Korean Multinational Enterprises Research Articles

Main contents and implications of the 2023 revision of the OECD Guidelines for Multinational Enterprises*

Purpose This study aims to provide the main contents of the revision of the 2023 OECD Guidelines for Multinational Enterprises and suggest implications for the Korean government and multinational enterprises.Design/methodology/approach Following the brief history of the revision of OECD Guidelines for Multinational Enterprises, this study reviews and evaluates major substantive and procedural revisions of the 2023 OECD Guidelines, and then suggests countermeasures for Korean government and businesses.Findings The most significant substantive change of the 2023 revision is that expectations for environmental due diligence and disclosure obligations, including climate change and biodiversity, for multinational enterprises have been expanded and strengthened. Regarding procedural changes, the biggest change is the introduction of a basis rule for the National Contact Points for Responsible Business Conduct (NCPs for RBC) to judge each issue and a rule that the final statement must include follow-up details and deadlines, which is expected to strengthen the effectiveness of the NCP dispute resolution mechanism.Originality/value This study is the first academic paper to introduce major substantive and procedural revisions to the 2023 OECD Guidelines for Multinational Enterprises in Korea. This study also provides implications for the Korean government and companies following the 2023 revised OECD Guidelines for Multinational Enterprises as follows. First, the Korean government must establish a public–private partnership to closely communicate to prevent Korean companies from being harmed by failing to meet strengthening international Environment, Social and Governance (ESG) standards. In addition, Korean government should actively participate in ESG-related international forums, including the OECD, and strive to reflect the needs and interests of Korean companies. Second, the Korean NCP should strengthen its activities to prevent potential damage by expanding education and promotions for Korean businesses on related overseas legislative trends and NCP dispute case studies so that Korean companies can effectively deal with the strengthened ESG standards. Third, Korean multinational enterprises should preemptively establish an advanced ESG management system to seize new opportunities in the global supply chain previously concentrated in China and India in the process of reorganizing global supply chains according to the trend of strengthening ESG standards and the US value alliance strategy.

Configuring an MNE’s subsidiary capabilities for performance in China

Purpose This study aims to explore how subsidiary capabilities collectively configure for performance. Additionally, it seeks to examine whether these configurations of capabilities can provide equifinal solutions through developing a comprehensive research framework that focuses on subsidiaries in China. Design/methodology/approach With a data set collected through a questionnaire from 172 Korean multinational enterprises (MNEs) in China, this study used a fuzzy-set qualitative comparative analysis to detect the capability conditions and configurations. These configurations represent combinations of various subsidiary capabilities linked to high performance. Findings This study identified several complex pathways with distinct configurations for high subsidiary performance. The findings demonstrate the importance of configurations over individual conditions. Thus, the results highlight that the effectiveness of diverse capabilities, which are widely believed to singularly contribute to the high performance of MNE subsidiaries, depends on how each combines with other capabilities. Overall, the findings provide a richer and fine-grained understanding of the role and relative importance of various forms of MNE subsidiary capabilities and how the joint effect of these subsidiaries contributes to high performance. Practical implications This study suggests that MNE managers should comprehensively understand how subsidiary capabilities are configured to produce subsidiary performance outcomes. This specifically illustrates the importance of understanding the mutually conflicting yet collectively exhaustive results of multi-selective solutions and aims to align with China’s industrial and regional heterogeneity. Originality/value By examining the role of MNE subsidiary capability configurations, which may collectively influence the subsidiary’s performance, this study contributes to the literature. It elucidates how MNE subsidiaries may achieve superior performance by developing and possessing various capabilities tailored to the local context.

South Korea–Vietnam–India Trilateral Economic Cooperation: Prospects and Policy Implications

Great attention has been paid to the bilateral economic relations between India, Vietnam, and South Korea; however, only scant research has focused on the prospects of triangular economic cooperation among the three countries. Given the advantage and demand for the cooperation of each party, there is significant potential for trilateral economic cooperation among South Korea, Vietnam, and India. In this paper, we discover the prospects for their triangular economic cooperation in three aspects. First, this study examines the potential for cooperation in production networks and supply chains between the three countries in the context of reconfiguring the global value chains (GVCs), with a focus on the leading role of South Korean multinational enterprises (MNEs). Second, the study explores trilateral cooperation in the digital economy and connectivity, focusing on how South Korea and India can collaborate on investment projects in Vietnam. Third, this study discusses the rationale and possibility of forming a regional trade agreement (RTA) between the three countries. South Korea, Vietnam, and India have extant bilateral trade agreements between two of the three countries; however, there is no regional integration among the three countries discussed in specific. Considering the bilateral relations and domestic and external factors, the paper reckons that an RTA for starters between the three countries would be mutually beneficial to each of the corresponding economies.

한국 다국적 기업의 디지털 전환 및 데이터 분석 역량 준비도를 높이기 위한 최고 경영층 인식 연구

Purpose - This study investigates the differences in the recognition of the need, impact, and readiness of CEOs, directors, and employees for successful digital transformation. The success of digital transformation, which refers to the overall organizational change in business models and culture through application of advanced technologies is the shared perception and implementation of all members of the digital transformation. Design/Methodology/Approach - Based on data from 30 South Korean multinational enterprises, the difference in perception between groups was examined, and it was confirmed that there was a difference in perception among CEOs, directors, and employees. Findings - The data confirmed the relationship between the top management’s perception of digital transformation to the readiness of data analytics by employees, which is an essential element of sustainable digital transformation. Employees of the organization, which are recognized by top management as having a high need and readiness for digital transformation, are well prepared for data analytics. Third, we identified important sub-competencies through empirical analysis to derive priorities for employee competency development, and confirmed that programming ability and business domain differ between beginner and advanced levels, while the advanced scored the highest level of growth mindset. Research Implications - This study contributes to the international business area in terms of emphasizing the importance of shared perception among all members of the organization for successful digital transformation. Also, it provides priorities to enhance the readiness of data analytics for employees in terms of employee selection and development.

Stronger together: Country‐of‐origin agglomeration and multinational enterprise location choice in an adverse institutional environment

AbstractResearch SummaryResearch suggests that multinational enterprises (MNEs) are attracted to locations with concentrated firms from the same home country to benefit from interactions with market forces, but it remains an open question whether such agglomeration facilitates MNEs' interactions with nonmarket actors such as the host government. We submit that since country‐of‐origin agglomeration can enable collective actions and create collective gains, colocation with compatriot firms will help MNEs navigate an adverse institutional environment. In line with this reasoning, we hypothesize that MNEs are more attracted to locations with country‐of‐origin agglomeration when MNEs face an exogenous shock that increases their regulatory burden in the host country. Our analysis offers corroborative evidence. The study adds to research on agglomeration, institutional environment, and location strategy.Managerial SummaryWhy do multinational enterprises (MNEs) locate near compatriot firms in a foreign location? The commonly recognized benefits include resource access and knowledge spillover from interactions with market forces such as suppliers and customers. We submit that colocation with compatriot firms can also help MNEs navigate an adverse institutional environment by generating “stronger‐together” benefits. Colocation can enable collective actions and create collective gains for MNEs in their interactions with the host government. We find that after a diplomatic dispute, Korean MNEs are more attracted to locations in China that already have a cluster of Korean firms, whether in the same/related industries or in unrelated industries; this is particularly the case for small MNEs and in locations with weak institutions.

CEO Narcissism and Global Performance Variance in Multinational Enterprises: The Roles of Foreign Direct Investment Risk‐Taking and Business Group Affiliation

AbstractThis study examines key mechanisms through which CEO narcissism influences global performance variance in the context of Asian emerging market multinational enterprises. Building on the contextual reinforcement model of narcissism and the cushion hypothesis, we focus on the role of foreign direct investment (FDI) risk‐taking and business group affiliation (BGA). We test our moderated mediation model on data from 149 South Korean multinational enterprises from 2006 to 2016. The results show that CEO narcissism is positively associated with FDI risk‐taking. The effect of CEO narcissism on global performance variance is mediated by FDI risk‐taking. Furthermore, BGA moderates the above‐mentioned relationships. Our findings offer important contributions to the international business and CEO narcissism literatures.

Liability of Asianness? Global talent management challenges of Chinese, Japanese, and Korean multinationals

Within a short time, China, Japan, and Korea have produced worldwide leading multinational enterprises (MNEs). As they expand globally, these companies face major challenges in global talent management (GTM). This article provides a comparative analysis of the major GTM challenges MNEs from these countries experience and the underlying reasons thereof. Our comparative overview reveals similarities in ethnocentric staffing, traditional headquarters-driven organizational cultures, and home-country language policies. While there are striking differences in performance appraisal, reward and compensation, and promotion and career advancement, these GTM practices of Chinese, Japanese, and Korean MNEs are converging to Western style global best practices, though at different levels. Building on and enriching the convergence debate and the distance literature, we identify organizational and country characteristics that help better understand the reasons for these similarities and differences.

Cross‐Border Vertical Integration and Technology in Factory Asia: Evidence from Korea

Factory Asia, supply chains in Asian countries, is a center of global manufacturing. Over the last decade, Asian multinational enterprises have become a significant part of Factory Asia. In this paper, we examine the boundaries of Korean firms in Asia. More specifically, we test the predictions of property rights theory for cross‐border vertical integration, using firm‐level data from Korean multinational enterprises. In line with the theory's predictions, we find that cross‐border backward vertical integration is positively related to the R&D intensity of domestic producing industries and negatively related to those of foreign supplying industries, but only when transactions between the producing and supplying industries are large enough. These results can help us to understand how Asian multinational enterprises develop their supply chains in Asia.

Perceived discrimination as legacy: Korean immigrants’ job attitudes and career prospects at Korean multinational enterprises in the USA

ABSTRACT In this study, we examine how Korean immigrants employed at co-ethnic multinational enterprises (MNEs) perceive their work experiences based on their past employment in the USA. Using 63 in-depth interviews conducted from June 2012 to December 2014, we found that Korean immigrants have different job attitudes and career prospects depending on their experiences of workplace discrimination in the USA. The findings suggest that immigrants who previously worked in the mainstream economy have developed a higher level of racial/ethnic awareness through racialized experience than their counterparts who only worked for co-ethnic employers. Such disparities in awareness shape the workers’ job attitudes and their career prospects. We conclude that the knowledge on the host society’s racial/ethnic stratification, once established, comes into effect continuously in immigrants’ lives and strongly influences the immigrants’ attitudes toward their socioeconomic incorporation.

Constructing gender identity through masculinity in CSR reports: The South Korean case

Drawing on the themes of men and masculinity, this article examines texts in the corporate social responsibility (CSR) reports of local multinational enterprises (MNEs) in South Korea, an emerging economy. This article explores how Korean male hegemony is hidden and naturalized in CSR reporting. Focusing on the discursive construction of gender identity, we analyze how CSR reports portray gendered identities in ways that may foster gender inequality by examining how the texts reflect the inferior position of women and marginalized male workers in the workplace. We review 15 CSR reports from Korean MNEs as a primary data source for examining corporate policies and disclosure on gender‐equality issues in the workplace. We explore the inherently embedded meaning of CSR reports to evaluate the masculine tone of gender relations in these texts. To deepen our understanding, we retrieved the original text segments, coded them by using a categorical framework and revisited our data to critically examine our interpretation of the narrative structures that we argue reflect and reproduce certain discourses of masculinity, through the (in)visibility of women, the marginalization of women and (part‐time) men, and the silencing of their voices by the Korean male hegemony.

Learning from Success Versus Failure Under the Influence of Contextual Dissimilarities

This study contrasts the means by which success- and failure-based experiential learning in corporate activities are impacted by three types of contextual dissimilarities that complicate learning: (i) the dissimilarity between the context where a firm originated and the contexts of prior events from which the firm accumulates experience in an activity; (ii) heterogeneity among prior events; and (iii) the dissimilarity between prior events and subsequent events to which a firm may apply its experience. We suggest that these three types of contextual dissimilarities affect success- and failure-based learning differently by having dissimilar effects on the facilitating mechanisms and barriers of the two types of learning. We use longitudinal data on the foreign direct investments conducted by Korean multinational enterprises and find that all three types of contextual dissimilarities negatively affect success-based learning, whereas the dissimilarities among prior events as well as between prior and subsequent events enhance failure-based learning.

The changing nature of South Korean FDI to China

The purpose of this paper is to explore the changing motives and location choice patterns of foreign direct investment (FDI) from South Korea to China. Prior to the global financial crisis of 2008, South Korean multinational enterprises (MNEs) invested in China for efficiency-seeking motives in order to take advantage of low costs. While evidence is emerging that MNEs from developed countries are now investing in China for market-seeking reasons, no such evidence exists for MNEs from Asia. This study exploits a unique data set to uncover a change in strategy by South Korean MNEs in China, both in terms of motive and location, something that has received little attention in the international business literature.

International performance appraisal practices and approaches of South Korean MNEs in China

International performance appraisal of multinational enterprises (MNEs) in foreign subsidiaries has received inadequate research attention. The current study investigates the international performance appraisal practices, including procedures and methods, criteria and feedback, of South Korean MNEs in China and the extent to which these practices are localized or/and ethnocentric. Results of analyzing the in-depth interviews with local and expatriate managers show South Korean MNEs tend to adopt an ethnocentric approach to managing performance appraisals for expatriates and an integrative approach for host country-nationals by transferring their home appraisal practices to their Chinese subsidiaries. These approaches can be attributed to relative strength effects, i.e. the relative economic strengths and contextual differences between China and South Korea. This study adds to the knowledge base of how MNEs manage performance appraisals in their foreign subsidiaries.

Corporate Social Responsibility in International Business: Illustrations from Korean and Japanese Electronics MNEs in Indonesia

Employing Porter and Kramer’s corporate social responsibility (CSR) framework (Harv Bus Rev 84:78–92, 2006), we explored the strategic CSR programs of two Korean and two Japanese electronics multinational enterprises (MNEs) in Indonesia. We observed that the sample MNEs engage in strategic CSR either through investment in competitive context or the transformation of value chain activities. In addition, these firms strongly favor strategic CSR over responsive CSR, not just because of the economic benefits offered by the former, but also its advantages in managing the programs and communicating with stakeholders. Furthermore, they have developed varied organizational methods and tend to manage their key CSR programs centrally to effectively link them to the competitive strategy. Lastly, the results of our analysis suggest that Korean MNEs have customized their strategic CSR programs for emerging countries more actively than Japanese MNEs. In sum, our analysis elucidates several important features of strategic CSR employed by the MNEs in emerging countries.

Stakeholder Influence on Local Corporate Social Responsibility Activities of Korean Multinational Enterprise Subsidiaries

ABSTRACTIn this article, we attempt to identify key factors affecting local corporate social responsibility (CSR) practices by overseas subsidiaries of Korean multinational enterprises (MNEs) according to stakeholder theory. In this article, internal managers and the parent company (i.e., MNE) are considered as internal stakeholders in an organization; customers, government, local community, nongovernmental organizations (NGOs), and media are significant external stakeholders, as actors on the local society level. We test the relationship between local CSR practices and stakeholders by using multiple regression analysis (ordinary least squares [OLS] method). According to the results, parent company, government, and NGOs are verified as major factors that promote local CSR of subsidiaries, while the roles of internal managers, customers, local community, and media are not considered significant factors. Our research contributes to research flows regarding CSR and stakeholder theory and provides several practical implications for multinational enterprises.

International Training and Management Development Policies and Practices of South Korean MNEs in China

International training and management development has to date received little research attention. This study aims to contribute to the international human resource management literature by empirically exploring international training and management development policies and practices for both expatriates and host-country nationals (HCNs) of South Korean multinational enterprises (MNEs) operating in China. The data for this study were collected through in-depth interviews with both HCN managers and expatriate managers of 10 Korean MNEs. The results show that in our sample, South Korean MNEs provide expatriates with inadequate and low-rigor predeparture cross-cultural training and leadership training. However, the sample MNEs provide extensive predeparture and postarrival language training and regular postarrival technical and professional training. On-the-job training is provided mainly to HCN production workers in order to improve productivity and work safety. Selected high-performance HCN middle managers and employees are sent back to headquarters for training. This, however, is not regarded for career development but for rewarding good performance. The sample South Korean MNEs pay little attention to management development for both expatriates and HCNs. Consequently, this has a negative effect on employees' organizational commitment and retention.

Untangling the Paradox of Foreign Entry Mode Choice: Learning from Survival and Failure Experience

Our study examines why new entrant multinational enterprises (MNEs) are willing to establish wholly-owned subsidiaries (WOSs) in a host country, whereas many incumbent MNEs are still reluctant to do so. Drawing on performance feedback theory, our study examines how, and to what extent, different types of performance experience with WOSs (i.e., WOS survival and failure experience) shape new entrants’ and incumbents’ choices of WOSs in a host country. Hypotheses were tested using 447 (360) entry mode choices made by 183 new entrant (92 incumbent) Korean MNEs in the manufacturing sector from 1993 to 2003. Results show that secondhand survival experience of other home country MNEs enables new entrants to choose WOSs preferably, especially when CEOs are members of founding families and initial entries in a host country have been undertaken in core businesses. By contrast, firsthand experience of failure discourages incumbents from choosing WOSs, and this tendency is prevalent when professional CEOs are in char...

Transfer or localize? International reward and compensation practices of South Korean multinational enterprises in China

International reward and compensation has received little academic attention, but past research was mainly conducted in advanced Western economies. This study explores the extent to which multinational enterprises (MNEs) from an emerging economy, South Korea, transfer reward and compensation practices from business headquarters to a transitional economy, China and the determining factors for transfer. Using a qualitative approach to analysing 10 South Korean MNEs in China, this study reveals that the sample companies adopt home-oriented focal reward and compensation policies and practices (including base pay and performance-based pay) and an integrative approach to peripheral components (including allowances and benefits) for expatriates. However, the companies adopt an integrative approach to focal components of reward and compensation and a localized approach to peripheral components for host country nationals (HCNs). These findings indicate that Korean MNEs adopt different approaches to reward and compensation for expatriates and HCNs, as well as to focal and peripheral components of reward and compensation practices. The transfer of reward and compensation is due to the dominance effect resulting from the fact that the home economy is relatively more advanced than the host economy. On the one hand, the tendency to localize reward and compensation results from contextual differences between host and home nations, such as economic development, living costs and compensation traditions.

South Korean MNEs’ international HRM approach: Hybridization of global standards and local practices

This paper analyses the international Human Resource Management (HRM) approaches of Korean Multinational Enterprises (MNEs). Through a study of nine major Korean MNEs’ approaches to subsidiary-HRM, it is argued that the firms pursue hybridization through a blending of localization and global standardization across detailed elements in five broad HRM practice areas. Local discretion is allowed if not counter to global HRM system requirements and “global best practices” used as the template for global standardization of selected HRM elements. This strategic orientation appears to be part of a deliberate response to the “liabilities of origin” born by firms from non-dominant economies.

International recruitment and selection practices of South Korean multinationals in China

South Korean multinational enterprises (MNEs) have developed rapidly since the late 1950s. However, there is little research on, and hence little is known about, how South Korean MNEs manage human resources in overseas operations. To fill this gap, in the literature the current study investigates South Korean MNEs' international recruitment and selection policies and practices in their Chinese operations. It reveals that South Korean MNEs tend to adopt the polycentric approach or a mixed approach of being polycentric and ethnocentric to international staffing, with the number of expatriates dropping gradually over time. South Korean MNEs adopt ‘one-way selection’ in recruiting and selecting expatriates, and localise recruitment procedures and selection criteria for host-country nationals. South Korean MNEs have paid inadequate attention to: first, expatriates' career development; and second, personal and family issues emerging from expatriation and repatriation.