Mr. Kwon Has A Reputation As A Trailblazer In Corporate Korea: International Business Management Essay, GCD, Ireland

Culture of communication  breaks through traditional barriers

Mr. Kwon has a reputation as a trailblazer in corporate Korea in terms of his efforts to change the authoritarian corporate culture. Although LG Philips LCD is a joint venture between LG and Philips, its culture, like that of many other Korean companies, was based on strict hierarchical structures influenced by Confucian traditions. Mr. Kwon has overhauled the company with his mantra of ‘horizontal communication’. After a career of rising through the ranks, he became acutely aware of the importance of internet communication. He is convinced that Korean companies will become more competitive if they break down the authoritarian culture, where bosses are to be obeyed and never questioned, to a more creative one. ‘The era for authoritarian management is gone. When I propose, I want my staff to say no when they think it does not make sense.’

His bid to encourage greater openness has even stretched to the furniture – the V-shaped meeting room table has been replaced by a U-shaped one. And the walls of his executives’ rooms have been replaced by glass.

Question:

Examine the national and corporate cultural influences that would seem to be involved in this case study.

National culture and Japanese competitiveness

Among the many factors contributing to Japan’s post-war competitiveness have been the sociocultural underpinnings at the national level of its industrial and commercial activities. For example, during most of the post-war era Japan’s workers had a strong preference for work over leisure so that as real incomes rose, a high percent­ age of the additional income was saved. This, coupled with relatively low inflation and low-interest rates, helped stimulate investment.

The social framework of Japanese society also played a part, having been influenced by two powerful ideologies, namely Buddhism and Confucianism. Buddhism taught the importance of harmony and respect, reminding people that they should be prepared for change since this was an endemic part of life. Confucianism taught the importance of the individual’s position in society and the vital significance of the interaction between a person and his or her immediate superior/inferior. With this background, Japan became a strongly ‘vertical’ society based on the household. Individuals were subservient to group interest, whether it was within a traditional family framework or in a ‘quasi’ family-type situation based on the company. This aspect of Japan’s nature has been characterized as a society in which work organization is gemeinschaft rather than Gesellschaft in nature – that is, one based on the natural will and close face-to-face relationships rather than one which is based on the rational will and which is more utilitarian and goal-directed.

Competitiveness also depends to a great extent on how companies manage their most valuable asset – their workers. Japanese corporate strategy on labor-management in the large firm sector is very much about creating an efficient internal labor market. First, they hire individuals straight from school or college and employ them as far as possible until retiring age at about 55 to 58 years. On average Japanese companies tend to hire people with ‘neyaka’, i.e. an optimistic, open-minded, and wide-ranging set of interests as compared to the more specialist hiring policies of many European companies. Second, they mold workers into ‘flexible assets’ by rotating them be­ tween different departments within the company to ensure a broader perspective and a more flexible attitude. Third, they involve workers in in-company training schemes and stress the importance of on-the-job training. Finally, the pay system varies closely with age around the concept of providing workers in large and medium-sized firms with ‘life­ time’ employment. Japanese managers work hard at creating a stable internal labor market and treat workers as key resources deserving of attention. If workers feel that the company commits to keeping them employed, this gives them the confidence to release the ‘tacit’ knowledge or basic know-how, which often cannot be easily articulated. In other words, workers have the confidence to share any untapped knowledge they may have because they operate within a secure and dynamic environment.

Questions:

How does the discussion in the case study relate to Hofstede’s five cultural dimensions?