Back in 2006, after Chung Mong-koo, chairman of Hyundai Motor Co. Ltd. and son of its founder, was arrested amid one of South Korea's recurring corruption scandals, I called a friend in the company's public relations office. He answered in a breathless panic. Without Chung in the driver's seat, he assured me, the management of South Korea's largest automaker would be adrift.
At the time, I saw his warning as spin, an attempt to sway the South Korean government to back off Chung. (If so, it worked: Chung was pardoned two years later.) But in my 20 years watching South Korea's family-run business groups, known as "chaebol," I've come to realize my friend was telling the truth.
The much-maligned conglomerates that dominate South Korea's economy may be facing investigations, pressure from foreign shareholders and unprecedented public anger. But unless the culture that binds management, investors and other stakeholders to South Korea's corporate system changes dramatically, the chaebol will almost certainly survive.