The Analysis Of The Korean Family Business Management Pattern

Being the most important enterprise organizational form, family businesses exist widely, whether in the developed countries or developing countries. Family business is defined as a family or a several close allied families own the all or part ownership of the business and master the business'control right by all kinds of ways, at the same time these rights can inherit in the internal of family business.As the most important enterprise organizational form in Korea, the family ownership is prevalent not only in the small and medium-sized enterprise, but also in the strong list company. The choice of the family management pattern has a very profound reason, the reason include both informal institutional restriction, which is the deeply Confucianism culture tradition, and formal institution restrictions, which are the imperfect law protection of share holder and incomplete market of capital and manager. The choice of the family ownership is a kind of adaptation to these institutional restrictions, which can reduce economic costs.Family business management pattern is a kind of institution arrangement, it has abundant meaning, including both business internal institution, such as the ownership institution, and also external institutional complementary structure that surrounding the enterprise, such as the relations between enterprise and bank as well as enterprise and government. In the internal institution of family business, ownership institution is the determined factor of the internal institution. Family usually centralizes family business'ownership. In many family businesses, families manipulate the power by the separation of the cash flow right and vote right. The separation methods primarily contain pyramid structure, cross-ownership and dual stock right. Consistent with family ownership, the management power of family business in East Asia is largely held in the family members. The exterior institution's complementary structure of the family business in Korea is more complicated. Different from that in the USA, Japan and Germany, the relation between the business and the bank in the Korean family business presents non-market, weak bank-typed characteristics. The bank dose not implement the creditor's supervising duty even though it is the supplier of business funds, it couldn't supervise business effectively, and sometimes it is even affected and controlled by the business. Due to the influence of catching-up economy and authoritative government in Korea, the characteristic of the relation between Korean family business and government can be generalized into government-ruling type.The characteristic of management patterns mentioned above make Korean family business have numerous advantages which make family business in Korea achieves quickly development and occupies the prominent position in Korean economy. Family businesses play an important role in promoting industrial structure updating, accelerating export and providing employment opportunities etc. There are some inherent contradictions and defects in the management pattern of Korea family business of course, such as the defect of family-typed management and the close relation between the government and the family business may cause enterprise's moral hazard.After the mid 80s, with the trend of economic globalization, the inherent defects of family business management pattern have been exposed gradually. The harmony between the institution arrangement and the institution environment has declined and the unbalance state comes into existence. The disequilibrium of family business institution of Korea together with the other macroscopic factors is one of the important elements in resulting in Financial Crises. As an objective historical process, economic globalization can not be changed by human will. It surges against the foundation of the culture and the structure of Korean family business, and it requires family business to reform its closed, non-transparence running system.In order to cope with the challenge of globalization, Korea must accelerate the process of reforming the management pattern of family business. It becomes possible to reform under the pressure of public and international economic organization after the Financial Crisis. Korea try to absorb the popularly modern company governance standards of western countries to train their companies with competitive advantage, the basic requirements are as following: paying attention to stockholder's rights and values; emphasizing the functions of board; improving the transparence and information disclosure etc. But the reform meets with many difficulties and problems, and it is a long way to reform.The study or the Korean family business means to provide useful reference for the development of family business in China. Since the reforming and opening-up in China, the Chinese family business has gotten fast development and become an important main-strength of Chinese socialist modernization construction. But the development of Chinese family business is still limited by some factors: except the restriction of internal institution in enterprise, the financing difficulty becomes the most important problem limiting enterprise's healthy development. In addition, the protections from laws and rules are not enough and external policy environment is not smooth. In the future, if Chinese family businesses are expected to develop healthily by absorbing some experiences from Korea, they should reform the subsidiary structure between internal family business institution and the external complementary institution circling enterprises to achieve a balancing and coordinating development for both enterprises'internal and external institution. To achieve the aim, the government should improve the efficiency of family business's financing system and extraordinarily establish good cooperation-ship between enterprise and bank, and we should make the relationship between government and enterprise more smoothly, prevent political corruption and provide good policy circumstances for enterprise.