(Most of the chaebol are in their third generation of family control.) Moon has vowed to stop families from using such methods to keep control of these ostensibly public companies. However, their contribution to the world’s 11th-largest economy is overshadowed by repeated cases of bribery, weak corporate governance, and complicated shareholding plans that help the families accumulate wealth and inherit management. Known as chaebol, these businesses make up more than half the value of the companies traded on South Korea’s stock exchange. Many South Koreans feel envy and resentment toward family-run conglomerates such as Samsung, SK, LG, and Hyundai. The outrage at these and similar scandals helped propel liberal candidate Moon Jae-in to the presidency he campaigned on promises to clamp down on the country’s family-controlled business dynasties in the wake of Park’s cronyism and corruption scandal. Then, in March, South Korea’s president, Park Geun-hye, was removed from office, in part because of accusations that she helped a friend, Choi Soon-sil, pressure companies into making donations to nonprofits controlled by Choi and gave her access to secret government documents. Lee is accused of donating $36 million to nonprofit foundations operated by a friend of the former president in return for political favors. In February Samsung’s de facto leader Lee Jae-yong was arrested on bribery charges. The role of the country’s family-run businesses, and whether or how they are held to account for wrongdoing, is under intense scrutiny. Now is the time for the executives’ culture of loyalty to the “family” to be replaced by a culture of loyalty to the “organization.”įor the past several months, South Korea has been roiled by accusations of corruption in its government and major businesses. Samsung fundamentally needs actively accept moral and social responsibility. But in a shame culture such as Korea’s where the public decides what is right, global companies are much more vulnerable. Global firms often fail to manage such crises because they focus on proving innocence. In guilt cultures, which exist generally in Western countries, redemption derives from executives serving jail time and company fines and settlements. The hidden rules of redemption differ across cultures. Her impeachment followed the arrest of Samsung’s de facto leader Lee Jae-yong on bribery charges. Samsung’s path to repairing its damaged reputation is different than if it were based in a Western country. The winner of South Korea’s presidential election, Moon Jae-in, is coming to power in the wake of a corruption scandal that ousted President Park Geun-hye. South Korean political leaders are more determined than ever to correct the country’s reputation for being too lenient on the country’s family-controlled business dynasties known as chaebol.
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