Strategic Investment Policy in a Growing Market: Factors for the Management Strategy of Korean Firms in China
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Strategic Investment Policy in a Growing Market: Factors for the Management Strategy of Korean Firms in China Ki-An Parka, Chan-Kyung Kimb and Joon-Young Limc Kyung-Hee University, Seoul, 130–70, South Korea. E-mail: [email protected], [email protected], [email protected]
This paper reviews the factors determining the types of management strategies of Korean firms in China and identifies their relative importance. For the verification of the relationship between influencing factors and preference of management strategy type, variables are classified into two groups: independent variables and dependent variables. Independent variables comprise components related with the social– cultural value system of Chinese employees and the political–legal structure of China. Dependent variables are internally and externally oriented management strategies. The relationship between the management strategy of South Korean firms and the environment factors of social-culture and political law in China is tested empirically. The result shows that South Korean firms have been influenced by the obstacle elements of the social–cultural environment more than those of political– legal ones. Several factors like ‘inconsistent application of law’, and ‘corruption of public officials’, etc, are regarded as the obstacle elements of the political–legal environment. Among the difficult factors of the social–cultural environment, more influencing ones are revealed as ‘lack of communication between management and labor’, ‘lack of employee’s responsibility for their tasks’, ‘excessive demands of wage allowances over productivity’, and ‘employees’ immature work attitudes’, etc. Surely, this has resulted from the immature capitalism of China. Asian Business & Management (2002) 1, 59–77. DOI: 10.1057/palgrave.abm.9200006 Keywords: social–cultural value system of Chinese employees; political–legal structure of China; the immature capitalism of China
Introduction Korean industry successfully paved the way for competition during the period when it advanced its economic development with the assistance of government control of the competitive environment, low wage levels in manufacturing and the modernization of distribution channels as well as scale and/or scope economies. However, the recent financial crisis has led Korean firms to realize that these types of competitive advantages are not sustainable in a rapidly changing environment; yet, they have also come to appreciate that conventional wisdom is no more appropriate in a global competitive setting.
Ki-An Park et al Strategic Investment Policy
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For its economic development, Korea has been dependent on a foreign orientation emphasizing exports. In its early stages, this was to a certain extent very successful, but long-term indications show an acute shortage of proper resources in a financial and physical sense. The primary emphasis on exports provided the means for dynamic economic expansion until the 1980s, but unfortunately towards the end of the decade the extensive economic growth po
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