1
Understanding Cross Cultural Communications in the Business Sector of South Korea:
Case Study for Foreign Staffs in Korean Chaebols
By Hwajung Kim (December 2013)
Introduction
Samsung has been ranked 8
th
on the 2013 Interbrand Best Global Brand list, and Hyundai is
included within top 50
th
on the same list
1
. Samsung Electronics has been placed in the 35
th
“Most Admired Company” conducted by Fortune Magazine in 2013
2
. Also, according to
LEAD report
3
, Samsung Electronics Co. has been ranked at the top with an estimated value
of 116 trillion won, followed by Hyundai Motor Co. with a brand valued worth 30 trillion
won
4
.
Korean business conglomerate like Samsung and Hyundai are referred to as “Chaebols”,
and they have been undoubtedly exerted enormous influence on South Korea’s fast-growing
economy and made it possible for “the Miracle of the Han River” along with “strong
government leadership” and “sound economic planning” (Yoo and Lee 1987:95). Particularly
Hyundai, Samsung and LG (Lucky-Goldstar) were established in the late 1950s with support
of government. Chaebols have somewhat unique structure of ownership, family-orientation
and centralized control (Ferris 2003:255), and they are also characterized by an extensive
arrangement of pyramidal or multi-layered shareholding agreements and the existence of
cross-debt guarantees among member firms (Baek et al. 2004:269). These characteristics
have formed its corporate culture and the management styles, such as, clan management, top-
down decision making, Confucian work ethic, paternalistic leadership and so forth (Yoo and
Lee 1987:105).
At the end of last year, Samsung Electronics employed 90,700 workers and Hyundai
1
http://www.interbrand.com/en/best-global-brands/2013/Best-Global-Brands-2013.aspx
2
http://money.cnn.com/magazines/fortune/most-admired/2013/list/?iid=wma_sp_full
3
A survey of 2,000 people from 60 countries that reflected their perception of each country,
conducted by the Institute for Industrial Policy Studies
4
http://english.yonhapnews.co.kr/search1/2603000000.html?cid=AEN20131106005851320
2
Motor Company employed 59,831.
5
These two companies are Korea’s top two in
employment. In the meantime, according to Sustainable Report 2009
6
, Samsung achieved 48%
in locally-hired foreign workers as a percent of the total workforce. Approximately, 236,000
employees in 79 countries around the world work for Samsung, and Samsung culture is
getting diverse
7
. It is said that “Creative Organization Culture”, “Diversity Management” and
“Global Diversity” in Samsung Electronics Sustainability Report 2012
8
. However, foreign
staffs seemed not to be well incorporated with chaebol cultures because the number of
foreign employee turnover has increased substantially (Cho 2009). Employee turnover in
organization can be driven by “certain identifiable characteristics of workers, tasks, firms,
and markets, and that, by developing policies to address these characteristics”, thus it is
significant to see how to reduce the occurrence of turnover to raise efficiency in their
respective organizations (Zeynep and Huckman 2008
9
).
Then, why does it happen to foreign staffs in chaebols? Does the lack of cultural
understanding matter? If so, it is important to have theoretical backgrounds about cross
cultural communications and to seek for the role of culture in the business sector. Also it
needs to be addressed such as what are characteristics of chaebol cultures, which factors
determines the chaebol cultures, and how the chaebol cultures affect foreign staffs. In doing
so, the paper firstly provides a brief overview of Hofstede’s five dimensions of cultures and
the concept of organization culture, Trompenaars’ four characteristics of corporate cultures,
and Cho&Yoon’s dynamic collectivism of Korean corporate culture. Then, the paper explains
how cross cultural communications can be incorporated with cultural understanding in
Korean chaebols. Also the paper conducts a research on whether better cultural understanding
of Korea would result in better efficiency amongst the foreign employees in chaebols like
Samsung, L.G, and Hyundai. Next, the paper reviews findings, research accomplishments
5
http://english.khan.co.kr/khan_art_view.html?code=710100&artid=201309121705037
6
Samsung Electronics. Integrity Management. Respecting Global Diversity pp.24-27.
http://www.samsung.com/us/aboutsamsung/sustainability/integritymanagement/download/Respect
ingGlobalDiversity.pdf
7
http://job.samsung.ru/lifestyle/article1.aspx
8
Samsung Electronics. Global Harmony with People, Society & Environment. pp.22-25.
http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/download/2012/201
2_sustainability_rpt.pdf
9
http://frank-j-hernando.blogspot.kr/2012/08/south-korea-foreign-workers-policy-eps.html
3
and challenges, and then the paper analyzes the importance of cultural understanding through
profound and enduring cross cultural communications. Finally, the paper provides direction
for cultural understanding methods in order to integrate foreign staffs into Korean corporate
cultures.
Literature Review
Considering that foreign staffs’ turnover rate increases, the paper takes the assumption of
cross cultural communications problems at the core because foreign employees in Korean
chaebols may have difficult time due to culture differences. It might be not only because
Korea chaebols tend to maintain their ethnic culture but because they persist their own
corporate cultures as well, meaning that foreign staffs would take double burdens from both
national culture differences and unique corporate cultures when working for Korean chaebols.
In this regard, the paper gives a brief overview of Hofstede’s cultural value dimensions and
the four characteristics of Trompenaars, and then the paper provides the concept of dynamic
collectivism of Cho&Yoon.
Hofstede: Five Dimensions of Culture and Organizational Culture
Hofstede defines culture as “mental programming/mental software
10
corresponds to a much
broader use of the word that is common among sociologists and, especially, anthropologists”
based on a country level actor analysis, he classified the original 40 countries along five
dimensions (Hofstede 2010:5). The five dimensions are as follow: firstly, individualism, the
degree of interpersonal, social connectedness; uncertainty avoidance, the degree of
discomfort with the unknown; secondly, masculinity, the degree to which achievement and
aggression are valued; thirdly, power distance, the degree to which differences in wealth and
other endowments are accepted; and lastly, Confucian dynamism, long-term versus short-
term orientation (Hofstede 2010). Although Hofstede’s five dimensions are criticized because
of being overly simplified and ignorant of its heterogeneity (Sivakumar and Nakata,
2001:557), it is no doubt that this five dimension framework has been widely used by a
number of researchers because of its clarity, parsimony, and resonance with managers.
From the perspective of social anthropology, Hofstede refers culture as “a catchword for
all those patterns of thinking, feeling, and acting”, thus culture includes not only activities
supposed to refined the mind are included” but also “the ordinary and mental things”
(Hofstede 2010:5). Additionally, he underlines the personality of an individual isn’t
10
Both terms can be used interchangeably
4
necessarily shared with any other human being because the personality is a unique set of
mental programs (Hofstede 2010:5). Also he defines the characteristic of organizational
culture by saying “corporate culture is a soft, holistic concept with, however, presumed hard
consequences” (Hofstede 2010:47). While sociologists emphasize the role of the soft factor in
organizations, Hosfstede differentiates organizational cultures from nation cultures. He
underlines that “organizational cultures are a phenomenon by themselves, different in many
respects from that of a nation […] national cultures and their dimensions proved to be only
partly useful for the understanding of organizational cultures” (Hofstede 2010:47).
Therefore, Hofstede tries to explain what factors affect planning and control process in
organization and develops the plotting charts associating power distance(PDI) with
uncertainty avoidance(UAI)
11
(Figure 9.1 pp.303). He underpins that the position of a
country in that chart shows the country’s way of solving organizational problems (Hofstede
2010:302); because, he argues, “there is empirical evidence for the relationship between a
country’s position within the PDI-UAI matrix and models of organizations implicit in the
minds of people from those countries that affect the way problems are tackled” (Hofstede
2010:303). The way how national PDI and UAI affect planning and control processes in
organizations has been summarized in Table 1.
Table 1. How PDI and UAI Affect Organization Cultures
1 Higher PDI supports political rather than strategic thinking.
2 Higher PDI supports personal planning and control rather than impersonal systems.
The higher in the hierarchy, the less formal the planning and control.
3 Lower PDI control systems place more tryst in subordinates; in higher PDI cultures
such trust is lacking.
4 Higher UAI makes it less likely that strategic planning activities are practiced because
these activities may call into question the certainties of today.
5 Higher UAI supports a need for more detail in planning and more short-term
feedback.
6 Higher UAI implies leaving planning to specialists.
7 Higher UAI implies a more limited view of what information is relevant.
This chart extracted from Pyramids, Machines, Markets, and Families: Organizing Across
Nations, (Hofstede 2010:316)
Trompenaars: Four Characteristics of Corporate Cultures
Trompenaars emphasizes the essence of culture lies on “the shared ways”, whereas Geert
11
Refer the Figure 9.1 in Cultures and Organizations p.303
5
Hofstede defines culture as mental programs, so that groups of people can understand and
interpret the world; thus, it is significant not to consider culture as “what is visible on the
surface” (Trompenaars 1998:3). Since the culture is the shared system of meanings,
Trompenaars stresses that culture determines people’s interests/attentions, behavior, and value.
He argues that “culture organizes such values into what Geert Hofstede calls mental programs
[…] the behavior of people within organizations is an enactment of such programs […]
cultures structure the perceptions of what they experience”(Trompenaars 1998: 13). The
shared meanings are the core of culture, are incorporated into people within a culture and
cause them to interpret things in particular ways. But the shared meanings can transcend the
people in the culture meaning that they are “open to be changed if more effective solutions to
problems of survival are desired by the group” (Trompenaars 1998: 27).
Also he points out international managers should take the balance between consistency
and adaptation to the local characteristics for corporate success since universal application of
western management theory has been challenged. Therefore, more knowledge of cultural
patterns should be thoroughly considered for the internationalization of business life because
“Culture is like gravity: you do not experience it until you jump six feet into the air. […] in
practice, though, beneath the surface, the silent forces of culture operate a destructive process,
biting at the roots of centrally developed methods which do not fit locally” (Trompenaars
1998: 5).
He criticizes organizational theory in that it did not measure the effects of national culture
although the theory introduced the environment as an important consideration. In particular,
the cultural environments should be taken into consideration because culture is “the way in
which a group of people solves problems and reconciles dilemmas” (Trompenaars 1998: 6).
In this regard, Trompenaars sorts out the basis of cultural differences: relationships with
people, universalism versus particularism, individualism versus communitarianism, neutral
versus emotional, specific versus diffuse, achievement versus ascription, attitudes to time,
attitudes to the environment (Trompenaars 1998: 8-10).
Not only technologies markets but cultural and preferences of leaders and employees
affect organizational culture. Trompenaars clarifies three determining factors for corporate
culture; firstly, the general relationship between employees and their organization; secondly,
the vertical or hierarchical system of authority defining superiors and subordinates; thirdly,
the general views of employees about the organization’s destiny, purpose and goals and their
places in this (Trompenaars 1998: 162). He specifies four different characteristics of
corporate culture (Table 2), and describes national patterns of corporate culture within the
four characteristics
12
.
12
Refer the Figure 11.5 in Riding the Waves of Culture p.184
6
Table 2. Four Characteristics of Corporate Cultures
Family
=Hierarchical
Eiffel Tower
=Egalitarian
Guided missile
=Task
Incubator
=Person
Ways of
thinking and
learning
Intuitive,
holistic, lateral
and error-
correcting
Logical,
analytical,
vertical and
rationally
efficient
Problem-
centered,
professional,
practical, cross-
disciplinary
Process-
oriented,
creative, ad hoc,
inspirational
Ways of
changing
“Father”
changes course
Change rules
and procedures
Shift aim as
target moves
Improvise and
attune
Criticism and
conflict
resolution
Turn other
check, save
others’ faces, do
not lose power
game
Criticism is
accusation of
irrationality
unless there are
procedures to
arbitrate
conflicts
Constructive
task-related
only, then admit
error and correct
fast
Must improve
creative idea,
not negate it
This chart is extracted from Riding the Waves of Culture p.183
Cho & Yoon: Three Factors of Dynamic Collectivism
Cho&Yoon raises the different views on South Korea comparing to Hosfstede and
Trompenaars. Those two western scholars described Korea as one of the most collectivist
countries in the world and imply that the corporate culture of Korea is even more collectivist
than that of Japan; however, Japanese scholars point out that “Korean companies are more
competitive, individualistic and dynamic than Japanese ones” (Cho&Yoon 2001:71). Given
the fact that there are paradoxical features in Korean corporate cultures, Cho&Yoon
introduces dynamic collectivism, meaning collectivist norms for in-group members and
individualistic ones for out-group members, as a heuristic device to understand corporate
culture in Korea. Cho&Yoon explains competition between in-group and out-group has been
amplified and in turn the competition generates dynamic and competitive features of Korean
corporate culture. Three factors of dynamic collectivism are as follow: cultural legacy,
traditional culture embedded mainly in Confucian values; social climate, socio-political
situations created by the regime of General Park Jung-Hee since 1961; and corporate
leadership, paternalistic leadership of Chaebol founders. Cho&Yoon suggest that all three
factors form the environment of corporate culture (Cho&Yoon 2001:72).
7
The three dimensions of dynamic collectivism boost the dynamic nature of collectivism in
Korea by intensifying inter-group boundaries and competition. Its dynamic nature can
develop also from tension among the three dimensions. Both in-group harmony and hierarchy
favor a static social order, for example, but optimistic progressivism pushes for change. Two
root metaphors are family and military. Koreans have adopted a paradigm in which
organizations are like families as well as armies. This is a natural consequence of cultural
values socialized in the family and of experiences in the military. The Korean family is the
source of social bonds and value higher education (Cho&Yoon2001:79).
Searching for Defining Corporte Cultures of Korean Chaebols
The term chaebol refers to the whole business group as a unit consisting of numerous
members or affiliate companies (Lee, Kim and Lee 2010: 415) owned and managed by family
members or relatives in many diversified business area (Yoo and Lee 1987:97). They are,
therefore, characterized by an extensive arrangement of pyramidal shareholding agreements
Table 3. Three Factors of Dynamic Collectivism
Cultural Legacy Emotional Harmony
Gibun (??), save the face (??)
Hierarchy -Confucianism and ethical norms
-Interpersonal relationships are defined in terms of social status:
gender, age and position in the society
-Harmonious relationships are built on seniority
Discrimination
against Out-Groups
-A strong tendency to distinguish themselves from others
- Individualistic/egoistic to out-group For Koreans
Networking -Most trust for members of their own families and a high level of
trust for high-school classmates and people form same region
High-Context Society -Long history as a relatively homogeneous ethnic group
Social Climate Korean War -After WWII, the Korean peninsula was divided in two and
suffered from a devastating war
Military Government -Tensions between the North and South
-Growth-driven policies of a military government
-Military way, can-do spirit and result-oriented
Preference for
Western Ways of
Thinking
-Lack of natural/financial resources and industrial technology
-Dependence on other industrialized countries or regions
-Preference for Western ways of thinking, at least among the elite.
Corporate
Leadership
Chaebols -The power and leadership of their founders
-Family-controlled management and entrepreneurial orientation
-Paternalistic and authoritarian
Family-like Bonds -Chief Executive Officers centralize most decision-making
-Strong family-like bonds among employees
This chart is extracted from the origin and function of dynamic collectivism: an analysis of Korean corporate
culture p. 73-77
8
and the existence of cross-debt guarantees among member firms (Baek et al. 2004:269). In
general, chaebols are perceived as family-controlled business groups and thus are kinds of
business groups as a collection of firms bound together in some formal and/or informal ways,
characterized by an intermediate level of binding, namely, neither bound merely by short-
term strategic alliances nor legally consolidated into a single entity (Granovetter 1994).
Strong leadership and sound economic planning of the military government lead to the
remarkable economic growth of Korea with the efforts of the private business sector (Yoo and
Lee 1987:95). In the late 1950s Hyundai, Samsung, and Lucky-Goldstar (LG) were
established by self-made founders through governmental support, in the 1960s Hanjin, Korea
Explosive, Hyonsung, Sangyong, and Dong-A came about due to foreign loans, and in the
1970s Daewoo, Sunkyung, Lotte, Kolon, and Doosan were formed during the economic
boom (Yoo and Lee 1987:96). Chaebols contributed significantly to Korea’s economic
growth since these groups became dominant during the mid-1960s; and chaebols are highly
stable over time with characteristics of family-orientation and centralized control (Ferris
2003:254-5). The cultures of chaebols can be described as; “clan management, top-down
decision making, flexible lifetime employment, a Confucian work ethic, paternalistic
leadership, loyalty, compensation based on seniority and merit rating, bureaucratic conflict
resolution, a very bureaucratic yet low degree of formality and standardized systems, close
government-business relationship, expansion through conglomeration”(Yoo and Lee
1987:105).
Case Study
In order to seek for better understandings in different cultures, qualitative research
interviewing was conducted with four respondents who recently work for Samsung or LG.
The questionnaire consisted of three types of categories; multiple choice questions, yes/no
questions and rating questions on the basis of previous study
13
. The research questions and
strategies arose from the areas where these employees experience Korean culture differences;
such as , flexibility, communication with colleagues ( Korean language necessary),
management system ( Hierarchy due to Confucianism), ?? culture (drinking after work),
long working hours (not just due to work engagements but because boss does not leave early
and therefore you are unable to do so), networking inside the company (based on regional,
13
Cho. Sang Mi. 2009.The effects of diversity on organizational behavior in a perceived
homogenous society: the case study for Korea. Ph.D thesis. The University of Southern California
9
educational grounds etc), religious tolerance. Also the individual factors; education,
nationality, age, were reflected on the brief demographic profile section.
? Interviewee 1 (Male, 36): He is originally from India, yet he has a multi-national
background since he got educated from UK and had working experiences in Finland.
He is supervisor/manager level and joined Samsung 5 months ago. He has difficulties
with language since he barely speaks Korean, and in the working place colleagues
are sending emails in Korean or having a meeting in speaking Korean gives him a
culture shock. He is not able to have sense of belongings. He expects two years to
live in South Korea from now.
? Interviewee 2 (Male, 34): He is Indian American and lives in South Korea for 10
years. He speaks perfect Korean. It has been two years since he worked for Samsung.
He loves to live South Korea, but doesn’t like to work for Samsung. He characterizes
colleagues as “Yes Man” and he expects he will stay at Samsung for three months or
ten more years. He tries to keep balance between working life and personal life
because he puts more value on his social life outside of the office.
? Interviewee 3 (Male, 42): He is Korean American and worked for LG for three years
and left in 2011. He has lived in South Korea for five years but he plans to go back to
states within one year. The main difficulties come from lack of Korean language
skills, and more importantly Koreans perceive him as a Korean, not a foreigner,
because of his appearance which means Koreans are really consider cultural
differences when working with him just treat him like native Koreans. He described
colleagues as “Hard worker” “?? (get a sense of moods)” “tiresome” “political”
“no personal life”.
? Interviewee 4 (Male 29): He is from UK, and works for LG for 5 months. He has
lived in South Korea for 4 years. He thinks he will stay at LG for 2~5 years. He got a
culture shock when having an job interview, an interviewer asked him how much he
could drink three times consecutively. As he answered, the interviewer wrote it onto
the evaluation form. Although he is intermediate level of Korean language, still the
main challenge comes from language barriers. He advises that Korean colleagues
should “be less Korean” because their potentials and creativity are restricted. He
underlines Korean colleagues get burdened by its culture.
The first finding is that cultural shocks have been found in all of those four interviewees
regardless of the duration of living in South Korea and the fluency of Korean language. The
potential for culture shock is present each time a person changes cultures, and even the
seasoned bicultural person, aware of the hazard, faces disorientation in a new society and a
reverse culture shock when he returns to his parent culture. Besides, the origin of country or
the background of education is mostly western countries US and UK although the ethnicity of
10
each interviewee differs. Thus the first finding shows they were affected by the fundamental
nature of cultural differences because life in a foreign culture leads to misunderstandings and
ethnocentric responses and also to culture shock (Berry 2002).
Meanwhile the second finding, living in South Korea is relatively satisfying comparing to
working in Korean chaebols, implies that there are something uniqueness about the
surrounding cultures of chaebols and the unique culture cannot embrace foreign staffs
because they point out the main problem comes from no sense of belongings between foreign
staffs and Korean staffs. It proves that there is a strong tendency to discriminate against out-
group. Particularly the ?? culture roots in hierarchical and paternalistic leadership, and
therefore, foreign staffs cannot understand why Korean staffs are not able to detach
themselves from company. Moreover, two of respondents mention about the lack of trust
even amongst Korean staffs since the protection regulations are too strict. To understand this,
social climate of how chaebols has been formed throughout South Korean history should be
considered as a main factor.
Lastly, the third finding is that all of those four interviewees feel comfortable when
working with non-Korean colleagues. Reversely, it shows that foreign staffs might be not
fully aware of cultural legacy and have difficult time when co-working with Korean
colleagues. On the basis of Confucianism and ethical norms, Korean tend to be individualistic
to out-group for Koreans, thus it brings out competitiveness between in-group and out-group.
Also the characteristics of Korean society in general like networking and high-context society
would hinder the integrity of foreign staffs and Korean staffs, and the unique features of
chaebols such as paternalistic and authoritarian corporate leadership and their demands for
strong family-like bonds among employees make foreign staffs more questioning whether
they are able to stay further than their contract.
Conclusion
A corporate culture can be defined as a set of values, beliefs, goals, norms, and ways of
solving problems that members/employees of an organization share (Ferrell, Fraedrich,
Ferrell 2008:126). Culture in Korean chaebols play a significant role in shaping the values as
well as behavioral patterns, concepts, internal rules of behavior, which represents their own
culture. Chaebols droves the rapid growth of South Korean economy and now they are
outgrown into global companies. What determines their sustainability? The recent
phenomenon, the high turnover rate, among foreign staffs in Korean chaebols proves that the
chaebol cultures are not easily accepted or not favorably perceived by foreign staffs. In a long
term, it will affect the low efficiency of performance in chaebols. Thus it is necessary for
11
chaebols to integrate foreign staffs through multicultural approach.
The significance of shared understanding of each other can be achieved through active
cross-cultural communications. The dynamics of both chabols and culture are acknowledged
and globalized chabols modifies both corporate behavior and culture. The shared
understanding will consequently represent the extent to which the work values, norms,
problem solving approaches and so on. The paper suggest that chabols should cultivate
multicultural working environment rigorously.
Chaebols should take enormous efforts to bring about formidable culture so that they can
maintain their brand value internationally. First of all, cheabols should encourage an open
sharing of ideas and information, displaying fundamental respect for each other as well as the
cultural diversity. Secondly, chaebols should make employees take ownership and accept
accountability for achieving end results, and empower team members to do the same. In the
meantime, chaebols should take care of employees’ minds by listening to them and caring
enough to hear their concerns. Lastly, the leadership in chaebols should provide direction,
purpose, support, encouragement, and recognition to achieve the common vision, meet the
objective and the values.
12
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doc_659708715.pdf
Understanding Cross Cultural Communications in the Business Sector of South Korea:
Case Study for Foreign Staffs in Korean Chaebols
By Hwajung Kim (December 2013)
Introduction
Samsung has been ranked 8
th
on the 2013 Interbrand Best Global Brand list, and Hyundai is
included within top 50
th
on the same list
1
. Samsung Electronics has been placed in the 35
th
“Most Admired Company” conducted by Fortune Magazine in 2013
2
. Also, according to
LEAD report
3
, Samsung Electronics Co. has been ranked at the top with an estimated value
of 116 trillion won, followed by Hyundai Motor Co. with a brand valued worth 30 trillion
won
4
.
Korean business conglomerate like Samsung and Hyundai are referred to as “Chaebols”,
and they have been undoubtedly exerted enormous influence on South Korea’s fast-growing
economy and made it possible for “the Miracle of the Han River” along with “strong
government leadership” and “sound economic planning” (Yoo and Lee 1987:95). Particularly
Hyundai, Samsung and LG (Lucky-Goldstar) were established in the late 1950s with support
of government. Chaebols have somewhat unique structure of ownership, family-orientation
and centralized control (Ferris 2003:255), and they are also characterized by an extensive
arrangement of pyramidal or multi-layered shareholding agreements and the existence of
cross-debt guarantees among member firms (Baek et al. 2004:269). These characteristics
have formed its corporate culture and the management styles, such as, clan management, top-
down decision making, Confucian work ethic, paternalistic leadership and so forth (Yoo and
Lee 1987:105).
At the end of last year, Samsung Electronics employed 90,700 workers and Hyundai
1
http://www.interbrand.com/en/best-global-brands/2013/Best-Global-Brands-2013.aspx
2
http://money.cnn.com/magazines/fortune/most-admired/2013/list/?iid=wma_sp_full
3
A survey of 2,000 people from 60 countries that reflected their perception of each country,
conducted by the Institute for Industrial Policy Studies
4
http://english.yonhapnews.co.kr/search1/2603000000.html?cid=AEN20131106005851320
2
Motor Company employed 59,831.
5
These two companies are Korea’s top two in
employment. In the meantime, according to Sustainable Report 2009
6
, Samsung achieved 48%
in locally-hired foreign workers as a percent of the total workforce. Approximately, 236,000
employees in 79 countries around the world work for Samsung, and Samsung culture is
getting diverse
7
. It is said that “Creative Organization Culture”, “Diversity Management” and
“Global Diversity” in Samsung Electronics Sustainability Report 2012
8
. However, foreign
staffs seemed not to be well incorporated with chaebol cultures because the number of
foreign employee turnover has increased substantially (Cho 2009). Employee turnover in
organization can be driven by “certain identifiable characteristics of workers, tasks, firms,
and markets, and that, by developing policies to address these characteristics”, thus it is
significant to see how to reduce the occurrence of turnover to raise efficiency in their
respective organizations (Zeynep and Huckman 2008
9
).
Then, why does it happen to foreign staffs in chaebols? Does the lack of cultural
understanding matter? If so, it is important to have theoretical backgrounds about cross
cultural communications and to seek for the role of culture in the business sector. Also it
needs to be addressed such as what are characteristics of chaebol cultures, which factors
determines the chaebol cultures, and how the chaebol cultures affect foreign staffs. In doing
so, the paper firstly provides a brief overview of Hofstede’s five dimensions of cultures and
the concept of organization culture, Trompenaars’ four characteristics of corporate cultures,
and Cho&Yoon’s dynamic collectivism of Korean corporate culture. Then, the paper explains
how cross cultural communications can be incorporated with cultural understanding in
Korean chaebols. Also the paper conducts a research on whether better cultural understanding
of Korea would result in better efficiency amongst the foreign employees in chaebols like
Samsung, L.G, and Hyundai. Next, the paper reviews findings, research accomplishments
5
http://english.khan.co.kr/khan_art_view.html?code=710100&artid=201309121705037
6
Samsung Electronics. Integrity Management. Respecting Global Diversity pp.24-27.
http://www.samsung.com/us/aboutsamsung/sustainability/integritymanagement/download/Respect
ingGlobalDiversity.pdf
7
http://job.samsung.ru/lifestyle/article1.aspx
8
Samsung Electronics. Global Harmony with People, Society & Environment. pp.22-25.
http://www.samsung.com/us/aboutsamsung/sustainability/sustainabilityreports/download/2012/201
2_sustainability_rpt.pdf
9
http://frank-j-hernando.blogspot.kr/2012/08/south-korea-foreign-workers-policy-eps.html
3
and challenges, and then the paper analyzes the importance of cultural understanding through
profound and enduring cross cultural communications. Finally, the paper provides direction
for cultural understanding methods in order to integrate foreign staffs into Korean corporate
cultures.
Literature Review
Considering that foreign staffs’ turnover rate increases, the paper takes the assumption of
cross cultural communications problems at the core because foreign employees in Korean
chaebols may have difficult time due to culture differences. It might be not only because
Korea chaebols tend to maintain their ethnic culture but because they persist their own
corporate cultures as well, meaning that foreign staffs would take double burdens from both
national culture differences and unique corporate cultures when working for Korean chaebols.
In this regard, the paper gives a brief overview of Hofstede’s cultural value dimensions and
the four characteristics of Trompenaars, and then the paper provides the concept of dynamic
collectivism of Cho&Yoon.
Hofstede: Five Dimensions of Culture and Organizational Culture
Hofstede defines culture as “mental programming/mental software
10
corresponds to a much
broader use of the word that is common among sociologists and, especially, anthropologists”
based on a country level actor analysis, he classified the original 40 countries along five
dimensions (Hofstede 2010:5). The five dimensions are as follow: firstly, individualism, the
degree of interpersonal, social connectedness; uncertainty avoidance, the degree of
discomfort with the unknown; secondly, masculinity, the degree to which achievement and
aggression are valued; thirdly, power distance, the degree to which differences in wealth and
other endowments are accepted; and lastly, Confucian dynamism, long-term versus short-
term orientation (Hofstede 2010). Although Hofstede’s five dimensions are criticized because
of being overly simplified and ignorant of its heterogeneity (Sivakumar and Nakata,
2001:557), it is no doubt that this five dimension framework has been widely used by a
number of researchers because of its clarity, parsimony, and resonance with managers.
From the perspective of social anthropology, Hofstede refers culture as “a catchword for
all those patterns of thinking, feeling, and acting”, thus culture includes not only activities
supposed to refined the mind are included” but also “the ordinary and mental things”
(Hofstede 2010:5). Additionally, he underlines the personality of an individual isn’t
10
Both terms can be used interchangeably
4
necessarily shared with any other human being because the personality is a unique set of
mental programs (Hofstede 2010:5). Also he defines the characteristic of organizational
culture by saying “corporate culture is a soft, holistic concept with, however, presumed hard
consequences” (Hofstede 2010:47). While sociologists emphasize the role of the soft factor in
organizations, Hosfstede differentiates organizational cultures from nation cultures. He
underlines that “organizational cultures are a phenomenon by themselves, different in many
respects from that of a nation […] national cultures and their dimensions proved to be only
partly useful for the understanding of organizational cultures” (Hofstede 2010:47).
Therefore, Hofstede tries to explain what factors affect planning and control process in
organization and develops the plotting charts associating power distance(PDI) with
uncertainty avoidance(UAI)
11
(Figure 9.1 pp.303). He underpins that the position of a
country in that chart shows the country’s way of solving organizational problems (Hofstede
2010:302); because, he argues, “there is empirical evidence for the relationship between a
country’s position within the PDI-UAI matrix and models of organizations implicit in the
minds of people from those countries that affect the way problems are tackled” (Hofstede
2010:303). The way how national PDI and UAI affect planning and control processes in
organizations has been summarized in Table 1.
Table 1. How PDI and UAI Affect Organization Cultures
1 Higher PDI supports political rather than strategic thinking.
2 Higher PDI supports personal planning and control rather than impersonal systems.
The higher in the hierarchy, the less formal the planning and control.
3 Lower PDI control systems place more tryst in subordinates; in higher PDI cultures
such trust is lacking.
4 Higher UAI makes it less likely that strategic planning activities are practiced because
these activities may call into question the certainties of today.
5 Higher UAI supports a need for more detail in planning and more short-term
feedback.
6 Higher UAI implies leaving planning to specialists.
7 Higher UAI implies a more limited view of what information is relevant.
This chart extracted from Pyramids, Machines, Markets, and Families: Organizing Across
Nations, (Hofstede 2010:316)
Trompenaars: Four Characteristics of Corporate Cultures
Trompenaars emphasizes the essence of culture lies on “the shared ways”, whereas Geert
11
Refer the Figure 9.1 in Cultures and Organizations p.303
5
Hofstede defines culture as mental programs, so that groups of people can understand and
interpret the world; thus, it is significant not to consider culture as “what is visible on the
surface” (Trompenaars 1998:3). Since the culture is the shared system of meanings,
Trompenaars stresses that culture determines people’s interests/attentions, behavior, and value.
He argues that “culture organizes such values into what Geert Hofstede calls mental programs
[…] the behavior of people within organizations is an enactment of such programs […]
cultures structure the perceptions of what they experience”(Trompenaars 1998: 13). The
shared meanings are the core of culture, are incorporated into people within a culture and
cause them to interpret things in particular ways. But the shared meanings can transcend the
people in the culture meaning that they are “open to be changed if more effective solutions to
problems of survival are desired by the group” (Trompenaars 1998: 27).
Also he points out international managers should take the balance between consistency
and adaptation to the local characteristics for corporate success since universal application of
western management theory has been challenged. Therefore, more knowledge of cultural
patterns should be thoroughly considered for the internationalization of business life because
“Culture is like gravity: you do not experience it until you jump six feet into the air. […] in
practice, though, beneath the surface, the silent forces of culture operate a destructive process,
biting at the roots of centrally developed methods which do not fit locally” (Trompenaars
1998: 5).
He criticizes organizational theory in that it did not measure the effects of national culture
although the theory introduced the environment as an important consideration. In particular,
the cultural environments should be taken into consideration because culture is “the way in
which a group of people solves problems and reconciles dilemmas” (Trompenaars 1998: 6).
In this regard, Trompenaars sorts out the basis of cultural differences: relationships with
people, universalism versus particularism, individualism versus communitarianism, neutral
versus emotional, specific versus diffuse, achievement versus ascription, attitudes to time,
attitudes to the environment (Trompenaars 1998: 8-10).
Not only technologies markets but cultural and preferences of leaders and employees
affect organizational culture. Trompenaars clarifies three determining factors for corporate
culture; firstly, the general relationship between employees and their organization; secondly,
the vertical or hierarchical system of authority defining superiors and subordinates; thirdly,
the general views of employees about the organization’s destiny, purpose and goals and their
places in this (Trompenaars 1998: 162). He specifies four different characteristics of
corporate culture (Table 2), and describes national patterns of corporate culture within the
four characteristics
12
.
12
Refer the Figure 11.5 in Riding the Waves of Culture p.184
6
Table 2. Four Characteristics of Corporate Cultures
Family
=Hierarchical
Eiffel Tower
=Egalitarian
Guided missile
=Task
Incubator
=Person
Ways of
thinking and
learning
Intuitive,
holistic, lateral
and error-
correcting
Logical,
analytical,
vertical and
rationally
efficient
Problem-
centered,
professional,
practical, cross-
disciplinary
Process-
oriented,
creative, ad hoc,
inspirational
Ways of
changing
“Father”
changes course
Change rules
and procedures
Shift aim as
target moves
Improvise and
attune
Criticism and
conflict
resolution
Turn other
check, save
others’ faces, do
not lose power
game
Criticism is
accusation of
irrationality
unless there are
procedures to
arbitrate
conflicts
Constructive
task-related
only, then admit
error and correct
fast
Must improve
creative idea,
not negate it
This chart is extracted from Riding the Waves of Culture p.183
Cho & Yoon: Three Factors of Dynamic Collectivism
Cho&Yoon raises the different views on South Korea comparing to Hosfstede and
Trompenaars. Those two western scholars described Korea as one of the most collectivist
countries in the world and imply that the corporate culture of Korea is even more collectivist
than that of Japan; however, Japanese scholars point out that “Korean companies are more
competitive, individualistic and dynamic than Japanese ones” (Cho&Yoon 2001:71). Given
the fact that there are paradoxical features in Korean corporate cultures, Cho&Yoon
introduces dynamic collectivism, meaning collectivist norms for in-group members and
individualistic ones for out-group members, as a heuristic device to understand corporate
culture in Korea. Cho&Yoon explains competition between in-group and out-group has been
amplified and in turn the competition generates dynamic and competitive features of Korean
corporate culture. Three factors of dynamic collectivism are as follow: cultural legacy,
traditional culture embedded mainly in Confucian values; social climate, socio-political
situations created by the regime of General Park Jung-Hee since 1961; and corporate
leadership, paternalistic leadership of Chaebol founders. Cho&Yoon suggest that all three
factors form the environment of corporate culture (Cho&Yoon 2001:72).
7
The three dimensions of dynamic collectivism boost the dynamic nature of collectivism in
Korea by intensifying inter-group boundaries and competition. Its dynamic nature can
develop also from tension among the three dimensions. Both in-group harmony and hierarchy
favor a static social order, for example, but optimistic progressivism pushes for change. Two
root metaphors are family and military. Koreans have adopted a paradigm in which
organizations are like families as well as armies. This is a natural consequence of cultural
values socialized in the family and of experiences in the military. The Korean family is the
source of social bonds and value higher education (Cho&Yoon2001:79).
Searching for Defining Corporte Cultures of Korean Chaebols
The term chaebol refers to the whole business group as a unit consisting of numerous
members or affiliate companies (Lee, Kim and Lee 2010: 415) owned and managed by family
members or relatives in many diversified business area (Yoo and Lee 1987:97). They are,
therefore, characterized by an extensive arrangement of pyramidal shareholding agreements
Table 3. Three Factors of Dynamic Collectivism
Cultural Legacy Emotional Harmony
Gibun (??), save the face (??)
Hierarchy -Confucianism and ethical norms
-Interpersonal relationships are defined in terms of social status:
gender, age and position in the society
-Harmonious relationships are built on seniority
Discrimination
against Out-Groups
-A strong tendency to distinguish themselves from others
- Individualistic/egoistic to out-group For Koreans
Networking -Most trust for members of their own families and a high level of
trust for high-school classmates and people form same region
High-Context Society -Long history as a relatively homogeneous ethnic group
Social Climate Korean War -After WWII, the Korean peninsula was divided in two and
suffered from a devastating war
Military Government -Tensions between the North and South
-Growth-driven policies of a military government
-Military way, can-do spirit and result-oriented
Preference for
Western Ways of
Thinking
-Lack of natural/financial resources and industrial technology
-Dependence on other industrialized countries or regions
-Preference for Western ways of thinking, at least among the elite.
Corporate
Leadership
Chaebols -The power and leadership of their founders
-Family-controlled management and entrepreneurial orientation
-Paternalistic and authoritarian
Family-like Bonds -Chief Executive Officers centralize most decision-making
-Strong family-like bonds among employees
This chart is extracted from the origin and function of dynamic collectivism: an analysis of Korean corporate
culture p. 73-77
8
and the existence of cross-debt guarantees among member firms (Baek et al. 2004:269). In
general, chaebols are perceived as family-controlled business groups and thus are kinds of
business groups as a collection of firms bound together in some formal and/or informal ways,
characterized by an intermediate level of binding, namely, neither bound merely by short-
term strategic alliances nor legally consolidated into a single entity (Granovetter 1994).
Strong leadership and sound economic planning of the military government lead to the
remarkable economic growth of Korea with the efforts of the private business sector (Yoo and
Lee 1987:95). In the late 1950s Hyundai, Samsung, and Lucky-Goldstar (LG) were
established by self-made founders through governmental support, in the 1960s Hanjin, Korea
Explosive, Hyonsung, Sangyong, and Dong-A came about due to foreign loans, and in the
1970s Daewoo, Sunkyung, Lotte, Kolon, and Doosan were formed during the economic
boom (Yoo and Lee 1987:96). Chaebols contributed significantly to Korea’s economic
growth since these groups became dominant during the mid-1960s; and chaebols are highly
stable over time with characteristics of family-orientation and centralized control (Ferris
2003:254-5). The cultures of chaebols can be described as; “clan management, top-down
decision making, flexible lifetime employment, a Confucian work ethic, paternalistic
leadership, loyalty, compensation based on seniority and merit rating, bureaucratic conflict
resolution, a very bureaucratic yet low degree of formality and standardized systems, close
government-business relationship, expansion through conglomeration”(Yoo and Lee
1987:105).
Case Study
In order to seek for better understandings in different cultures, qualitative research
interviewing was conducted with four respondents who recently work for Samsung or LG.
The questionnaire consisted of three types of categories; multiple choice questions, yes/no
questions and rating questions on the basis of previous study
13
. The research questions and
strategies arose from the areas where these employees experience Korean culture differences;
such as , flexibility, communication with colleagues ( Korean language necessary),
management system ( Hierarchy due to Confucianism), ?? culture (drinking after work),
long working hours (not just due to work engagements but because boss does not leave early
and therefore you are unable to do so), networking inside the company (based on regional,
13
Cho. Sang Mi. 2009.The effects of diversity on organizational behavior in a perceived
homogenous society: the case study for Korea. Ph.D thesis. The University of Southern California
9
educational grounds etc), religious tolerance. Also the individual factors; education,
nationality, age, were reflected on the brief demographic profile section.
? Interviewee 1 (Male, 36): He is originally from India, yet he has a multi-national
background since he got educated from UK and had working experiences in Finland.
He is supervisor/manager level and joined Samsung 5 months ago. He has difficulties
with language since he barely speaks Korean, and in the working place colleagues
are sending emails in Korean or having a meeting in speaking Korean gives him a
culture shock. He is not able to have sense of belongings. He expects two years to
live in South Korea from now.
? Interviewee 2 (Male, 34): He is Indian American and lives in South Korea for 10
years. He speaks perfect Korean. It has been two years since he worked for Samsung.
He loves to live South Korea, but doesn’t like to work for Samsung. He characterizes
colleagues as “Yes Man” and he expects he will stay at Samsung for three months or
ten more years. He tries to keep balance between working life and personal life
because he puts more value on his social life outside of the office.
? Interviewee 3 (Male, 42): He is Korean American and worked for LG for three years
and left in 2011. He has lived in South Korea for five years but he plans to go back to
states within one year. The main difficulties come from lack of Korean language
skills, and more importantly Koreans perceive him as a Korean, not a foreigner,
because of his appearance which means Koreans are really consider cultural
differences when working with him just treat him like native Koreans. He described
colleagues as “Hard worker” “?? (get a sense of moods)” “tiresome” “political”
“no personal life”.
? Interviewee 4 (Male 29): He is from UK, and works for LG for 5 months. He has
lived in South Korea for 4 years. He thinks he will stay at LG for 2~5 years. He got a
culture shock when having an job interview, an interviewer asked him how much he
could drink three times consecutively. As he answered, the interviewer wrote it onto
the evaluation form. Although he is intermediate level of Korean language, still the
main challenge comes from language barriers. He advises that Korean colleagues
should “be less Korean” because their potentials and creativity are restricted. He
underlines Korean colleagues get burdened by its culture.
The first finding is that cultural shocks have been found in all of those four interviewees
regardless of the duration of living in South Korea and the fluency of Korean language. The
potential for culture shock is present each time a person changes cultures, and even the
seasoned bicultural person, aware of the hazard, faces disorientation in a new society and a
reverse culture shock when he returns to his parent culture. Besides, the origin of country or
the background of education is mostly western countries US and UK although the ethnicity of
10
each interviewee differs. Thus the first finding shows they were affected by the fundamental
nature of cultural differences because life in a foreign culture leads to misunderstandings and
ethnocentric responses and also to culture shock (Berry 2002).
Meanwhile the second finding, living in South Korea is relatively satisfying comparing to
working in Korean chaebols, implies that there are something uniqueness about the
surrounding cultures of chaebols and the unique culture cannot embrace foreign staffs
because they point out the main problem comes from no sense of belongings between foreign
staffs and Korean staffs. It proves that there is a strong tendency to discriminate against out-
group. Particularly the ?? culture roots in hierarchical and paternalistic leadership, and
therefore, foreign staffs cannot understand why Korean staffs are not able to detach
themselves from company. Moreover, two of respondents mention about the lack of trust
even amongst Korean staffs since the protection regulations are too strict. To understand this,
social climate of how chaebols has been formed throughout South Korean history should be
considered as a main factor.
Lastly, the third finding is that all of those four interviewees feel comfortable when
working with non-Korean colleagues. Reversely, it shows that foreign staffs might be not
fully aware of cultural legacy and have difficult time when co-working with Korean
colleagues. On the basis of Confucianism and ethical norms, Korean tend to be individualistic
to out-group for Koreans, thus it brings out competitiveness between in-group and out-group.
Also the characteristics of Korean society in general like networking and high-context society
would hinder the integrity of foreign staffs and Korean staffs, and the unique features of
chaebols such as paternalistic and authoritarian corporate leadership and their demands for
strong family-like bonds among employees make foreign staffs more questioning whether
they are able to stay further than their contract.
Conclusion
A corporate culture can be defined as a set of values, beliefs, goals, norms, and ways of
solving problems that members/employees of an organization share (Ferrell, Fraedrich,
Ferrell 2008:126). Culture in Korean chaebols play a significant role in shaping the values as
well as behavioral patterns, concepts, internal rules of behavior, which represents their own
culture. Chaebols droves the rapid growth of South Korean economy and now they are
outgrown into global companies. What determines their sustainability? The recent
phenomenon, the high turnover rate, among foreign staffs in Korean chaebols proves that the
chaebol cultures are not easily accepted or not favorably perceived by foreign staffs. In a long
term, it will affect the low efficiency of performance in chaebols. Thus it is necessary for
11
chaebols to integrate foreign staffs through multicultural approach.
The significance of shared understanding of each other can be achieved through active
cross-cultural communications. The dynamics of both chabols and culture are acknowledged
and globalized chabols modifies both corporate behavior and culture. The shared
understanding will consequently represent the extent to which the work values, norms,
problem solving approaches and so on. The paper suggest that chabols should cultivate
multicultural working environment rigorously.
Chaebols should take enormous efforts to bring about formidable culture so that they can
maintain their brand value internationally. First of all, cheabols should encourage an open
sharing of ideas and information, displaying fundamental respect for each other as well as the
cultural diversity. Secondly, chaebols should make employees take ownership and accept
accountability for achieving end results, and empower team members to do the same. In the
meantime, chaebols should take care of employees’ minds by listening to them and caring
enough to hear their concerns. Lastly, the leadership in chaebols should provide direction,
purpose, support, encouragement, and recognition to achieve the common vision, meet the
objective and the values.
12
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