Knowledge Resources in Korea: Understanding Korea’s Business System and Capitalism

After several decades of interdisciplinary research on developing economies by researchers in international business and social sciences, there is an increasing consensus that ‘knowledge’ is the crucial resource for development throughout the developing economies — much more important than land, tools and labour (Ostrom, 1990; World Bank, 1998). And, following North (1990) and Olson (1982, 1992), we believe that knowledge is crucial for economic development through the interaction between organizations and institutions. The nature of knowledge is such that it is widely dispersed throughout society, and it is accumulated and exchanged usually through networks, traditional groups, or professional associations (Hayek, 1945; Simon, 1991; World Bank, 1998). It is also coincidental, that just as knowledge is seen as crucial for the development of the poorest developing economies, knowledge is also seen as a resource crucial for the success of societies in developed economies (Coase, 1992; Nelson, 1994a, 1994b). This chapter analyses the nature of knowledge as a resource in Korea’s business system. However, in order to assess the role of knowledge in Korea, there is a need for a more fundamental understanding of Korea’s business system in the context of global capitalism. The Korean business system is a hybrid of the well known: the Anglo-Saxon system of capitalism practised in countries such as the US and UK, and the Communitarian system (Albert, 1991; Etzioni, 1988; Choi et al., 2004) prevalent in countries such as Germany, France and in continental Europe.