The State Matters: Management Models of Singaporean Chinese and Korean Business Groups

Abstract

Both the proponents and critics of Asian economic organization have been preoccupied with the ideal-typical management models of family businesses, and have rarely identified their changing management structures. We, instead, identify the change and continuity in these management structures through an analysis of family-controlled business groups in Singapore and South Korea before and after the Asian currency crisis. In our view, these business groups professionalized their management, but retained family control and corporate rule before the crisis. The crisis, however, increased the pressure on such groups to relinquish family control and corporate rule. Singaporean Chinese business groups tended to loosen their tight grip on corporate rule by absorbing more professional managers into their upper echelons. The surviving Korean chaebol, however, intensified family control. Only a few chaebol, which were on the brink of bankruptcy, relinquished corporate rule to professional managers. We argue that other than the market, cultural, and institutional factors as suggested in the existing literature, state capacities and strategies do matter in shaping the changing management structures of business groups. Drawing on our analysis, researchers will be able to conduct comparative studies of family businesses across East Asian societies, of organizational imitation, and of the role of the state in influencing management models.

Future research on human resource management systems in Asia

“…Similarly, there is information available regarding different aspects of managing human resources in different countries of the region (see Budhwar, 2004). For example, the Japanese employment system and the management models of Singapore, Chinese and Korean businesses are now explored in the literature (see Isobe, Makino, & Goerzen, 2006;Rowley, 1998;Tsui-Auch & Lee, 2003). However, in the present context, the validity of a number of such established ideal-typical management models is questionable.…”

“…These business groups have deep roots in the core institutions (such as family structure, Confucianism), and socio-cultural background of their respective societies and accordingly have their own HRM systems (see Begin, 1997;Rowley, 1998;Yang, 2006). The economic crisis of late 1990s and the present competitive environment have raised questions regarding the validity of such ideal-typical family business management models in the present context (see Tsui-Auch & Lee, 2003;Tu, Kim, & Sullivan, 2002;Wang, Huang, & Bansal, 2005). Before the economic crisis, such groups, although professionalized their management systems, retained family control and corporate rule.…”

Institutions and entrepreneurship development: High-technology indigenous firms in China and Taiwan

“…Methodologically, our objective was to ensure we had an accurate depiction of the growth process of the firms. Owing to the fact that it was impossible to gain unlimited access to the informants from the sample firms, this paper follows Rindova and Kotha (2001), Siggelkow (2001), and Tsui-Auch and Lee (2003), who grounded their research mostly on data from secondary sources, drawing on publicly available publications, newspaper and magazine articles, teaching cases from various business schools, and scholarly writings. The findings of ATSD, Lenovo, and Acer were derived both from field visits and secondary data; while those of Great Wall, UMC, and VIS, were from secondary sources.…”

A Multicultural Joint Venture Under the Post-Developmental State in Singapore

“…The ruling elite had few ties with domestic capitalists and did not put much trust in the many small Chinese businesses that characterized early post-colonial economy (Chan, 2000;Tsui-Auch & Lee, 2003). Local capital -mainly invested in trade, commerce, retail and real estate -was largely synonymous with unproductive rent-seeking activities.…”