Transformation of Corporate Control in Korean Business Groups

Abstract

The internal power of the large Korean business groups (chaebol) had been determined by the interests of the founding families and the hierarchical relations within their organizational structure. Since the 1980s, the family-dominated business groups have been challenged and the power of professional managers has gradually increased. Nevertheless, the dominant coalition of corporate owners and managers has been formed on the basis of shared interests and coordinated strategic management. It is reinforced through a complex set of social ties based on school, regional and marriage networks. This structure of embedded social relations within a class provides a social basis for a class’ internal integration and common action. Accordingly, our analysis of corporate control reveals the institutional dynamics of power relations that is not fully captured by the extent of interlocking directorships.