Samsung's New Board Gets Back to Business

The top Korean conglomerate has tussled with prosecutors before

“It’s just literally unthinkable in chaebol society” to depose the heir

- Bruce Einhorn, Sohee Kim, and Jungah Lee

“No chaebol chiefs want to lose control over their empires,” says one analyst. “Their tendency is to lie flat on the ground, tough it out, and then resume business as usual.”

While this could be a commentary on Seoul today, the reporting comes from a Businessweek article in the late 1990s, when South Korea was ensnared in the Asian financial crisis. Then South Korea’s corporate empires were under attack. The Korean economy was struggling, and politicians were responding by pledging to reform the chaebol, the family-controlled conglomerates that dominate businesses ranging from shipbuilding to chipmaking. The conglomerates waited for the storm to pass.

For the chaebol, reformers come and reformers go. In the decades since the Asian crisis, politicians have made repeated calls for reform of the conglomerates, and prosecutors have won criminal convictions of top executives. But the chaebol showed enough flexibility in their business, so that the market value of the top nine still accounts for roughly 60 percent of the Kospi 200 stock index. Their combined revenue is about 75 percent of gross domestic product.