KAIST College of Business 상세 > Media > News >KAIST COLLEGE OF BUSINESS
본문 바로가기 사이트 메뉴 바로가기 주메뉴 바로가기

Korean Corporate Culture of Preferring Loyalty to Creativity Shall be Gone from Now2016-10-27Hit:896


Korean Corporate Culture of Preferring Loyalty to Creativity Shall be Gone from Now


Korean Academic Society of Business Administration Symposium / Proposal by former·current·future presidents of the administration


The former, current, and future president of the Korean Academic Society of Business Administration, the representatives of business administration field in Korea, have gathered in the opening ceremony of the 18th symposium of business administration conference on 18th to provide proposals toward Korean economy and corporations under crisis. They have diagnosed that the crisis of Korean economy and corporations comes from the loss of power for innovation. To resolve such issue, they have suggested that the government regulation to block innovation shall be removed and that the “punctuated transformation of economic structure and corporate management is required. Especially, they concurred that the unique corporate culture of Korea to prefer diligence and loyalty to creativity and innovation shall be changed significantly.

The greatest crisis nowadays is the loss of power for innovation

Three scholars of business management agreed that Korean economy and corporations are in a quagmire. The prospect president of the Korean Academic Society of Business Administration, Han, In-gu (professor of business school at KAIST), has stated,
“the competitiveness of Korean corporations have been aggravated continuously. The return on owner equity and the business profit rate have been lowered for the past few years.”

The current president Yu, Chang-jo has evaluated,
“the Korean corporations have lost the will and the confidence toward the exploration of future market.” He also warned, “The corporations shall try and challenge for new areas, but they tend to maintain the current business. If this inclination continues, the companies will be in greater difficulties in the future.”

The former president of the Korean Academic Society of Business Administration and the current leader of the Small Business Corporation, chairman Lim, Chae-un has stated, “the greatest crisis of Korean economy and corporations is the loss of internal power for innovation, and while the external issue is temporary, the internal crisis is sustaining and brings a long-term effect.” He has also mentioned, “The punctuated transformation of economic structure and corporate management shall be promoted for reformation.”

In the survey toward the business management scholar presented on a day before, the greatest external risk of Korean economy was
“China.” With respect to this, the scholars of business administration have evaluated that the fundamental reason for this is that the rate of innovation by Korean corporations is in behind of China. Especially, they have criticized that the government regulation is acting as an obstacle to block innovation.

Chairman Lim has explained, “The competitiveness of Chinese corporations is not based on capital, technology, or production cost but is based on innovation. Most of Chinese corporations are starting up, and thus entrepreneurship is full, and the organization culture is flexible enough to excessively promote and accept new innovation.” He has also said, “The Chinese government is also promoting the long-term development plan consistently, and from the pragmatic perspective, as the government supports corporations in China, China has a firm foundation for business. If the Chinese corporations based on an enormous Chinese market begin to suppress Korean corporations under the support of Chinese government or try to absorb Korean corporations through M&A, the self-sufficiency of Korean economy will be greatly threatened.”

Professor Han, In-gu has also mentioned,
“In China, the government has alleviated the regulation in new technology and especially in IT fields for leading companies to advance forward in IT and new business. There are still a lot of regulations on pin-tech and other new businesses in Korea, and thus the rate of innovation is slower than China.” Professor Han has explained that the barrier of regulations in Korea is blocking the promotion of start-ups. It is urgent to greatly alleviate the regulations for promotion of start-ups, not just with words but with more progressive alleviation of regulations than China or the U.S.”

Chairman Lim has explained,
“In the countries where innovative start-ups are raised such as the U.S. or Israel, the top-notch manpower starts up a business. In Korea, those top-notches tie themselves to find jobs instead of starting new businesses.”

Horizontal Corporate Culture for Innovation

The scholars of business administration have agreed that the organization culture of Korean corporations is required. They insist that the conventional open recruitment system shall be destroyed, the decision-making shall be performed at a horizontal structure, and the current evaluation system of preferring loyalty and long-hours of work by employees shall be changed.

Chairman Lim has said,
“The elimination of position, introduction of liberal work clothes, and flexible working hours are just perfunctory changes. For the fundamental, flexible, and open transition of the organization culture of Korean corporations, the recruitment system shall be changed.” He has also explained, “The current open recruitment system may not find and raise talents. In terms of career background management, the experts instead of general managers shall be promoted. The decision-making structure shall be horizontal instead of vertical. Unless the structure of uncritical accept and implementation of opinions by executives changes, the organization culture of Korean corporations will never change.”

Professor Yu, Chang-jo has explained,
“The elimination of job position or change in working clothes may bring partial effects, but the innovation and creativity of organization culture shall be emphasized. Obtaining of new knowledge instead of conventional knowledge shall be preferred, and the flexible thinking and decision-making system to promote the new business idea instead of conventional business idea are required. The strong will of executives to form a completely different structure from the conventional system is required.”

Professor Han has explained,
“In Korea, within the stage of hyper-growth, the culture of seniority, loyalty, and long-hour working has been created. In the era of quaternary industrial revolution, the creativity and innovation are more important than diligence and loyalty, and the corporate culture shall be flattened and freed by reflecting such transition.” Professor Yu has explained, "The corporate management with outstanding growth in the past has been disappeared by moving into the second and the third generations. If an entrepreneur settles in presence and tries to maintain the conventional business with easygoing mind, there is no future for that company. The will of exploring the business along with a risk is a principal philosophy of entrepreneurship.”

The scholars of business management have evaluated that it is difficult for the government to artificially invigorate the corporate investment.

He has explained that it is better to maintain policy consistency and to form a corporate-friendly atmosphere than to give incentives to investment. Chairman Lim has explained, “Under the current circumstances of global market depression and reduction in demand, the solution to artificially invigorate corporate investment is limited. The past solution of giving benefits for investment is not effective anymore.” He has also criticized, “The government policy and laws changing frequently and new systems to constrict corporate activities put a damper on investment.” Professor Han has also explained, “There is no reason for the government to ask for corporate investment, and it is not effective. If there is any chance to gain the return on investment over the capital cost, the corporations naturally invest.”

By the Coverage Planning Team at Maeil Business Newspaper

Contact : Lee, Sohyun ( sohyun.c.lee@kaist.ac.kr )