The Evidence from Korea1
Running Head: ASIAN MANAGEMENT STYLES
Asian Management Styles:
The Evidence from Korea
Donna Marie F. Yap, RPh; MBA
Saint Louis University
May 2010
The Evidence from Korea2
Asian Management Styles: The Evidence from Korea
All management systems have a common feature: They strive to enhance the
performance of organizations in the most effective way to achieve the organization’s goals,
sharing universally applicable principles of planning, organization, control, leadership and
motivation. The meaningful comparison of the history of firms and business systems among
countries requires a thorough understanding of the political, social, economic and institutional
contexts. In the paper reviewed, there is a limitation on the number of references collated to
come up with only two models that pertain to Japanese and Korean management styles.
Both Japanese and Korea have rich histories before the occurrence of World War II. It
would be pleasant to revisit their histories and see how the foundations of their businesses and
practices were made. Despite the common notion from the West that management practices were
not being carried out in Asia, management practices have already been used in as early as the
1500s in Japan, with business being likened to battle, employing tactical strategy to succeed.
Japan’s society can be identified as blood-prone. It was only after Japan’s quick economic
growth after the war that attention has been focused on them. Not until business practices were
given named by foreign analysts were these recognized accordingly. One example of a business
practice in Japan is the Japanese Candlestick System, developed by Munehisa Homna from a
rice-trading family of Japan, was used in the early 16 th century to give rice traders an overview of
open, high, low and close market prices of rice over a certain period. The traders discovered that
the resulting candlestick charts is a reliable basis for future rice demand. The candlestick system
has only been applied in Western investment practices in the early 1900s. (The History of
Japanese Candlesticks, 2003)
The Evidence from Korea3
Family businesses in Japan contribute much economic development. Family-owned
business tend to outperform non-family operated businesses (José Allouche, 2008), therefore it
would be a good basis to start looking into this avenue to understand more about the Japanese
management styles. During the Meiji restoration onwards, family businesses in Japan played a
strategic role in combining western advancements with the traditional eastern values. They have
defined family as those contributing to the economic welfare of the group irrespective of lineage.
They practiced primogeniture long before World War II, establishing structure and family
holding practices of large businesses or zaibatsu. The longevity of Japanese family companies
may be attributed to often turning sons-in-law into true family insiders, broadening the pool for
successors and talented managers without involving non-family members (Barclays Wealth &
The Economist Intelligence Unit, 2009). Salaried managers were delegated to manage the
enterprise (families reigned but did not govern) and had the opportunity to move up the
company’s hierarchy through internal promotion. Japan has a peculiar concept of family which is
based not only on consanguinity but also on adoption (Colli, 2003). The long-standing practice
of keeping the business in the family contributes much to the hierarchical, broad-based structures
and loyalty of the employees that is demonstrated by Japanese businesses today. Profit
maximization, through just-in-time inventory keeping and value-added measures look more like
effects of sustainable relationships that are fostered within the business (employees) and out
(suppliers, customers). For this Japanese management style to be applied in the western setting, it
would involve changing business relationships to a more intimate, familial kind. All in all, the
following characteristics can be seen from Japanese management systems: Consensus decision-
making, lifetime employment, team spirit, strong loyalty, paternalistic leadership, personal
The Evidence from Korea4
approach, active participation of rank and file, satisfactory relationship between labor and
management, Confucian work ethic.
Just like in Korea, broad-based models of sustainable family-businesses make sure that
there is a communal relationship between family and business systems in an effort to foster the
synchronized development of functional families and profitable firms.
When Japan colonized Korea, they were imposing Japan-Western technology and
management practices to Korea; however, Korea absorbed the Japanese management system into
their own. One example would be the hierarchical structure business organizations have. The
Korean War left 1.5M South Koreans dead, 100,000 orphans, millions homeless and separated
from their families. Disorder continued due to a corrupt government led by Rhee. Because of
this, Korea became a blood-taboo society. Park Chung-Hee saw the need for rapid social and
economic development through authoritarian presidential leadership. Larger chaebols were
easier to keep track of than small or medium enterprises (Kaslow, 2006). Chaebols were
managed under government intervention (quid pro quo relationship), providing them with
subsidies, cheap credit and protection against foreign competition. Labor had a traditional work
ethic of long hours and low pay. From the early 1960s to the late 1990s, Korea exhibited a fast-
growing, export-fueled economy that was called The Miracle of Han River that has been based
on the relationship of business and government, wherein a supplementary and complementary
relationship was been maintained. The Korean management system in itself is unique and would
be more understood based on the context of culture. The characteristics of Korean management
are: decision-making by consensus with some qualifications, lifetime employment with some
qualifications, individualism in group settings, loyalty, inter-organizational mobility, significance
of promotion, close relationship between business and government with qualifications, harmony.
The Evidence from Korea5
The Asian Economic crisis, as well as globalization became major points for Korea to re-
think management styles, however this does not mean letting go of culture. When Daewoo has
undergone bankruptcy in (Daewoo, 2010), the new Korean government has given value to small
and medium family-owned enterprises. These are engaged in traditional low-tech industries into
high-tech knowledge-based business start-ups. In this model, the financial resources and business
skills of the parents are combined with the skills and resources of their future-oriented,
technology-savvy, college-educated children. These are introducing professional management,
using strategies to increase performance, and becoming more market-driven. Currently, family
businesses make up 86.55% of all businesses in Korea (Kaslow, 2006).
The implications of cultural identity to management between the similarities and
differences of Japanese and Korean management involve: blood on behaviors (Japanese –
restrained, Korean –aggressive), mythic tradition (Japanese – flexible, innovative and creative,
Korean – less flexible, innovative and creative), territorial location (Japanese – sense of security
and long-range goals, Korean – extreme insecurity and short-range goals), family and blood
relationship (Japanese – family member involvement to business is important, Korean – family
member involvement to business is extremely important), education (Japanese – high zeal,
Korean – extremely high zeal), regionalism (Japanese – not a critical factor for career success,
Korean – critically important for career success), and reciprocity (Japanese – absolutely
important, absolute loyalty to superiors and paternalism, Korean – critically important, strong
loyalty to superiors and paternalism) (Chang & Chang, 2004).
There is no single model for successful or unsuccessful capitalism. There are many ways
of understanding management styles such as identifying culture or heritage. Each country has its
own management system shaped by its cultural identity and historical experience. Japanese and
The Evidence from Korea6
Korean management styles are in many ways similar, and also variedly different. The
management concepts that are applied cannot be explained by cultural identity alone, however
this approach would give a clearer understanding of the country’s management system. In Japan,
the five-volume Nihon keiei shi or Japanese Business History gives an overview of management
styles in Japan that go as far back to the 1700s (Amatori & Jones, 2003). This shows that even
for older cultures, successful management models need an intensive study of the past.
The Evidence from Korea7
References
Amatori, F., & Jones, G. (2003). Business History Around the World. Cambridge: Cambridge University
Press.
Barclays Wealth & The Economist Intelligence Unit. (2009). Family Business: In Safe Hands? Barclays
Wealth Insights vol 8 .
Chang, C. S., & Chang, N. J. (2004). The Korean Management System: Cultural, Political, Economic
Foundations. Connecticut: Quorum Books .
Colli, A. (2003). The History of Family Business: 1850 - 2000. Cambridge: Cambridge University Press.
Daewoo. (2010, April 13). Retrieved May 13, 2010, from Wikipedia The Free Encyclopedia:
http://en.wikipedia.org/wiki/Daewoo
José Allouche, B. A. (2008). The Impact of Family Control on the Performance and Financial
Characteristics of Family Versus Nonfamily Businesses in Japan: A Matched-Pair Investigation.
Family Business Review vol 8 .
Kaslow, F. W. (2006). Handbook of Family Business and Family Business Consultation: A Global
Perspective. Binghamton: The Hawthorne Press, Inc.
The History of Japanese Candlesticks. (2003). Retrieved May 13, 2010, from Candlestick Trading Forum:
http://www.candlestickforum.com/PPF/Parameters/1_279_/candlestick.asp