Korean Entrepreneurship: The Foundation of the Korean Economy

222 Pages·2010·2.298 MB·English

by  Theresa Youn-ja Shim (eds.)

Korean Entrepreneurship
Korean Entrepreneurship
The Foundation of the
Korean Economy
Edited by
T. Youn-ja Shim
(Theresa Y. Shim)
Palgrave
macmillan
KOREAN ENTREPRENEURSHIP
Copyright © T. Youn-ja Shim (Theresa Y. Shim), 2010.
Softcover reprint of the hardcover 1st edition 2010 978-0-230-10707-6
All rights reserved.
First published in 2010 by
PALGRAVE MACMILLAN®
in the United States – a division of St. Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
Where this book is distributed in the UK, Europe and the rest of the
world, this is by Palgrave Macmillan, a division of Macmillan Publishers
Limited, registered in England, company number 785998, of Houndmills,
Basingstoke, Hampshire RG21 6XS.
PALGRAVE MACMILLAN is the global academic imprint of the above
companies and has companies and representatives throughout the world.
Palgrave® and Macmillan® are registered trademarks in the United States,
the United Kingdom, Europe and other countries.
ISBN 978-1-349-29057-4 ISBN 978-0-230-11550-7 (eBook)
DOI 10.1057/9780230115507
Library of Congress Cataloging-in-Publication Data
Korean entrepreneurship : the foundation of the Korean economy /
T. Youn-ja Shim, editor.
p. cm.
Includes bibliographical references and index.
1. Entrepreneurship—Korea, South—History. 2. Business
enterprises—Korea, South—History. I. Shim, T. Youn-ja
(Theresa Youn-ja)
HB615.K674 2011
338'.04095195—dc22
2010020037
A catalogue record of the book is available from the British Library.
Design by MPS Limited, A Macmillan Company
First edition: December 2010
Contents
List of Tables and Figures vii
Foreword ix
Acknowledgement xv
1 Korean Politics and the Spirit of Entrepreneurship 1
Wayne Le Cheminant
2 Korea Inc.: Building Pre-Entrepreneurship in Korea 17
T. Youn-ja Shim (Theresa Y. Shim)
3 The Infusion of American Entrepreneurship in the
Early Republic of Korea 43
T. Youn-ja Shim (Theresa Y. Shim)
4 Value Systems, Entrepreneurship, and Changing Society 67
David Choi
5 The Effects of Family Values on Entrepreneurship in
East Asian Countries 91
In Hyeock Lee and Yongsun Paik
6 Social Entrepreneurship in Korean Education: American
Jesuits Open Sogang College 113
John P. Daly, S. J.
7 Teaching English—A Major Opportunity for
Entrepreneurship 133
John P. Daly, S. J.
8 Entrepreneurial Opportunities in Cyberspace: Korea and
the United States 149
Judith N. Martin and T. Youn-ja Shim (Theresa Y. Shim)
9 Entrepreneurial Leadership of Korean Companies in the
Global Market 179
Yongsun Paik and In Hyeock Lee
Contributors 203
Index 205
List of Tables and Figures
Tables
4.1 Contrasting values 72
4.2 Changing views toward business and entrepreneurship 86
7.1 Total dollar amount the Korean Government allocates
to education 134
9.1 Korean SMEs and internationalization 181
9.2 Internationalized Korean SMEs and entry mode 182
9.3 Internationalized Korean SMEs and regional strategy 182
9.4 Internationalized Korean SMEs and industry
segmentation 182
9.5 Internationalized Korean SMEs and founders’ age 183
9.6 Internationalized Korean SMEs and founders’ major 183
9.7 Internationalized Korean SMEs and founders’
education 183
9.8 Internationalized Korean SMEs and CEOs’ age 184
9.9 Internationalized Korean SMEs and CEOs’ major 184
9.10 Internationalized Korean SMEs and CEOs’ education 184
9.11 Internationalized Korean SMEs and financial networks 185
9.12 Internationalized Korean SMEs and technological
network 185
9.13 Internationalized Korean SMEs and R&D investment 186
9.14 Internationalized Korean SMEs and Intellectual
Property Rights 186
viii LIST OF TABLES AND FIGURES
Figures
5.1 An institutional-based view of firm strategy 94
8.1 Social types: Average times spent on social networking
sites, October 2009, hours per user 165
8.2 Who will be my friend? Social networking sites, total
unique visitors, October 2009 167
Foreword
The entrepreneurial values of self-driven, risk-taking, creativity, and
innovation have been pillars not only of the U.S. economy but also of
other developing countries that are trying to learn from the United States
in their attempt to catch up to the wealth of America. We agree that such
individualistic entrepreneurial values have contributed to the creation of
American capitalism, but we often overlook how political systems and
fundamental societal cultural values have influenced and sometimes
dictated the initiation of entrepreneurship and its progress in other parts
of the world, such as in the newly risen economic superpowers in Asia:
China, Japan, and Korea.
In this book we attempt to examine the discursive and sociopolitical
practices of Korean leaders and entrepreneurs, how those practices have
worked as the foundation for the development of entrepreneurship even
before they were introduced to Western concepts of entrepreneurship,
and how fundamental societal cultural values promoted and sometime
hindered their entrepreneurial opportunities down the road. We selected
Korea as a subject for several reasons. Within fifty years, Korea has
emerged from centuries of poverty and the devastation experienced in
the Korean War (1950–1953) to become one of the rising forces of the
global economy along with neighboring Asian countries, including Japan,
Singapore, Taiwan, and now China. As Michael Schuman points out in
his recent book, The Miracle, “In only thirty years, Koreans transformed
a nation poorer than Liberia, Zimbabwe, and Iraq into a member of the
rich countries’ club, the Organization for Economic Cooperation and
Development” (Schuman, 2009, p. xxiii). Korea, the country, often asso-
ciated by America with the TV series MASH, the Korean War, and the
adoption of Korean orphans, is now known as the world’s most wired
country with the highest broadband penetration and with one of the
world’s best-educated populations.
Some Westerners have called the transformation of the Korean economy
a miracle. Presidents Park Chung-Hee (1961–1979) and Lee Myung-bak
(2007–present), however, have refused to accept the idea that Korea’s
economic transformation is the result of a miracle, but rather have claimed
x FOREWORD
that it is the result of many years of great hardship, sacrifice, national effort,
and the commitment by Koreans to stand on their own feet. This came
about through the collective drive of the highly hierarchical structure of
the government that permitted clean, quick decisions, the citizen’s tradi-
tional value of respect for authority and their willingness to participate in
a national quest for economic development, and the visionary and self-
driven entrepreneurs. As Schuman points out, “Korea’s economic boom
was far more than just a route to wealth. It defined the nation’s purpose,
engendered a sense of pride and confidence rarely matched in Korea’s five
thousand-year history” (Schuman, 2009, p. xxiii).
This book is a collection of research papers and stories listing the various
factors that have impacted the foundation of Korean entrepreneurship and
its creation of wealth by examining the historical environment, fundamental
cultural values, and changes the Korean people have made thanks to the
vision of the political leaders with regard to the country’s modernization
and economic development. We often recognize political leaders who have
been responsible for economic development and policies, especially in
Asia where they have created a unique government-led economic develop-
ment model, but we often give less credit to those entrepreneurs who
recognized the nation’s leaders’ vision and were willing to develop their
innovative ideas that would contribute to the common good.
The nine chapters are organized as follows. In Chapter 1, Wayne Le
Cheminant explores the salient points of Korean political history, parti-
cularly of the past century, and, more specifically, looks at how these events
led to the specific conditions in which the Korean people find themselves
today. At the end of his chapter, he speculates as to how these events, in
particular, democratization and financial reform, may have contributed to
what can be called an entrepreneurial spirit.
In Chapter 2, T. Youn-ja Shim goes on to describe the big picture of
South Korea’s economic modernization process focusing on the stories
of how the nation’s economic system, known as Korea Inc., was created.
This was a unique business model that developed the foundation of South
Korea’s economic modernization. She begins with the story of President
Park Chung-Hee who was the driving force behind Korea, Inc. and was
also responsible for the creation of the giant family-run conglomerates
(Schuman, 2009), resulting in the creation of the current inequality of
wealth distribution. Shim then explains how the government, the early
pre-entrepreneurs who became conglomerates, and civil society working
together made it possible for President Park to serve as CEO of Korea Inc.
through stories of the developing relationships between Park, civil society,
and the leading entrepreneur in Korea, Chung Ju-young, the founder of
the Hyundai Group.
FOREWORD xi
In Chapter 3, Shim continues to reveal how the first generation of
entrepreneurs, particularly American-educated technocrats in the 1960s,
rose to the top of the social ladder and how they practiced their entre-
preneurial opportunities by playing the traditional Korean value of the
importance of human networks with their advanced education from
the United States. Through the story of one such successful early entrepreneur,
Lee Chu-yong, who is considered the pioneer of computer education in
South Korea and has contributed greatly to the computerization of the
Korean government and banking systems, Shim provides a picture of how
the early entrepreneurs contributed to the nation’s economic modernization
while establishing American-influenced entrepreneurship.
In Chapter 4, David Choi provides the background and facts associated
with South Korea’s entrepreneurial economy. He examines some of the
most fundamental values of Korean culture that are in conflict with those
of entrepreneurship, and then looks at the development of entrepreneur-
ship in South Korea to see how its growth has affected the people’s
values systems and their perspectives on various groups’ roles in society.
He concludes his chapter by discussing how Korea’s experience with
entrepreneurship and its impact on society compares to entrepreneurship
in the United States.
In Chapter 5, In Hyeock Lee and Yongsun Paik investigate characteristics
of entrepreneurial family firms across three East Asian countries: Korea,
China, and Japan. They suggest that the entrepreneurial family firms in the
three countries exhibit similar characteristics depending on the unique com-
bination of formal and the surrounding informal institutional constraints in
each country. In addition, they assess the effects of Confucianism on the role
of family in the process of the creation of their firms and identify hierarchical
relationships, paternalism, seniority, and preservation of group harmony as
common characteristics of the entrepreneurial family firms.
In Chapter 6, the story of the foundation of Sogang University is told.
The university originally intended to be a small liberal arts college, was
established shortly after the Korean War in 1960, and was modeled after
the Jesuit universities in America. Later, the plan changed and it became
a big university through the acculturation process. The critical role that
American education played in the Korean education system and its
contribution to the implementation of the economic development of
South Korea is often underestimated. This was particularly important in a
country that has always honored education and placed scholars on the top
of the social scale, but during the first half of the twentieth century, Korea
suffered a significant downgrading of education during Japanese colonization
and then, soon after liberation, suffered the heavy toll of the Korean war.
Korea was eager to change and was ready to accept American education