Korean Culture and Business Relations

Korean Culture and Business Relations

Today, the "Land of the Morning Calm" is anything but calm. Indeed, South Korea is booming economically and the southern half of the divided Koreas has emerged from the devastation of the 20th century to become one of the so-called "Asian tigers" that is dominating the global economy. Despite the tensions that exist between the divided Korean states, South Korea enjoys favorable relations with many of its neighbors as well as the international community and an increasing number of transnational corporations are seeking to establish strategic alliances with South Korean companies. Although the Korean people are generous and friendly and foreigners can expect to be warmly received, there are some important cultural practices that must be observed in order to establish and sustain effective business relations in the country. This paper provides a review of the relevant literature to identify the cultural practices that affect business relations in South Korea, followed by a summary of the research and important findings in the conclusion.

Review and Discussion

By any measure, the Korean people have witnessed their fair share of strife and violence over the years and these experiences have manifested themselves in the country's culture. According to Austin (2007), "The business culture of Korea is a fascinating subject. It is representative of North Asian culture norms but has also been forged and tempered over the fiery anvil of the country's history" (p. 7). Although the Korean people can trace their ancestry back thousands of years during which they jousted with first one invader then another, modern South Koreans have been primarily preoccupied with their nuclear neighbor to the north. In this regard, Villegas (2006) reports that, "Korea was born on the frontlines of the Cold War and throughout its existence has conducted its domestic politics within the looming shadow of a reclusive and potentially dangerous North Korea" (p. 37). Traditional Korean culture therefore has a powerful influence on Korean businesses and as a result of the country's cruel subjugation by the Japanese during the early 20th century, a strong desire to win has become evident among many Korean businesspeople today (Austin, 2007). This strong desire to win has been translated into the highest rate of export growth among the top 20 exporting nations of the world and the third strongest economy after Japan and China (Lee, 2005).

Notwithstanding this strong desire to win and achieve, the pace of business itself is somewhat slower than in the West and foreigners should be prepared to invest the time and effort needed to forge lasting relationships with their Korean business contacts before enjoying significant levels of success. In this regard, Austin emphasizes that, "Strong relationships are fundamental for business success in Korea. Building such bonds takes time and cannot be achieved in a single visit; you must be prepared to invest in the relationship to make it work" (p. 8). The South Korean people have also been highly influenced by the forces of globalization, especially in the major metropolitan areas of the country. According to Austin, "The young are embracing the fads of the youth pop culture, which is a phenomenon across the region. Attitudes are changing, but traditions remain strong. They are in fact influencing the new" (2007, p. 8). Even though the pace of business and the formation of relationships may require more time than in the West, the South Korean people can be differentiated from their Japanese counterparts by a sense of pragmatism. For instance, Austin, "Koreans see themselves as being very direct people and they often contrast their approach to that of the 'polite' Japanese. Due to the importance attached to relationships, it is more often the dinner, drinks and karaoke following the business meeting that seals the deal" (2007, p. 8). Like their Japanese counterparts, though, the South Koreans place a high regard on education for themselves and others. In this regard, Austin adds that, "For Koreans, education is fundamentally important. Koreans value being number one and therefore the institutions they support must also be top performers" (p. 8).

To help gain a better understanding of how these cultural differences can affect business negotiations and transnational operations, a comparison of South Korea's national culture with that of the United States is provided in Figure 1 below.

Figure 1. Comparison of U.S. And South Korean Cultural Dimensions

PDI:

Power Distance Index

IDV:

Individualism

MAS:

Masculinity

UAI:

Uncertainty Avoidance Index

LTO:

Long-Term Orientation

Source: Hofstede, 2010

As can be readily discerned from Figure 1 above, South Korea and the U.S. have several night-and-day differences in their cultural dimensions, particularly individualism and long-term orientation. Cultures such as South Korea's that have high levels of long-term orientation are characterized by patience, perseverance, respect for elders and ancestors, as well as a sense of obedience and duty toward the larger good (Newman & Nollen, 1999). The long-term orientation cultural dimension consists of the values of persistence, ordering of relationships by status and observing order, frugality and a sense of shame (Jackson, 2004). The short-term aspects of this cultural dimension include values such as personal steadiness and stability, protecting individual "face," demonstrating respect for tradition, and the reciprocity of gifts, favors and greetings (Jackson, 2004). Based on these cross-cultural differences, Lee (2005) offers a set of important recommendations and guidance for Western managers seeking to establish business contacts in South Korea today, the most salient of which are provided below:

1. Expect negotiation to take time.

2. Be familiar with Korean counterparts and the items under negotiation.

3. Have at least the same number of individuals in as the Koreans in the negotiation team.

4. Have flexible deadlines.

5. Be prepared for a lot of singing and drinking to build relationship. Entertaining is an integral part of doing business in Korea and alcohol acts as a 'social lubricant' in Korean society in general and it is essential for business dealings.

6. Understand that contract is not really a contract, be flexible.

7. Saying 'no' directly results in 'loss of face' and destroys human relationships. Thus, know the difference between when a Korean says 'yes' and means it and when he or she says 'yes' to save face. It is common for Koreans to avoid saying 'no' directly to avoid loss of face for the other and for them.