Permanency of CSR Activities and Firm Value

So far overlooked by the international business ethics literature, we introduce, characterize, and normatively analyze the use of affective ties and networks in South Korea from an ethical point of view. Whereas the ethics of using Guanxi in China has been comprehensively discussed, Korean informal networks remain difficult to manage for firms in South Korea due to the absence of existing academic debate and research in this field. In this study, we concentrate mainly on the question of whether foreign firms will and can use affective ties in Korea. The informal social network forms are classified and contrasted with the conventional ethical approaches used in international business ethics (relativism, universalism, and social contract theory) to assess which categories can be regarded as ethical or unethical. Finally, foreign firms are advised how to cope with and use different affective network types. Although the nature of affective ties and networks in Korea differs from that found for instance in China (Guanxi), consistent with the conclusion of prior research, we recommend particularistic analysis and decision making regarding the circumstances in which to conclude affective ties and networks and when to opt out. We conclude that foreign firms in Korea should invest in establishing Inmaek, refrain from engaging in Yonjul, and support host country nationals’ Yongo ties. Moreover, it is suggested that foreign firms should find ways to monitor and manage informal ties effectively.     

Approaching Korean Business and Management Ideals through the Lens of Yongo: A Scholar–Practitioner Perspective

By adopting the insider perspective based on participant observations, this article explores a new dimension of management ideals in South Korea. In particular, it proposes an important cultural context extension to the conventional collectivism paradigm that is often used to explain Korean management. By introducing the term yongo, which denotes exclusive and informal social networks based on (pseudo-) family, university alumni, and regional connections, challenges for management practices can be reported, including, for example, the difficulties that foreign managers face in accessing these networks to establish high-trust ties and influence business decisions.     

Affective networks,informal ties,and the limits of expatriate effectiveness

Expatriate effectiveness research has so far rarely taken into account the influence of social networks on expatriate performance and adjustment. Likewise, antecedents of social networks remain poorly understood. We fill this research gap by exploring the situation of expatriates in South Korea. Based on expert interview data, we have discovered seven antecedents critical to expatriate effectiveness. Most antecedents hinder expatriate effectiveness due to the expatriates’ inability to become a part of so-called Yongo networks, a distinctive type of social tie in South Korea that is to a great extent determined by birth. As a consequence, it is in particular expatriates’ relational performance and interaction adjustment that is negatively influenced by Yongo. Based on the South Korean case, this study advises future research to more deeply study the nature and characteristics of the local social context, in particular affective ties, and extend research on expatriate effectiveness in this important dimension. Finally, we discuss practical implications important for multinational corporations and provide suggestions on how to better cope with exclusive informal social networks while on an assignment abroad.     

Materialism,fashion consumers and gender: a cross‐cultural study

The purpose of this study was to examine the relationships among materialism, gender and fashion consumer groups from two countries – one representative of an individualistic culture (US) and one representative of a collectivistic culture (Korea). Participants were 397 students from a university in Korea (n = 221) and a university in the US (n = 176) who completed the questionnaire. The materialism construct showed adequate reliability for participants in both cultures. Fashion change agents scored higher on materialism (centrality and success) than fashion followers. Females scored higher on materialism than males which seemed to be based on higher scores on the centrality subscale. Participants from the US and Korea differed on all three subscales of materialism with US participants scoring higher on centrality but lower on success and happiness than Korean participants. The findings of this study provide valuable implications for fashion marketers and retailers in Korea and US. The findings are limited to Korean and US consumers and cannot be generalized to other cultures. This paper fills a gap in the literature by comparing materialistic values between genders and fashion consumer groups in an individualistic culture (US) and a collectivistic culture (Korea).     

A complementary perspective on business ethics in South Korea: Civil religion,common misconceptions,and overlooked social structures

Following the recent call for advancement in knowledge about business ethics in East Asia, this study proposes a complementary perspective on business ethics in South Korea. We challenge the conventional view that South Korea is a strictly collectivist country, where group norms and low trust determine the norms and values of behavior. Using the concept of civil religion, we suggest that the center of the South Korean civil religion can be seen in the affective ties and networks pervading the economic, political, and social institutions, embedded in and guided by Confucian ideals. We argue that South Korea should be seen not as a collectivist low‐trust society, but rather as an affective‐relational society, in which the relational context determines whether collectivism or individualism prevails. Further, we assert that trust, the cohesive factor of affective ties and networks, has until now been inadequately captured by conventional surveys. Our proposed perspective contributes to a more holistic picture and a more firmly grounded understanding of business ethics in South Korea.     

Promoting Giving Campaigns in University Websites: A Cross-cultural Comparison between the United States and South Korea

ABSTRACT

This study was designed to compare the ways the websites promote giving campaigns between the United States and South Korea. Furthermore, this study explored how the campaign appeals are associated with the distinct cultural values between universities in the United States and Korea. Guided by a content analysis of 200 universities in the United States and South Korea, the findings of this study demonstrated that, compared to the Korean university websites, U.S. university websites more frequently targeted university-affiliated donors, including alumni, students, parents, and so forth, and used multimedia-based exemplars about the giving campaigns.     

The Informal Organization of Korean Companies: Implications for Korean MNCs

Many Korean multinational corporations (MNCs) try to adapt locally by introducing hybrid international human resource management (IHRM); however, in‐depth case studies indicate a gap between espoused and actual IHRM. To resolve this challenge, and taking into account country‐of‐origin effects and institutional practices, we argue that Korean MNCs must become aware of the embeddedness of informal processes in Korean organizations. These informal organization processes complement paternalistic leadership and hierarchical communication, and without them the formal management systems of Korean MNCs are left with authoritarian centralized decision‐making processes where local employees may not feel able to participate. © 2014 Wiley Periodicals, Inc.     

University research and development activities: Intrusion into areas untended? A review of recent developments and ethical issues raised

The traditional and emerging roles of the major research entities in the United States are reviewed. Particularly controversial has been the university's emerging role of applied researcher in addition to its traditional role of basic researcher. Private, for-profit research laboratories have vociferously objected to the funding of university applied research by both the federal government and private industry. The funding of university research by these latter two entities is then reviewed and discussed. In addition to the ethical issue of whether university applied research should be funded, there is apparently another ethical issue regarding how the recipient universities are selected. In essence, if the universities intrusions are merely into untended areas, the first ethical issue seems less serious. Such may be the case if private laboratories are not equipped to perform the research. Of course, the second issue of which university should receive the funding remains. The apparently strengthening ties between universities and private industry are then reviewed. Direct ties between universities and industry still account for a very small part of university research. But impediments to cooperation are melting away as universities market their services to private industry. The authors contend that the government encourages cooperative ventures between universities and industry. They pose questions for all sides and suggest further areas of study should these joint ventures continue as they seem most likely to do. Much of the literature has leaned toward criticism of these joint efforts. Martin Kenney, in the February, 1987 issue of The Journal of Business Ethics, offered one of the more extensive efforts in his criticism of cooperative industrial/university research. Kenney concentrated on the area of biotechnology research. The present article avoids specific areas of research and takes a broad view of these cooperative research efforts. It is less critical than Kenney of the cooperation between industry and universities. David E. Blevins is Associate Professor of Management in the Department of Management and Marketing, University of Mississippi. From 1962–1971 he was employed by Caterpillar Tractor Co. in various management positions including District Representative for four European and Middle East countries. He received a Ph.D. and MBA from the University of Illinois and a BS in Industrial Engineering from the University of Missouri. He has published articles in the Journal of Business Ethics, Journal of Product Innovation Management and Mississippi Business and has published three textbooks. Sid R. Ewer is Assistant Professor of Accountancy at Southwest Missouri State University. His areas of research interest involve public policy and ethics, and he has published in The Journal of System Management. He has spent eight years in state government as an executive for an educational agency, and, prior to state government Mr. Ewer was an executive for industry. He is a Certified Public Accountant, Certified Management Accountant and Certified Internal Auditor.     

The Big Family: Informal Financing of Small‐ and Medium‐Sized Businesses by Guanxi

Guanxi facilitates interaction between companies and people in Confucian societies. Does this type of social construct still play the key role, when the entrepreneurs live in Western societies? The objective of this article is to verify the impact of Guanxi on the capacity of small and medium‐sized businesses accessing financial resources informally. To this end, data collected from small Chinese entrepreneurs active in the principal business center of Brazil were used. From nonparametric tests, the results suggest that: (1) different levels of Guanxi allow small and medium‐sized businesses to access informal financial resources; (2) different types of informal financing are mostly used, or judged to be more significant, depending on the level of Guanxi of the entrepreneur in terms of parental and nonfamily ties; and (3) unlike the Western literature on the financial cycles of start‐ups, this type of informal financing can extend beyond the initial stage of the business. © 2014 Wiley Periodicals, Inc.     

Economic geography and emerging market clusters: A co-evolutionary study of local and non-local networks in Bangalore

The presence of network ties within location plays a significant role in organization and evolution of clusters. This has proven to be particularly true for clusters specializing in knowledge intensive industries, where the organization of resources – people and technology – has been a primary driver for firm and regional performance. With the help of a longitudinal case study of the Bangalore IT cluster in India, we investigate the effect of local and non-local network ties on its evolution. We argue that networks – both local and non-local – play an important role in the development of cluster. We propose a non-linear relationship between cluster evolution phases and the type of network ties most prominent. Our study also outlines the role that embedding, expansion, and extension of ties plays in transitioning cluster from one phase to the other. The consideration of non-local ties is rather nascent in the cluster literature and promises to enhance the understanding of how clusters develop at both levels – policy as well as firm.     

Organizational culture and the tolerance of corruption: the case of South Korea

ABSTRACT

There has been long term and widespread criticism of organizational corruption around the world. This also includes South Korea with many examples, both historical and current. This is underpinned by several elements but an important and high profile factor is a seeming creation and tolerance of corruption by the large, diversified, dynastic family-owned and run conglomerates – the chaebol – and their nexus with the political elite. This study examines if there is any relationship between organizational culture and the tolerance of corruption within Korean firms. For this purpose, we chose four cultural traits as independent variables: large power distance, the government–business relationship, hereditary management and naembi culture, along with the tolerance of corruption as a dependent variable. Data was collected through a questionnaire survey and we used regression analysis to test our four hypotheses. According to the results, all our hypotheses received statistical support which implies these four cultural characteristics positively affect the tolerance of corruption within firms. The theoretical and practical implications of our findings are also discussed.     

Varieties of regional integration,international trade networks and risk

This paper explores the relationship between regional integration models and trade network structures. The paper further investigates the implications of these trade relationship configurations on risk. The exploratory study models the European Union and the Association of Southeast Asian Nations as networks: countries in each region are nodes connected by lines representing commodity trade flows. The study compares the evolution of the two regional networks over a 25‐year period (1990–2014). The results confirm that different regional integration models lead to differently structured economic relationships. The findings show that loosely coupled networks are vulnerable to the failure of a few connected nodes (concentrated vulnerability), but that tightly coupled regional networks are vulnerable to the failure of any of its nodes (random vulnerability). These unique differences in vulnerability have critical implications for managing economic risk.     

Myth and Reality in Chinese Financial Cliques in 1936

Much of current scholarly work argues that China and Chinesecommunities are distinguished by a culturally specific and uniquepattern of networking based on personal relations (guanxi),but there is little agreement about whether such personal relationsproduce discrete factions or more disbursed, weblike connections.The literature on banking networks is similarly unclear, andmost discussion has focused on regional groups, such as a cliquemade up of natives from Zhejiang and Jiangsu provinces, or sharedprofessional values among bankers. None of these approachesadequately describes actual connections, and this case studyprovides a new and empirically broad approach that applies toolsof network analysis to interlocking bank directorships in 1936.This analysis shows the existence of twenty-four isolated banks;three very small, discrete, and regionally based groups; andone huge, diffuse, and weblike bank network that included virtuallyall Chinese bank assets and extended to most of China’seconomically developed regions. This network had a multicentercore made up of densely linked large banks and a number of smallstart-ups associated with prominent individuals. Diffuse connectionsalso characterized networks of individual bankers, though denseties existed either among the most important bankers who eachsat on numerous boards of directors (suggesting associationsbased on business ties, professional interests, and the importanceof banks) or among individuals who shared common native place,defined at the level of adjacent counties (suggesting the simultaneousexistence of strong but very local guanxi ties). In the end,bank networks arose as much from historical contingency as fromcultural predisposition.     

The contingent value of social resources: Entrepreneurs' use of debt-financing sources in Western China

This study shows that entrepreneurs' use of debt-financing sources is conditioned by the resources embedded in their social networks. More business or political contacts increase entrepreneurs' probability of using formal financial sources, and more urban ties increases their probability of using informal sources. However, the effects of business and bureaucratic ties are contingent on community-level institutional trust and on firms' age. Business ties have greater positive impact on the probability of using formal financial sources for older firms and for those in regions with a higher level of institutional trust, while the impact of bureaucratic ties on these firms is weaker.     

Turning a liability into an asset of foreignness: Managing informal networks in Korea

Although foreignness can bring both benefits and costs to a business, much of the literature has focused on the liability of foreignness (LOF), while relatively little attention has been paid to the positive side. Despite the presence of LOFs, foreign companies may accrue some unique advantages from their foreign status, which are referred to as assets of foreignness (AOFs). Drawing upon social-capital theory and institutional theory, this article examines the issue of LOFs versus AOFs in the context of the informal networks in Korea and explores how foreign companies can manage their weaknesses in host-country-specific informal networks to create value from their foreignness. We discuss two practical strategies, reactive and proactive strategies, that can be used by foreign companies. While these two strategies can be pursued in parallel, this article suggests that foreign companies should prioritize pursuing proactive strategies. This article contributes to a more nuanced understanding of the role of foreignness in the international business context and provides practical insights into how foreign companies can leverage their foreign status in developing their own informal networks in Korea.     

Should Independent Board Members with Social Ties to Management Disqualify Themselves from Serving on the Board?

This paper examines whether independent directors who have social ties to management (inside directors) can effectively perform their fiduciary duty to monitor management on behalf of shareholders. Ex ante, it is not clear whether social ties will enhance or obstruct the quality of board performance. Theory suggests that directors who are socially tied to management are ineffective and would make decisions favoring management. However, social ties can increase trust and information sharing between management and independent directors, improving directors’ ability and effectiveness in governing the company (Westphal, J.D.: 1999, The Academy of Management Journal 42(1), 7–24). To examine these contradicting predictions I use social network analysis and construct proxies for social ties between management and independent board members. Using these proxies, I first demonstrate that social ties are associated with higher managerial compensation. Further analyses reveal that these results are driven by social ties that include members of the compensation committee. Conversely, I demonstrate that financial reporting quality is improved when social ties exist. Specifically, I find that the likelihood of material weaknesses in internal controls and the likelihood of financial restatements are lower in companies with social ties. I further observe that this improved quality of financial reporting holds only when social ties include members of the audit committee. I conclude that ethically, socially tied independent directors should disqualify themselves from serving on compensation committees where social independence is essential. However, in tasks where collaboration with management is essential, directors with social links to each other can be of added value to shareholders.     

Fast-Expanding “Online” Markets in South Korea and China: Are They Worth Pursuing?

The online shopping craze in South Korea has been ongoing for more than a decade, but in China, online shopping is experiencing tremendous growth, with 64 million additional shoppers per year. Consumers in Asia are among the world's most prolific online shoppers. This study compares the evolution, cycle, and stages of the online shopping markets in South Korea and China. Using the fast-expanding market model as an initial analytical framework and multiple case approach, we find that Chinese online shopping corresponds to the take-off stage of a successful cluster, in which significant opportunities are still present in Chinese Tier 3 and Tier 4 cities. Conversely, the South Korean online market is nearing saturation, though major foreign players are still entering this perceived lucrative marketplace. © 2016 Wiley Periodicals, Inc.     

The dynamics of small and medium-sized enterprises in Korea and other Asian NIEs

After a brief comparison of data on small and medium-sized enterprises in the four Asian newly industrialized economies (Hong Kong, Korea, Singapore, Taiwan), this paper deals with the existing or potential role of small firms in Korea's industrialization process; it reviews Korea's industrial heritage up to the post-Korean war period, then concentrates on the last three decades of very rapid industrial development and on the numerous issues facing the Korean economy today, especially in the field of big versus smallmedium scale business. This particular issue is again at the centre of policy changes, debates and controversies since the beginning of the 1990's.The major arguments of this paper can be summarized as follows: Very little is yet known about the history of Korean small entrepreneurship before World War II and how it might have affected later industrialization process after the Korean war. It seems that little indigenous industrial expertise was accumulated before and during colonial rule, this last period being dominated by the Japanese in a few big key industries, the very start of big scale business in Korea.