Korea is currently a front-runner among developing nations, getting closer to the ranks of developed nations. In the process of economic growth, a few dozen big business groups, of chaebols, have emerged. The fifty largest business groups account for as much as 20 percent of Korea’s gross domestic product (GDP), and the five largest business groups, such as Hyundai, Samsung, Lucky-Goldstar, Sunkyong, and Daewoo, account for as much as 10 percent of GDP (Korea Development Institute, 1982). This dominance of large business groups in the Korean economy is comparable to Japanese businesses, of which the six largest groups (Mitsui, Mitsubishi, Sumitomo, Fuyo, Sanwa, and Daiichikanging) accounted for 16.18 percent of 1,791 companies listed on the Tokyo Stock Exchange and 15.30 percent of total assets of these companies in 1983 (Hattori, 63, 1984a). The primary objective of this paper is to compare and contrast the family involvement in the companies and how it relates to ownership and management of the zaibatsu and the chaebol.

There are many different views on the definition of Japanese zaibatsu. Shigeaki Yasuoka (1985) defines zaibatsu as “a diversified business entity, invested and

It is well known that Korean chaebol groups have many affiliated companies under their control; but not many of them are listed on the Korean Stock Exchange. As a result, it is necessary to obtain business operation reports directly from the closed corporations to analyze the ownership structure of Korean chaebols. There were 319 companies listed on the Korean Stock Exchange in 1982. Of those, 150 companies belonged to forty-one chaebol groups, each with two or more affiliated business firms under the same family ownership. The family ownership of the forty-one chaebol groups averaged about 33 percent, about 18 percent through direct ownership and 15 percent through interlocking ownership among affiliated companies. The family ownership in the nonchaebol companies averaged about 24 percent (Hattori, 1984a). The tendency is that the large size chaebol results in larger shares of the family ownership.

The difference in the concept of family in Japan and Korea has an important implication to the family inheritance and to the ownership structure of zaibatsu and chaebols. In Korea, the family inheritance is strictly based on the blood relationship, with the eldest son given the priority. This system is called “the unequal inheritance favoring the eldest son” (Lee, 1975). In Japan, however, the concept of ieh is applied to family inheritance, and its primary purpose is to maintain the wealth of the family under the leadership of a capable person rather than to bequeath the wealth only to the blood-related family. Therefore, the family wealth may be bequeathed to an adopted son with no blood relationship or to an in-law. In other words, under the ieh concept, the head of the family is not as much the successor of blood lineage as the one who takes the leadership role in the family (Hiroshi, 1967).

Mitsubishi Group. As of 1983 the President Club, called Kinyokai, consists of the presidents of twenty-eight group companies. The mutual stock ownership ratio is 24.39 percent, with Mitsubishi Trading, Asahi Glass Company, and Mitsubishi Heavy Industries holding relatively high shares. Meiji Life Insurance, Mitsubishi Bank, and two other financial firms held 62 percent of the entire group-company shares (Mishima, 1981). Although the ratio of the mutual stock ownership among group companies is somewhat higher, the overall ownership structure over many subsidiary and affiliated companies is similar to Mitsui.

The source of management power is clearly in the hands of tobagi executives, or professional career managers. The tobagi executives account for over 70 percent in terms of number, as compared to 4.7 percent for the owner’s family members and 25 percent for those hired from other organizations. Tobagi executives are also strongly represented in the power structure with over 65 percent as compared to 12.3 percent for the owner’s family members. The power ratio between tobagi and nontobagis (owner’s family members and outside hires) in Samsung is 318 to 170 in terms of the power-index score (KDI, 1982). This ratio indicates that Samsung has the highest degree of professionalization in the management structure among the largest Korean chaebols.

Daewoo Group. The Daewoo group has a somewhat unusual ownership structure. The ownership share of founder W.C. Kim and his family appears to be 41.8 percent, but 40.74 percent is owned by affiliated companies and the Daewoo Foundation. The share directly owned by the founder and his family is only 1.06 percent, which stems entirely from 7.45 percent ownership in the Choongbook Bank. The founder and his families do not own any stocks of any other affiliated companies listed on the Korean Stock Exchange. This is a truly exceptional case of ownership structure among Korean chaebols (Hattori, 1982).

Some topics in this essay:
Stock Exchange, Mitsui Sumitomo, Mitsubishi Mitsui, Japan Korea, Mitsubishi Sumitomo, War II, Korea Japan, Shinichi Yonekawa, KH Lee, Daewoo Foundation, affiliated companies, korean chaebols, ownership management, professional managers, subsidiary affiliated, ownership structure, subsidiary affiliated companies, japanese zaibatsu, family ownership, mitsui mitsubishi, holding company, mitsui mitsubishi sumitomo, japanese zaibatsu korean, korean stock exchange, listed korean stock,