Speak up, Companies!

Written By Byung-tae Lee, a professor at KAIST business school

In 2012, our economy seems to be darker than ever. Even exports, which are a factor for growth, are unstable due to the global economic downturn and uncertainty. Let’s look at an important matter among many challenges facing our economy. The first thing is about the globalization of leading companies in Korea. Products produced in Korea already are being purchased around the world. However, the globalization of products tends to be mistaken as the globalization of corporations.

Japan once dominated the world market through the globalization of their products. But now there is no Japanese company good at business in Korea. Product globalization tells us that more competitive manufacturing countries such as Korea and China are rising, and Korea’s competitive advantage does not persist. We have to learn from the failure of Japan that we must secure global human resources and creating global organizations in order for global companies to be sustainable. Now it is the time to think calmly about whether globalization of goods is mistaken as the globalization of corporations.

Next, how can we overcome the challenge of the market economy? Since the homeless appeared on the streets of Korea, some people consistently raised the issue of the market economy, which is called ‘neoliberalism’. The U.S. financial crisis and Europe"s economic crisis triggered Wall Street protests, and 99% of the people are angry toward 1% of the people. Under this circumstance, the question about Korea’s market economy seems to be quite relevant.

According to a survey, more than 60% of people think that poverty is caused by social structure. This sentiment is clearly revealed in the extreme distrust in politics, opposition to the South KOREA-United States Free Trade Agreement (FTA), and the Seoul mayoral election. Especially, there is a great deal of social pressure on large corporations

In particular, as growth is achieved in all segments of society or the co-existence of businesses has become a hot topic; social pressure on large corporations is also growing. Even a government committee proposes reserving business areas for SME (Small and Medium) enterprises, which was repealed long ago. It is obvious that this kind of anti-corporation sentiment would rage because of the upcoming presidential election. Thanks to widespread social media, people are easily able to organize political pressure. This leads a problem that these political and social pressures may have a huge adverse effect on society. Expanding pressure and regulations by these pressures ultimately bring about a contraction in business activity and international competitiveness.

It is clear that corporations should make an effort to be responsible for their social responsibility. However, the current political and social pressure on individual companies seems too fierce. If the pressure brings expansion of regulations, this would lead to unfortunate consequences for both corporations and the national economy. Corporations should express a more aggressive purpose to defend the market economy; they must speak up and talk openly in order to participate in the political decision-making processes.

In the smart age, corporations cannot achieve their purpose by only convincing a few influential political elites. Business communities should think about how they respond to the challenge of social media on the system of representative government. Clearly, 2012 will be the time for such wild challenges.