BEIJING ¨C Back in 2006, after Chung Mong-koo, chairman of Hyundai Motor Co. Ltd. and son of its founder, was arrested amid one of South Korea¡¯s recurring corruption scandals, I called a friend in the company¡¯s public relations office. He answered in a breathless panic. Without Chung in the driver¡¯s seat, he assured me, the management of South Korea¡¯s largest automaker would be adrift.
At the time, I saw his warning as spin, an attempt to sway the South Korean government to back off Chung. (If so, it worked: Chung was pardoned two years later.) But in my 20 years watching South Korea¡¯s family-run business groups, known as ¡°chaebol,¡± I¡¯ve come to realize my friend was telling the truth.
The much-maligned conglomerates that dominate South Korea¡¯s economy may be facing investigations, pressure from foreign shareholders and unprecedented public anger. But unless the culture that binds management, investors and other stakeholders to South Korea¡¯s corporate system changes dramatically, the chaebol will almost certainly survive.
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