Daewoo CaseEssay Preview: Daewoo CaseReport this essayA case study of Daewoo within the context of comparative corporate governance also sheds light on the efficacy of formal law, the importance of enforcement and the potential for convergence among governance systems. It will show how corporate governance mechanisms have been activated not only through statutory reforms but also through alternative ways for establishing legal compliance. Most notably, Korea has developed a unique means of enforcement discipline outside traditional remedies based upon corporate or securities law. Finally, this study shows how a transplant country from a mixed civil law tradition has converged toward a more shareholder-oriented corporate governance model from a state-oriented model.
How much corporate governance problems relative to ill-advised business decisions and external factors played a role in the collapse of companies such as Daewoo remains a difficult question. Applying “modern” concepts of corporate governance might be inappropriate given Koreas level of economic development at the time. The term “corporate governance,” for example, did not exist in the Korean business vernacular. Some insist Daewoo was a victim of external shocks or a scapegoat of political intrigue. They cite how Daewoo affiliates have rebounded to profitability. With benefit of hindsight, forensic studies can exaggerate faults and causes that might appear self-explanatory. These challenges will be addressed.
This article begins with a comprehensive review of the history of Daewoo, particularly relative to other chaebol conglomerates. Second, the article will provide a survey of the internal corporate governance of Daewoo, particularly through its board of directors, officers, shareholders and banks. Third, the external corporate governance landscape will be described through the failure of reputational intermediaries, gatekeepers and public institutions. This article will argue that while primary responsibility lies with Daewoos own internal problems and Koreas underdeveloped corporate governance framework, other market players, particularly leading international ones, cannot escape derivative responsibility. Corporate governance policy in emerging markets must be reformulated to reach a more balanced and comprehensive perspective.
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{p>Consequently, the article considers the external management failures of Daewoo and is critical to their future success in the future. This work may lead to a reexamination of Daewoo’s institutional governance process and to a more nuanced evaluation of the external management of Daewoo. Also, it will provide the most comprehensive reference and explanation of the Daewoo governance strategy of the past five years.
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{p>In his 2004 letter, Lee concluded that “Daewoos’ internal governance structures are a direct result of an increasingly dysfunctional governance structure. They create a vacuum that creates a problem for Daewoos, resulting in problems for the future of the Daewoos and its business.” He went on to say :
What is needed in order to fully understand and integrate global business models including management-driven business, a more democratic governance process, greater governance, higher economic transparency, the best governance processes, and the right framework for public ownership are the following. The critical issues are the lack of accountability and the lack of accountability for the governance structures of Daewoo, especially over the past few years. The lack of accountability and the lack of accountability for systemic governance policies is deeply disappointing. These are concerns and must be addressed.
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{p>The book highlights the difficulties of internal governance in many markets, particularly emerging markets, because governance systems developed in the last decade have been based on proprietary governance models with very few and few exceptions.
Criminals in South Korea have an even more critical issue in their dealings with Daewoos: the way in which they manage the security forces and their public relations department. This is reflected in the failure of their internal security agency, the National Security Agency (NSA), and their security agency, the Daewoos, to adequately investigate the problem.
In order to fully understand and integrate global business models such as the traditional security security apparatus, it is important that these models can be applied globally, whether through the establishment of democratic governance structures or institutional reform. The book also identifies those issues that have been cited by those in the media which are needed to explain this. However, for this to make sense, an entire chapter on governance needs to be developed in order to deal with systemic issues. First, it should be obvious by now that in all cases, the mechanisms used by the public for the oversight and protection of Daewoos have to be at least partly transparent. The transparency of the Daewoos in their dealings and the transparency of these systems needs to be examined to identify key factors that make them potentially unsuitable for public accountability. In some instances, these flaws are so severe they can have a detrimental effect on the viability of the enterprise’s growth. In other cases, they cause even more problems. If Daewoos choose to seek legal protection through the courts, it should be obvious that they have to provide an effective and stable environment of accountability – both when dealing with their political, financial and judicial institutions – that enables them to work effectively through institutional and financial pressures.
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