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Managing diversified firms through socio-cultural mechanisms : A focus on Korean Chaebols

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Frame of Image al performance. In addition, sociocultural mechanisms appear to have unequal effects on the corporate performance in societies with different cultural contexts. Statistical results show that socio-cultural mechanisms worked better in chaebols than in large U.S. firms, possibly because such mechanisms positively interact with high-context culture. Key words: Diversified Firm, Chaebol, Socio-cultural Mechanism, Shared Value, Inter-divisional Interaction
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* Dr. Ji-Hwan Lee, Assistant Professor of Strategic and International Management, Korea Advanced Institute of Science and Technology, 207-43 Cheongryangri 2-dong, Dongdaemoon-gu, Seoul 130-722, Korea. Phone: +82-2-958-3616, e-mail: jihwanlee@kgsm.kaist.ac.kr. Article received: April 1, 2006 Revised version accepted after double blind review: January 15, 2007.
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management revue, 18(1): 23-41
ISSN (print) 0935-9915, ISSN (internet) 1861-9916, © Rainer Hampp Verlag, www.Hampp-Verlag.de
24
Ji-Hwan Lee: Managing Diversified Firms through Socio-Cultural Mechanisms
1. Introduction
Theories from the strategy literature suggest that there is a limit to how much a firm can diversify, and, indeed, many large U.S. firms seem to have reached this limit in the early 1980s. The high level of diversification led to poor performance, and this, in turn led to massive wave of refocusing (Bowman/ Singh 1990; Markides 1995). However, in Korea, most business groups – called “chaebo


Full Text
Title Managing diversified firms through socio-cultural mechanisms
Similar Titles
Sub Title

A focus on Korean Chaebols

Material Type Articles
Author(English)

Lee, Ji-hwan

Publisher

Mering:Rainer Hampp Verlag

Date 2007
Journal Title; Vol./Issue Management Revue:vol. 18(iss. 1)
Pages 20
Subject Country South Korea(Asia and Pacific)
Language English
File Type Documents
Original Format pdf
Subject Economy < Economic System
Industry and Technology < Manufacturing
Industry and Technology < Entrepreneurship
Holding EconStor

Abstract

Based on theoretical considerations, this article investigates the socio-cultural mechanisms through which diversified firms are effectively managed without loss of control. Empirical results from extensive questionnaire surveys in Korea and the U.S. show that socio-cultural mechanisms such as shared values and corporate-level training were significantly and positively associated with divisional performance. In addition, sociocultural mechanisms appear to have unequal effects on the corporate performance in societies with different cultural contexts. Statistical results show that socio-cultural mechanisms worked better in chaebols than in large U.S. firms, possibly because such mechanisms positively interact with high-context culture.