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An Investigative Study of Confucian Humanism in the Development and Maintenance of Korean Business Groups”

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An Investigative Study of Confucian Humanism in the Development and Maintenance of Korean Business Groups” “An Investigative Study of Confucian Humanism in the Development and Maintenance of Korean Business Groups” Calvin Chong Kun Lee Thesis submitted in partial fulfilment of the requirements for the degree of Doctor of Business Administration. Faculty of Business and Enterprise Swinburne University of Technology 2009 Foreword This thesis has been prepared for submission in December 2008 to fulfil the requirements of the degree of Doctor of Business Administration (DBA) at Swinburne University of Technology, Melbourne, Australia. The study is trans-temporal and cross-disciplinary, and crosses cultural and linguistic boundaries of the East Asian nations of Korea, Japan and Greater China, and deploys tri-lingual vocabulary and concepts. Names of figures, places and events already popularised in the English language have been kept as in common use. Others have followed the international conventions of Romanisation as below: For Korean, the McCune-Reischauer system1 has been used. In the quotation of other works the conventions used by original sources have been maintained, unless changes were considered imperative. For Japanese, the Hepburn system2 has been used together with modification made to it by Kenkyusha’s new Japanese-English Dictionary, 3rd edition. In the quotation of other works, the conventions used by the original sources have been honoured, unless changes were considered necessary to maintain integrity of the texts. For Chinese, the Wade-Giles system3 has been used and pinyin equivalents are shown where deemed necessary. In the quotation of other works, the conventions used by original sources have been used, unless changes were considered desirable. 1 McCune-Reischauer system: http://mccune-reischauer.org, examined 20 August 2008. 2 Hepburn system: http://www.loc.gov/catdir/cpso/romanization/japanese.pdf, examined 20 August 2008. 3 Wade-Giles system, http://www.loc.gov/catdir/pinyin/romcover.html, examined 20 August 2008. i Abstract This study on ‘Confucianism and Korean business groups’ is designed to examine Confucianism as a belief system and way of life in Korea in history and today, and how it influenced the birth and evolution of business groups. This thesis contains no material which has been submitted for examination in any other course. Confucianism is seen as a contiguous culture amongst the industrialised East Asian nations, namely, Korea, Japan and Greater China. The study explores how common or similar intellectual and cultural grounding influences for societal and economic ethics. The study also examines Confucian humanism and its ethical implications for business groups in Korea. Comparative examinations are also made, where possible and necessary, with the conglomerates of other East Asian nations, in particular those of Japan. The main research question lies in two hypothesised questions: (I) Does the foundation a ethics of Korean business groups derive from Confucianism and do their operating principles still remain anchored at the Confucian humanism? (ii) Does Confucian humanism remain central to Korean business groups as the principal determinant of their global strategies and the underpinning of corporate governance? Three elements of research strategy were deployed, namely (1) literature review, (2) focus group discussions and (3) documentation corroborations. The literature reviewed been selected mostly from the scholarly works of Korea and other Confucian East Asian countries, and also from those of non-Asian international scholars. Narrative data were obtained from the focus group discussions. Discussants were from the five functional groups on the level of senior managers of as many leading business groups. Discussants were selected from those with substantial interest in, or understanding of Confucianism. Those five occupational sectors represented are: 1) ii ‘strategic management group’, 2) ‘global network management group’, 3) ‘research and development’, 4) ‘labour and union relations’, and 5) ‘investor relations and governance.’ Documentation was referenced as complementary to narrations and also as corroboration of what the focus groups expressed through unstructured discussions. Documentary sources were corporate internal documents public use, government or official publications, and media-based databases. The study explores the origin of Confucianism and proceeds to examine how the Confucian philosophical tradition gave naissance to Confucian humanism as a living tradition. From Confucian humanism, the thesis proceeds to examine Confucian governance (ching shih) that remained the central theme of Confucian public service since the adoption of orthodox Confucianism as the state ideology of China and Korea, and governance of senior management of business groups in modern corporate context. While the Confucian ideal of the ‘sagely sovereigns’ persists as an enduring governance model, complementary and alternative political views of more egalitarian inclinations, such as that of Mencius, also take up a good part of the governance theme. The role of Confucian lifelong self-cultivation and education has been examined as the foundation of character-building and the reservoir of human capital for societal and corporate roles vis-à-vis knowledge-based industries, where business groups in Korea are focused. As regards the modern context of Confucian governance, its interactions and accommodation of the modern democratic institution of global governance have been examined beyond its fertile demo-centric Confucian social ethos and egalitarian strand of Confucian tradition. The study highlights the fact that the Confucian tradition of ‘humanity’ that Confucius and his disciples formulated in the Classical age has endured through the ages to modernity. The Confucian cosmology of the ‘human to nature’ nexus and the Confucian spirituality of cosmic immanence in the ‘self’ provide clues to the multi- layered structure of Confucian consciousness of self, selves and the greater self, namely society or the Heaven itself. iii The Neo-Confucian school of ‘mind and heart’ learning reinforced the inquiry into selves in connection with nature and the universe. Religious tolerance and the adaptability of Confucianism have stood out as important qualities in the globalization of East Asian values and ethos, including those of Korean. The secularism and spirituality of Confucianism benefited from the peaceful co-existence amongst the three great philosophical traditions of Confucianism, Taoism and Buddhism, blessed as they are with very little inter-religious conflict throughout history. The thesis, as an inquiry into Confucian humanism as a living tradition of extraordinary resilience as applied to the nascence and evolution of business groups, concludes by answering the main research question as expressed in its two associated hypotheses. iv Doctor of Business Administration (DBA) Page TABLE OF CONTENTS Foreword (with Romanisation Conventions) i Abstract ii Table of Contents v Acknowledgements ix Declaration x List of Tables, Diagrams and Figures xi Chapter One: Introduction 1.1 INTRODUCTION 1 1.1.1 Industrialised Confucian East-Asia and Korea 1 1.1.2 Aims 2 1.1.3 Rationale 2 1.2 ORIGIN AND EVOLUTION OF CONFUCIANISM AND ITS HUMNANISM AS THE FOUNDATION 3 ETHICS OF KOREAN CONGLOMERATES 1.3 RESEARCH STRATEGY 6 1.3.1 Research Elements 6 1.4 ROADMAP OF THESIS AND TIMELINE 8 1.4.1 Roadmap 8 1.4.2 Timeline 9 1.5 SUMMARY 9 Chapter Two: Origin and Evolution of Confucian Humanism 2.1 INTRODUCTION 10 2.1.1 Main Strands of Confucian Ideas and Key Figures 11 2.2 CONFUCIANISM 12 2.2.1 Collective Intentionality 13 2.2.2 The Contributions of the Korean Neo-Confucian T’oegye 14 2.2.3 Self-cultivation and Humanism 15 2.3 CONFUCIAN HUMANISM 16 2.3.1 Confucian Humanity 16 2.3.2 Mencian Humanism and Governance Ideals 18 2.3.3 Chung-Yung (The Doctrine of the Mean): ‘Superior Personhood, 20 Community of Trust and Sincerity’ 2.3.4 Confucianism and its Encounter with Taoism and Mahayana Buddhism 23 2.3.5 I Ching: Source of Imagination for Confucian Creativity 26 2.4 CONFUCIAN GOVERNANCE 29 2.4.1 Governance: ‘Sovereign as a Sage’ Ideal: Ching-hsi 29 2.4.2 Legalism: An Alternative to Confucian and Mencian Views 31 2.4.3 Confucian ‘Power-Knowledge’ (‘governmentality’), Hierarchy and 33 Governance 2.5 CONFUCIAN REFORMATION: REDISCOVERY AND PRACTICAL LEARNING 35 2.5.1 Chang Tsai and the Coming of Neo-Confucianism 35 2.5.2 Chu Hsi: Reformation and Integration into Neo-Confucianism 37 2.5.3 The ‘Lu-Wang School’: A Major Challenge to Chu Hsi’ Orthodoxy of Neo- 42 Confucianism v 2.5.4 Wang Yang-ming and ‘the School of Yang-ming’ 44 2.5.5 Practical Learning: Sirhak in Yi Dynasty Korea 48 2.6 SUMMARY 52 Chapter Three: Confucian Business Groups 3.1 INTRODUCTION 54 3.2 OVERVIEW OF THE KOREAN ECONOMY 55 3.3 CONFUCIANISM AND KOREAN BUSINESS GROUPS: PHASES 1-4 58 3.4 PHASE 1: INCEPTION AND NATIONAL EXPANSION 59 3.4.1 Government-led Economic Development (EDP) and the Role of Business 59 Groups in Foreign Economic Policy (FEP) on ‘Development Ladder’: ‘Flying Geese’ 3.4.2 Differences between Korean Chaebol and Japanese Keiretsu 62 3.4.3 Family-based Business System (FBS) 62 3.4.4 Institutionalisation of Governance and the Fair Trade Act 64 3.4.5 Financial Incentives and Debt-based Expansion 64 3.4.6 Integration, Efficiency and Economy 65 3.4.7 Cross-subsidisation: Potential Moral Hazard Overlooked 67 3.5 PHASE 2: GLOBAL EXPANSION 68 3.5.1 Global Networks and Chains: Commodity, Value and Production 69 3.5.2 Confucian Knowledge Economy and Innovation:
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