The Multi-Dimensional Influence of Informal Social Networks in Korea – Propositions for Future Management Research

Abstract

Whereas sociologists such as Granovetter (1973, 1995) pointed out the positive influence of informally organised social ties for economic exchange, Chinese Guanxi networks in particular have served as a major source to fuel discourse on informal networks in East Asia. This paper contributes to the advancement of such theory by presenting the as yet seldom recognised Korean version of informal social networks. These can be classified into three types: Yongo-, Yonjul-, and Inmaek-based ties. The paper proposes some important departures for future research, i.e.: (1) informal ties strengthen cooperation between firm-external stakeholders through high-trust relationships; (2) they contribute to a homogeneity of corporate leadership groups; and (3) they positively contribute to group harmony and team cohesion. Further (4) informal ties benefit information acquisition but at the same time bear a risk of unwanted information transfer among competing firms; finally (5) expatriates cannot establish certain important informal ties in Korea by their very nature. Whereas social science proposes a decline of informal networks with further economic development, informal networks in Korea do not seem to be declining, but rather, in certain fields, they seem to be increasing in strength. Implications presented in this paper contribute to the theory of informal social networks, show avenues for future management research on Korea and provide practitioners with important information on management practice in Korea.