Globalization and the Diversification Behavior of the Chaebols

The previous chapter started our analysis of the chaebol issue with an empirical account detailing the insufficiencies of economic institutions and the role of an over-interventionist government in creating and sustaining conglomerates which were relatively non-viable. This chapter continues the chaebol discussion from a different perspective, exploring the effects of globalization on the structure of industrial organization in Korea and the reasons behind the characteristic diversification behavior of the chaebols. Another purpose of this chapter is to identify the optimal structure of industrial organization in a globalized market, should such a thing ever exist. To this end, we extend our field of study to offer future directions for structural management in all economies seeking to respond to the challenge of globalization. We complete our analysis by applying these general theoretical implications to the Korean case.