The Chaebŏl: Korea's New Industrial Might (review)

218KOREAN STUDIES, VOL. 19 monument to the refusal to give up, no matter how bleak the circumstances. But how is that monument negotiated? What is given up, what is put in hostage , for such violently mediated heroism? What is the price for making such necessity a literary virtue? Read the fate of women in these stories and see. David R. McCann Cornell University The Chaebol: Korea's New Industrial Might, by Richard M. Steers, Yoo Keun Shin, and Gerardo R. Ungson. New York: HarperCollins, 1991. $12.95, paper. Though originally published in 1989, this remains one of the few books in English on the large Korean business enterprises known as chaebol. There have been some major changes in Korea and the chaebol have undertaken fundamental restructuring since the book's publication. Nevertheless, much of what Steers, Shin, and Ungson have described persists today and forms a basis for understanding the changes that are occurring. Students of Asian business, both scholars and business practitioners, will find much valuable information here about the strategies and management practices of the chaebol in a very readable form. Despite understating the weaknesses of the chaebol and the economic problems that have been created by Korean industrial policies, the book makes a clear contribution to our understanding of the companies that have made Korea the number two Asian country in global business. The authors attribute the "Miracle on the Han River" to a number of factors , including government policies, global market opportunities, the entrepreneurial talents of company founders and executives, and the characteristics of the Korean people. The book has something to say about each of these factors. But it focuses on the chaebol and their approaches to strategy, management, and labor relations. In describing how the chaebol are organized and managed , the authors' assess the role of culture and make comparisons between Japanese and Korean practices that reveal many similarities as well as some key differences. To research this book, a team of Americans and Koreans combined archival information with extensive interviews of company executives and managers, scholars, and government officials. Beyond understanding the chaebol, the authors' objectives included drawing lessons for the West as well as pointing to challenges ahead for Korea. Chapter 1 provides historical and cultural background on Korea to enhance the reader's understanding of Korean companies. Korea is described as a country with both strong traditional Confucian values and a contemporary BOOK REVIEWS219 outlook greatly influenced by Western values. According to the authors, this combination has produced high values for achievement, individuality, perseverance , loyalty, optimism, and strong nationalism. These values in turn are described as a major factor in Korea's rapid economic growth. Chapter 2 covers Korean industrial policy and the strong governmentbusiness ties that have characterized Korean economic development. In the spectrum of national industrial policies, Korea is characterized by a high degree of government intervention in the economy designed to adapt and develop, as opposed to merely defend, Korea. The authors divide the period from 1960 onward into three stages, a take-off period (1961-73), sectoral policies (1973-79), and trade liberalization (after 1979). Though following industrial policies in many ways similar to Japan's, the Korean government favored a smaller number of companies that were significantly more dependent on the government for capital. The Korean government's move toward trade liberalization is only briefly touched upon. Efforts to shift financing to the private market, to favor small and mid-size firms, and to open markets are mentioned. But the problems and difficulties are neglected. For example, in a book that appeared at about the same time, Amsden (1989) shows how the policy of favoring a few very large companies has resulted in highly concentrated industries. By 1980, the top ten chaebol produced 70 percent of Korea's GNP. In the presence of these large enterprises, liberalization and privatization of die financial sector has served to increase rather than decrease concentration. The large chaebol have established banks and moved strongly into the financial sector. Further, Amsden states that by 1 989 only small moves toward open markets were evident . By providing a more comprehensive analysis of Korean industrial organization , Amsden casts a different light on the...