Hyundai Case
HISTORICAL DEVELOPMENTS OF KOREAN CAPITALISM The Hyundai Business Group, 1940s-1990s
SCHOOL OF INDUSTRIAL RELATIONS AND ORGANISATIONAL BEHAVIOUR WORKING PAPER SERIES
ISSN 1325-8028
November 1997
115
HISTORICAL DEVELOPMENTS OF KOREAN CAPITALISM The Hyundai Business Group, 1940s-1990s1
Seung-Ho Kwon Abstract The chaebol, family-controlled conglomerates, which now dominate the South Korean economy constitute a unique type of business enterprise in the development worldwide of capitalist economies. With the support of a developmentalist state, the chaebol played a central role in rapid industrialisation of the South Korean economy, which in turn facilitated the transformation of what were originally small, family capitalist enterprises in the late 1940s, to large scale industrial enterprises in the 1990s. The chaebol employed aggressive diversification and expansionary strategies to achieve monopoly capitalism through dominant market advantages derived from economies of scale and scope. While the chaebol was initially managed by members of the founder’s family, as it expanded, increased reliance on a cadre of professional managers was necessary. However, despite the inevitable devolution of managerial control from founder to second generation and the rise of a powerful managerial cadre, the essential nature of this unique form of proprietary capitalism has so far been retained, along with its economic pre-eminence. The genesis and evolution of the chaebol is examined through an in-depth case study of a leading Korean industrial conglomerate, the Hyundai Business Group, from its origins in the 1940s to the early 1990s.
INTRODUCTION The historical development of large scale capitalist business entities is a frequently canvassed topic of research across the economics, business history and organisational structure disciplines. Most of these studies have focussed on large scale capitalist enterprises in advanced countries such as the United States,
SCHOOL OF INDUSTRIAL RELATIONS AND ORGANISATIONAL BEHAVIOUR WORKING PAPER SERIES
ISSN 1325-8028
November 1997
115
HISTORICAL DEVELOPMENTS OF KOREAN CAPITALISM The Hyundai Business Group, 1940s-1990s1
Seung-Ho Kwon Abstract The chaebol, family-controlled conglomerates, which now dominate the South Korean economy constitute a unique type of business enterprise in the development worldwide of capitalist economies. With the support of a developmentalist state, the chaebol played a central role in rapid industrialisation of the South Korean economy, which in turn facilitated the transformation of what were originally small, family capitalist enterprises in the late 1940s, to large scale industrial enterprises in the 1990s. The chaebol employed aggressive diversification and expansionary strategies to achieve monopoly capitalism through dominant market advantages derived from economies of scale and scope. While the chaebol was initially managed by members of the founder’s family, as it expanded, increased reliance on a cadre of professional managers was necessary. However, despite the inevitable devolution of managerial control from founder to second generation and the rise of a powerful managerial cadre, the essential nature of this unique form of proprietary capitalism has so far been retained, along with its economic pre-eminence. The genesis and evolution of the chaebol is examined through an in-depth case study of a leading Korean industrial conglomerate, the Hyundai Business Group, from its origins in the 1940s to the early 1990s.
INTRODUCTION The historical development of large scale capitalist business entities is a frequently canvassed topic of research across the economics, business history and organisational structure disciplines. Most of these studies have focussed on large scale capitalist enterprises in advanced countries such as the United States,
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