The Vanguard
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The Vanguard

The State of South Korean Entrepreneurship

Source: LA Times

South Korea has long been considered an economic miracle. Though tormented by the Korean War, South Korea achieved exponential growth post-war, known as the Miracle on the Han River, becoming the 7th largest exporter in the world. One of the strongest factors that lead to this “miraculous” growth is the prioritization of education. South Korean emphasis on higher education and efficiency spurred numerous engineers and highly-motivated intellectuals, who buttressed the industrialization of the Korean economy. According to the OECD 2012 PISA test results, South Korea ranked 5th overall in mathematics, reading, and science and 2nd overall in problem-solving skills.

However, due to heavy reliance on the global economy and conglomerates, South Korea is in dire need of transition from an export-led economy to a service-dominant economy. Since 2013, Park Geun Hye, current president of South Korea, began economic initiatives, spending $176 million on startups and $300 million on mergers and acquisitions in order to revive the Korean economy into so-called “Creative Economy.” From the surface, Korea seems to benefit from the implementation. According to South Korea’s Small and Medium Business Administration, the number of startups surged from 2,000 in 1999 to 30,000 in early 2015. From the numerical values, South Korea may seem to reinvented its economy.

Despite the impressive number, Korea is still in the premature stage, in terms of entrepreneurship, due to its traditional cultural principles. One of the key characteristics of Korean businesses is a highly centralized and bureaucratized managerial structure. From Korean Management: Global Strategy and Cultural Transformation, Professor Kae H. Chung mentions that an authority is centered towards the upper level of the managerial hierarchy, suppressing individualism, an important component of entrepreneurship; ideally, as Jonathan Rosenberg states on his book How Google Works, “when it comes to the quality of decision-making, pay level is intrinsically irrelevant and experience is valuable only if it is used to frame a winning argument.” Moreover, Ahmed and Ghulam concluded from their research that, in order to increase individual’s entrepreneurial propensity, organizations should offer good and timely rewards, resources, autonomy and empowerment to employee, and supportive structures.

The traditional Korean beliefs not only influence the corporate environment, but also impact the education. The cultural norm often suppresses students to adapt conformity and to perform in a highly competitive academic environment. In 2013, almost 70 percent of students from grade one to twelve partook in for-profit afterschool academic programs, known as cram schools or “Hagwon,” spending over $18 billion. Hence, Korean society and work environment place excessively high value on graduating from top three universities in Korea, known as SKY — Seoul National University, Korean University, and Yonsei University. Not surprisingly, a survey conducted by The Korea Bang Jeong-hwan Foundation in 2014 revealed that Korean children ranked lowest in the subjective happiness level. If the current situation pervades, South Korea will create a vicious cycle that suppresses talented individuals who would want to expand their entrepreneurial pursuits.

By: Sam Lee

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The Vanguard is an online publication affiliated with the Claremont Colleges bringing student perspectives on current events in entrepreneurship.

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The Vanguard

The Vanguard

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The Vanguard is an online publication affiliated with Claremont McKenna College where we try to bring student perspectives to current events in entrepreneurship