawed and fragile. It is structured as a pyramid with an oversized bottom due to too many small enterprises, weak mid-sized companies in the middle and just a handful of large companies at the top. Of the total corporate population, small enterprises make up 99 percent, while mid-sized firms account for 0.4 percent. Large companies are even fewer. The structure persists because small enterprises resist growing to mid-sized companies and the mid-sized resist growing to large-scale companies.

The small share of mid-sized companies poses a huge problem for the Korean economy. Young graduates cannot find decent jobs after leaving school. With the economy having lost vitality and being mired in a slow-moving structure, we should find a solution to the bottleneck by fostering mid-sized companies and reinventing the corporate habitat. It would be meaningless to just increase the number of mid-sized companies, as quality and competent players must be sought out and groomed.

A German politician attending an international conference on the theme of fostering mid-sized companies through the German experience advised that the key to successful policy depends on deregulation and easing of bureaucratic red tape. He gave pointed advice to the government that primarily regards small- and mid-sized businesses as targets for protection. Upon orders from the president to do more to foster the small- and mid-sized business sector, the government is again trying to come up with new aid and protection measures.

Small and mid-sized businesses do need protection and support for their growth and competition with larger companies. But the government must ease up on the grounds where some 190 new regulations pop up when a company grows to mid-sized. The companies still need exemption on inheritance tax when they are family-run as well as tax incentives on research and development. They need government assistance and guidance in setting global marketing strategies and entering a new business line. But what’s most important is to inspire an entrepreneurial spirit in small- and mid-sized companies. They must help and arm themselves with a venturous spirit to challenge the global market. Both the government and enterprises must keep in mind that enterprises must grow up on their own.