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Coordination and industrial organization : South Korea's chaebols versus Taiwan's small enterprises

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  • Coordination and industrial organization
  • Yu, Tony Fu-Lai
  • The Association of Korean Economic Studies


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Title Coordination and industrial organization
Similar Titles
Sub Title

South Korea's chaebols versus Taiwan's small enterprises

Material Type Articles
Author(English)

Yu, Tony Fu-Lai

Publisher

[Seoul]:The Association of Korean Economic Studies

Date 2000
Journal Title; Vol./Issue The Journal of the Korean Economy:vol. 1(no. 2)
Pages 27
Subject Country South Korea(Asia and Pacific)
Taiwan(Asia and Pacific)
Language English
File Type Link
Subject Industry and Technology < Entrepreneurship
Holding AKES

Abstract

This paper compares South Korea's chaebols and Taiwan's small family firms in the evolutionary perspective. Given that all firms exist in order to solve coordination problems, this paper attempts to examine how these two types of latecomer firms deal with uncertainty and knowledge problems. This paper shall argue that in rapidly changing conditions, vertical integration enables Korean chaebols to facilitate communications between departments and to reduce uncertainty by fixing a focal point or by arranging preplay communications. In horizontal diversification, Korean chaebols behave as professional learners and are able to transfer 'overhead' capabilities to unrelated businesses, thus rapidly exploiting economies of scale in mature industries. On the contrary, firms in Taiwan use their small size and hence flexibility to deal with uncertainty. Moreover, being small family establishments, these firms are able to manipulate family trust so to reduce transaction costs. (The rest omitted)