Global Business Cultural Analysis of South Korea
John Smith
University of Rochester

BUS 800 – INTERNATIONAL BUSINESS
Dr. Peterson
March 6, 2015 Abstract
Today, the United States conducts a substantial amount of business with South Korea. It is important that American managers, entrepreneurs, and businessmen understand the South Korean social, cultural, and religious dimensions of the nation. The South Korean culture and customs are uniquely different from those of the United States. The culture and customs of the United States are based on European traditions and religious Christian beliefs. The culture and customs of South Korea are based on Confucianism’s way of life, Buddhism’s individual salvation, and since the 1950’s Christianity’s redemption of the soul. American businesses that incorporate South Korean culture into American business practices will develop long lasting business relationships with their South Korean counterparts. American businessmen working in multinational corporations have adjusted well the collectivist culture of South Korea. Multinational enterprises considering cross border business in South Korea can feel safe investing in South Korea.

Keywords: South Korea, United States, cultural dimensions, multinational business, Hofstede. Introduction
South Korea is one of the United States most important strategic and economic partners in Asia. Members of Congress tend to be interested in South Korea for political purposes. South Korea has development into a global player. As a global player, South Korea has provided greater opportunities for businesses and private organizations in the United States. The economies of South Korea and the United States are closely knitted, and are joined by the South Korea-United States Free Trade Agreement. This is the second largest free trade agreement for South Korea. South Korea is the seventh largest trading partner for the United States and the third largest trading partner for South Korea. Since late 2008, relations between the United States and South Korea have been at their best state in decades. The overall United States-South Korean relationship is expected to remain healthy. Conducting business in South Korea is also expected to remain healthy. Major Elements and Dimensions of Culture in South Korea
Hofstede cultural concepts have advanced the understanding of global countries among researches looking to help practitioners capture the essence of a country’s culture. Fang (2010) made a compelling argument on the rich tradition of Asian thought in describing new cultural patterns to assist with defining multi-cultural environments. The world is different today. There is limitless access to the internet that drives researches to redefine the concepts explored in the twentieth century. Fang urges Asian scholars to share insights of the cultural richness to help build cultural understanding that will contribute significantly to global business managers.
Communication
Foreign management turnover in South Korea is extremely high. This is due to a lack of cultural communication between American and South Korean managers. Foreign managers in Korean chaebols may have a difficult time due to culture differences. Korean chaebols tend to maintain their national ethnic corporate culture. Foreign managers take on double burdens from the American cultural differences and the unique corporate culture of Korean chaebols.
Native language: Korean. The people of South Korea look different than other Asian groups. South Koreans have unique physical features. South Koreans have a strong cultural identity as an ethnic people. All South Koreans speak and write a common language. The people of South Korean speak, read, and write the Korean language. The language is understood by the millions of people living in the mainland and all of the surrounding territories. There are also 5.5 million Koreans living in other parts of the world. The strong national identity of the South Korean people is due to the common national language. The Korean language has several colloquial accents in the larger cities of the nation. This is similar to the accents of the different areas in the United States.
Foreign language: English. English for South Koreans is learned as a foreign language. South Korean children study English in public schools starting in the third grade. English is taught by Korean-born instructors, and they mostly teach simple vocabularies. High school and college entrance exams measure English proficiency. This is one of the many reasons why South Korean children study English (Magno, 2010).
High-context communication. Decision makers from South Korea and the United States found that individualism versus collectivism orientation and the link between manager and employee resulted in different relationships between trust and reciprocal behavior. Managers interpret power differences according to the values of their native culture. Two cultural values, individualism and collectivism, have frequently been studied in the decision making process. Empirical findings demonstrated that depending on a manager’s cultural group, high economic power could lead to increased or decreased levels of cooperation in a dilemma. South Korean culture was arbitrated by perceptions of fairness, whereas for the United States it was not. Kopelman (2008) stated, “factors such as self-versus group-focus primes may lead to different levels of cooperation contingent on whether the cultural group is vertical-individualist, vertical-collectivist, horizontal-individualist, and horizontal-collectivist” (p. 161). Understanding group and individual behavior is a common dilemma faced by managers at all levels. Understanding the difference between individualism and collectivism between the United States and South Korea is a prerequisite when working cross border with South Korea.
Religion
There are three religious groups in South Korea. These are Protestantism, Catholicism, and Buddhism. The religious groups have influenced South Korea’s unique context of cultural dimensions. Christianity increases the individuals’ civic engagement, while Buddhism does not have an impact on civic engagement. The cultural influence of the non-religion of Confucianism represents the classical culture of South Korea. Although these religions all coexist in South Korea, none of them fully represent the South Korean culture (Jeong, 2010).
Christian influence. About 26 percent of Koreans are Christians. Missionaries from China found their way to the Korean peninsula around the 17th century to introduce Christianity. The rulers of Korea outlawed Christianity and many Christians were martyred. Christianity grew in the Korean peninsula after World War II. Christian missionaries introduced education to young Koreans. Christianity grew even greater after the Korean War. Over fifty percent of South Koreans follow Christianity. Christians have a low tolerance for corruption. Mensah (2014) wrote, the “Protestant faith is not alone in having this anti-corruption effect. We find that the Buddhist faith” also has low levels of perceived corruption (p. 276). Christianity in South Korea is growing more as evangelical Protestants continue to convert non-believers in the country.
Buddhist influence. Buddhism influenced the culture not only in the religious aspects, but it has also brought the culture of temples and art to South Korea. South Korean Buddhist temples are nestled high in the mountainous regions. The temples are set near the natural beauty of rivers, valleys, or the seaside. The locations of the temples offer refuge to South Korean and tourist alike. Individuals travel to the temples looking for a quiet peaceful place to meditate and find solitude. Temples are the residence of monks who practice Buddhism. Buddhist temples draw large numbers of visitors annually. Buddhism is not a centralized system. The Buddhist religion appears to have an inhibitive effect on the level of corruption comparable to the Christian religion. Mensah (2014) wrote, “Non-European cultural clusters are associated with significantly higher corruption tendencies, but the overall effect is mitigated partially by either greater perceived political legitimacy” (p. 255). Buddhism is an exception in Mensah’s findings.
Confucianism and culture. Confucianism is not a religion. Confucianism is described as the position of an individual in Korean society. Confucianism is a system of behaviors and ethics. The practice of Confucianism stresses the obligation people have to each other based on relationships. Park and Müller, (2014) wrote, “the Korean people think that ancestor worship is a very important expression of filial piety, and it is a ritual which they practice regularly during their festive days” (p. 1). The basic codes of beliefs are based on the different relationships. One relationship is the ruler and the subject. A second is the husband and wife relationship. A third relationship is parents and children. Brothers and sisters cover a forth relationship and the fifth is based on a friend to friend relationship. Confucianism stresses respect for the elderly. The other ethical tenets of Confucianism are sincerity, duty, loyalty, and honor. Values, Manners, and Customs
Cross cultural communication between South Korean and American managers is a serious problem. The dynamics of South Korean high context chabols, large family owned businesses, are the reason there is a high rate of turnover in foreign management staff. The American low context culture and the high context South Korean require both cultures to acknowledge the opposing cultures. A shared understanding between the differing cultural groups can be achieved through active cross-cultural communications (Kim, 2013).
Hofstede’s cultural dimensions. There are many challenges for multinational corporations. The challenges of human resource management require a significant investment in time and money. It is important for multinational corporations to attract high performance managers. A management control system should consider the South Korean culture. When designing a management control systems, a manager’s culture is more significant than a manager’s personality. National culture is an important consideration when making a decision to implement a management control systems. According to Leach-López (2013), “Given that there are expected relationships between personality and cultural values and between cultural values and job performance, one would expect to detect a moderating effect of culture on the personality/performance (LOC-PER) relationship” (p. 7). United States controlled management control systems that include cultural dimensions can feel confident when designing management control systems for South Korea.
Individualism versus collectivism. Integrating and compromising styles are more prevalent in the collectivistic culture of South Korea than the individualistic culture of the United States. The Confucian ethics of the South Korean culture has been beneficial to the American style individualistic culture. Komarraju, Dollinger, and Lovell (2008) suggested that “Korean participants used less avoidance with subordinates whereas US participants did not change their strategy with subordinates” (p. 25). Korean employees used less avoidance with subordinates. American employees do not change their strategy with subordinates. Culture between nations is complex. How host managers resolve conflicts in the workplace depends on whether the conflict is horizontal or vertical. American employees change their style based on the situation whereas Korean employees use the same style regardless of circumstances The study suggest that the vertical and horizontal aspects of individualism and collectivism provides a more comprehensive understanding of how United States and South Korean cultural values influence conflict management styles.
Masculinity versus femininity. In their study, Christie, Kwon, Stoeberl, and Baumhart (2003) examine the relationship between cultural dimensions of masculinity, uncertainty avoidance, and ethical attitudes toward questionable practices. Among the countries of interest were South Korea and the United States. Korean is the official language of South Korea and Buddhism is the traditional religions of South Korea. At the time of the study, 37.9% of the population was listed as Christians. South Korea has grown to the 13th largest economy in world. The per capita income of South Korea in 1999 was listed as $10,200. The World Bank has listed the per capita income of South Korea at $33,140 and the United States at $53,042. The authors state that in 1999 the United States had the largest economy in the world with per capita income of $34,870, and it was the home for 153 of the 500 largest corporations. Christianity is the predominant religion in the United States, 85.3% of the population are Christians. Judaism (2.1%) and Islam (1.9%) were two other religions in the United States. English is the official language of the United States. The United States is the most individualistic country, while South Korea was judged to be collectivist. The United States was found to be more masculine, whereas South Korea was more feminine. South Korea was found to be a long-term oriented culture, while the United States was found to be a short-term oriented culture. South Korea was found to exhibit more power distance than the United States. There were differences in the ethical attitudes among business managers in the United States and South Korea. The study produced useful information for conducting business with managers from the United States and South Korea.
Indulgence versus restraint. South Korea is a restraint society. However, the United States is an indulgent society. South Koreans, as a society, are suspicious by instinct and unenthusiastic in appearance. On the other hand, Americans are culturally prudish and naturally arrogant as a society. These opposite attitudes and behaviors have not prevented American entrepreneurs and business managers from conducting business in South Korea or the United States.
Family structure. The traditions of the South Korean family are slowing changing as the nation emerges as a world player. Nevertheless, the family is still an important part of the South Korean life style. The father is the head of the household and is responsible for providing the needs of the family. As the head of the family, the father approves the marriage of all household members. The oldest male member of the household has additional responsibilities. As the eldest, he is foremost responsible to his parents, brothers, his sons, then to his spouse, and finally to his daughters. The cultural Confucian tradition is prevalent in the South Korean Family. The welfare of the family overrules the needs of the individual. The Human Development Index measures a country’s achievement in different areas of development between nations. The research presented by Rende and Donduran (2013) emphasized “not only has the Human Development Index helped to focus attention on improving well-being as the ultimate goal of development and galvanized international policy for poverty reduction” (p. 731). The Human Development Index of South Korea ranks high on the scale. The quality of life for the South Korean family is comparable to that of the United States.
Personal space. South Koreans, of the same sex, stand close together when talking or walking in public. Unlike the United States, an arm’s length from one another is not a common practice. For South Koreans, personal space is a western concept. In the major cities and public areas where space is limited, pushing and shoving is a common occurrence. Where there is limited space, people do not apologize for pushing, shoving, or bumping. Intrusion of personal space is a tolerated practice in South Korea. However, South Koreans aren't too comfortable with public displays of affection between men and women.
South Koreans are surprisingly uninhibited about touching other people of the same sex. Holding hands is normal for friends of the same sex. It is not that uncommon for South Koreans of the same sex to compliment foreigners on their skin or hair or stare in amazement. South Koreans are curious and uninhibited. People in smaller towns and rural areas, where foreigners are rarely seen, will intrude in a foreigner’s personal space. South Koreans are fascinated by the differences in the Anglo facial appearance.
Cuisine and health. The statement: ‘Good food is good medicine’ is a cliché used many times when describing Korean cuisine. South Korean cuisine has been described as one of the healthiest in the world. All cuisines from East Asia, regardless of its appearance, are considered nutritious and healthy food. South Korea has marketed its cuisine worldwide as ancient, nutritious, and tasteful in an effort to develop tourism. This has been a successful marketing scheme for the South Korean tourism industry.
Integration of Culture into the Business Environment in South Korea
Glocalization is the combination of globalization and localization. A term introduced in the researched article. Roudometof (2014) noted, “Two conceptual links among globalization, glocalization and nationalism that pertain to key aspects of the emergence and evolution of the nation-form” (p. 25). This article provides some insight on the cultural behavior of the homogenous Korean society in respect to globalization and nationalism. The article discusses the relationship between nationalism and globalization. A reassessment of the historical definition of globalization was offered in relationship to conventional thought. The cultural behavior of a homogenous society will differ from the heterogeneous society. South Korea, a homogenous society, will create glocalization. Transnational nationalism will also create pressure for cultural groups outside of the norm. This will require non-Korean groups to adjust their identities and adapt to South Koreas national cultural identity. A full understanding of globalization in respect to the national Korean culture will help in the development of solid business relationship with South Korea.
South Korean Corporate Culture
Kull and Wacker (2010) examine the cultural values between Asian and non-Asian nations. The study was based on Hofstede’s four cultural dimensions of 50 nations. ISO 9000 was the benchmark quality system used along with the Global Leadership and Organizational Behavior Effectiveness (GLOBE) scores to compare the differences in quality management effectiveness of the East Asian cultures of China, South Korea, and Taiwan. The study found that specific cultural dimensions were statistically related to quality management effectiveness. Kull and Wacker (2010) point out that ISO 9000 with its quality management “practices assume certain cultural traits to exist in the workforce, that if lacking will impact effectiveness” (p. 236). The study concluded that all Asian cultures are not consistent with quality management values. South Korea had a high score for quality management values. This study confirms that South Korea had been able to incorporate ISO 9000 into the national business culture. The ability of a facility to produce a quality product is based on the quality management system and the ability of workers and managers to follow the quality management system. Knowing the national cultural values of the business enterprise and how the workers will accept the concept is very import to the success of a multinational corporation. This study revealed the cultural dimensions that cause inconsistency in the effectiveness of any quality management system. Hierarchy and Business Leadership
Froese, Pak, and Chong (2008) discussed human resource management on how three multinational corporations handled the acquisition, merger, and integration of South Korean companies. The United States, France, and Germany with different national cultures were involved in the study. Froese, Pak, and Chong (2008) stated that, “These countries all differ from Korean culture in a similar way, along the organizational dimensions that we measured ... Besides, this study focused not on national cultural differences, but on actual changes to organizational culture” (p. 105). The United States followed an immediate approach to the integration and merger of organizational change. Human resource management conducted interviews with middle management and senior management. The United States received a passing grade on the employees’ overall perception of the immediate approach to integration of organizational change. There were lower scores to corporate structural change and individual cooperation. The study produced six hypotheses. The first hypothesis was that market oriented changes were perceived positively by managers. The second hypothesis that slower changes to new human resource management practices was also perceived positive. The third hypothesis that strong performance oriented cultural changes was positively received by managers. The forth hypothesis that stronger cultural changes with increasing market orientation, was positively received. The fifth hypothesis that strong organizational cultural changes, agreeing with Korean national culture, was also positively received. Corporate Social Responsibility
Human Development Index (HDI) measures a country’s achievement in different areas of development. The authors created new parameters for more inclusive discussion and evaluation of the Human Development Index rankings. The research presented by Rende and Donduran (2013) emphasized “not only has the Human Development Index helped to focus attention on improving well-being as the ultimate goal of development and galvanized international policy for poverty reduction” (p. 731). The authors suggest the use of self-organizing maps (SOM) to analysis the similarities across nations. This method allows a decision maker to statistically compare the similarities and differences of nations under consideration. Self-organizing maps fails to answer many issues. However, it is still useful as an evaluation tool for economic feasibility. Human Development Index and self-organizing maps allows businesses and investors in evaluating the economic feasibility of the country under consideration. Self-organizing maps may not have policy implications for South Korea, but examining the similarities and levels of achievement may provide some understanding of the developing nation’s achievements. Human Development Index and self-organizing maps are useful tools for the United States and South Korea when evaluating developing nations.
A Comparison of American and South Korea Business Culture
Cappellen and Jassens (2008) suggested, “Values and motivations are necessary for global leadership development but are unlikely to change from the typical training and development methods” (p. 532). Organizations should focus their support on the development of skills that can be applied across culturally diverse settings. The objective is to increase the understanding of global managers through examining their career competencies. Global managers should be aware of which key career competency will develop their career. Managers should be attracted to the position of a global manager because of the values that the position represents. These values are work-life balance, international exposure, professional identification, and decision making. These values allowed managers to make horizontal career moves that can cross organizational boundaries into global management positions. Competent global business managers are strengths vs. weakness when addressing corporate social responsibility challenges, which includes human rights. Proper development of managers will attract competent global management candidates.
Differences in South Korean and American Management Styles
Chang (2006) wrote, “It seems reasonable to assume that individual PFPs may trigger positive effects on employees’ work effort, even under the assumption of negative effects on their commitment to the” (p. 370). South Korean companies are switching to pay for performance systems. In collectivistic societies like South Korea, the pay for performance has been successful. The article states that there are not many empirical studies regarding their effects on employee attitudes. A data-set of 37 companies and 959 employees from South Korea was collected for the research and examined whether the new compensation system influences Korean employees. The organizational commitment and work effort were studied to understand how the effects were moderated by Human Resource (HR) practices. Using Hierarchical Linear Modeling, the researchers found that pay for performance and the commitment to HR practices did not affect organizational commitment. Positive interaction effects were found. The positive effect of pay for performance was seen as positive by employees.
Modernization of South Korean and American Women and Their Role in Business
Im, Kim, and Sung (2014) contended, “All the Korean working mothers in South Korea expressed the desire to quit their jobs and regretted being employed when they encountered difficulties with raising their children as working mothers” (p. 40). This study points out the cultural difference of the Korean working women in South Korea and the United States. The study implied that in South Korea, women in the work force feel guilty leaving their children at home while they go to work. The study involved women in professional and technical skills. Korean American working mothers in the United States have overcome this challenge. This implies that South Korea is a male dominated culture versus the United States. The attitude on women in the work force is a culture difference that requires the understanding of multinational managers. South Korea has made progress improve the working environment of women in the work force.
Political Role in Business
During the global financial crisis of 2008 and 2009, the Asian financial systems were less affected then the United States and Europe. However, South Korea experienced a sharp surge in foreign currency reserves and exchange swap lines to deal with the crisis. The Korean won was on the verge of collapse. Aizenman, Jinjarak, and Park (2011) explored the consequences of South Korea having access to swap lines and increasing their reserves on hand. They conclude that these agreements might weaken the reserves anticipated and on-hand. As a result, South Korea engaged in securing foreign exchange swap lines to have access to liquid funds as needed to cope with the turbulence of the foreign exchange and financial markets. Aizenman, Jinjarak, and Park (2011) wrote that “The evidence suggests that there is only a limited scope for swaps to substitute for reserves” (p. 1). The Korean crisis was averted by the ability to have foreign exchange swap agreements. These swap agreements rescued South Korea when its ample pool of foreign exchange reserves was ineffective in the market intervention.
Implications for US Businesses Considering Operations Located in South Korea
There will be cultural problems between South Korea as the host nation and the United States as parent nation. A culture is defined as people sharing the same religion, language, beliefs, and values. South Korea and the United States Most businesses have different cultural backgrounds where people work together to achieve goals, yet each nation operates from its own cultural awareness. Understanding the cultural dimensions of a host country as well as the parent nation can enable a business to operate globally. Firoz, Maghrabi, and Kim (2002) examined the importance of effectively managing people of different cultural values, and exposed some of the problems occurring when a parent company manager refuses to internalize the differences in a host country culture (p. 41). The values of communication and ethics, as well as the desire to incorporate the host culture, rather than impose the parent culture on the host nation, are desired practices for all multinational companies.
SWOT: Analysis of South Korea
South Korea has a rapidly growing economy. The Small nation wants to capitalize on the efforts it has made to join the global trade communities. South Korea exports more goods than it imports. The nation wants to continue this trend by removing barriers and inviting multinational enterprises to seek partnerships with local manufacturing companies
Strengths. South Korea is at the opposite end the scale in terms of national individualism, uncertainty avoidance, and power distance as compared to the United States. Brewer and Venaik (2012) admitted, “The trust-loyalty link was the same across the two cultures because they expect in different cultures the relationship would be different” (p. 677). The article highlights the misapplication of the Hofstede and GLOBE national culture dimensions at the individual level of analysis in both research and teaching. The Korean and American cultures continue to be at opposite ends of the scale. However, because of globalization the individuals in the two cultures have meet in the middle. The individuals in the two nations cannot be classified according to Hofstede’s cultural dimensions. The dimensions no longer exist at the individual level. However, they do apply as a nation. Managers should avoid using Hofstede’s cultural dimensions to draw potentially incorrect conclusions about an individual while dealing in international business transactions. When learning about the South Korean culture, a manger should keep in mind that Hofstede’s cultural dimensions remain the same as a national culture. Consulting with local human resources will help understand the individual culture versus the national culture.
Legal and regulatory. Severino (2010) wrote, “The drafting of the ASEAN Charter by a task force of senior ASEAN officials, its signing by the ASEAN leaders in November 2007, and its entry into force in December 2008 were significant” (p. 60). The primary reason is that ASEAN is now on a rules-based path. An important cultural business aspect is the declared aspiration to the goals of democracy, human rights, fundamental freedom, rule of law, and social justice. The Charter and the Commission on Human Rights (AICHR) have now placed human rights on the ASEAN agenda. The AICHR members have diverse backgrounds and varied personalities. The commission may not have the power to make or implement change. However, this is a step in the right direction. South Korea is part of the ASEAN plus tree free trade area with China. The elimination of tariffs on ASEAN’s trade with other nations and the global economic crisis can lead to significant changes in the economic cultural dynamics of South Korea and other ASEAN nations. South Korea has made great progress in democracy, human rights, fundamental freedom, rule of law, and social justice. Time will tell if the goals of ASEAN are taken seriously by the other member states.
Weaknesses. Foreign trade, especially manufactured exports, is rapidly changing the economy of South Korea. Electronics, computers, and automobiles are exported by South Korea. Foreign multinational enterprises are a major contributor to the export growth of the nation. Low protection policies have helped the multinational enterprises in the cross border exports. However, high protection policies will discourage multinational enterprises from engaging in other ventures with South Korea. Industries in South Korea maintain high tariffs to protect local workers. These protected industries have seen a decline in exports. International business professions have had a significant role in changing South Korea’s trade policies. South Korea need to have a a more open trade policy on the locally protected industries.
Governmental. In the article, Hu (2009) analyzes how the Asia-Pacific Economic Cooperation (APEC) relates to the emerging regional architecture in the Asia-Pacific region as APEC searches for a new direction relevant to regional community building (p. 15). APEC has problems and limitations. APEC needs to engage in the removal of trade barriers. Currently, APEC does not engage in negotiations to reduce and eliminate barriers to trade and investment. APEC needs to find a new approach to remain successful in the Asia-Pacific region. South Korea is a member of the Asia-Pacific Economic Cooperation (APEC). While South Korea has joined other organizations like the World Trade Organization, many of the APEC nations are still clinging to their economic sovereignty and are not ready or willing to participate in the process of transferring economic sovereignty to the APEC structure. The article covers the commitment of the member nations to open trade, economic reforms, and investment. With the help of South Korea, the other APEC nations will have a strong partner in establishing a rules-based multilateral trading regime. Most APEC nations are export-oriented economies. These nations have managed to achieve extraordinary prosperity through free trade and investment. Before 1989, many Asia-Pacific nations, including South Korea, had sanctioned selective trade discrimination making it impossible to benefit from regional trade and the global economy. Today APEC is able to promote trade liberalization through its commitment to free trade and investment and South Korea is leading the effort. However, the diversity among APEC nations is enormous. This diversity creates problems in finding common denominators for cooperation. In order to survive APEC may need to scale back on its ambitious agendas and activities and transfer them to other trade organizations. APEC needs to follow the South Korean model.
Opportunities. International trade and the expansion of global corporations create ethical issues and generate concerns for global corporations. Ethical issues are no longer limited to national borders. Ethical issues have grown to worldwide stature and will require international solution. The author recommends an international organization to create a global code of ethics. Mahdavi (2009) wrote, “American business in spite of all of its faults and weaknesses, still form a key model for much of the world” (.p. 3). The fall of trade barriers worldwide require an international code of ethics. The United States should be the foundation for this code of ethics. Multinational corporations should be inject, into the code, the multicultural issues and the channels to communicate the code. The author suggested that the World Bank should take custody of international ethics and create a global code of ethics.
Foreign trade. The article suggests that that there are gains to be made from traditional trade liberalization. South Korea is not included in this study. However, South Korean trade policy on trade was changed to attract foreign development investments from the United States and Europe. Hoekman and Nicita (2011) wrote, “Bilateral and regional trade agreements have proliferated, and progress at the multilateral level has unfortunately been slow” (p. 2077). The article suggested that traditional trade policies continue to be important in developing countries. However, non-tariff measures and domestic trade costs are also of great importance. South Korea has reduced trade restrictiveness. This reduction has impacted exports in a positive direction. Removing trade restrictions at the border will have effects on domestic policies that affect trade costs. The article suggests that behind-the-border measures to improve logistics performance and facilitate trade are likely to have a larger effect in expanding trade, especially exports.
Threats. Chang (2008) wrote, “One mind-set that is almost universally held by Korean people and almost universally reflected in their behavior is a shallow credentialism that accords undue prestige and political influence to academics” (p. 6). In South Korea, it is the diploma and not the individual’s abilities, accomplishments, or potential that matters. This is an extreme self-importance functioning as an absolute social criterion and results in an obsession with education. With their good school diploma, means success mentality. Therefore, people forgo almost anything for that diploma from a good school. Chaebols, family owned business, often buy their children a diploma. Social appointments in family owned business, chaebols, is a major concern for multinational corporations.
Rivalry among multinational corporations. In his paper, Baldwin argues that the WTO has not kept pace with “the cross-border flows of goods, investments, services, know-how and people associated with international production networks” (p. 1). Adapting the WTO to the realities of modern supply-chain trade will require a new organization – WTO 2.0 as Baldwin (2014) calls it. As a developed nation, the methods of traditional trade no longer apply to South Korea. New methods of trade are being used that are covered by the WTO. Baldwin argues that organizations succeed when they facilitate win-win outcomes in situations that would otherwise produce lose-lose outcomes. Baldwin (2014) wrote, “the structure and rules of the organization must be carefully crafted to account for the nature of the international spillovers that create the existence of both the win-win and lose-lose outcomes” (p. 266). This means that the best strategy for South Korea is to adopt strict disciplines. High technology firms are attracted by nations that adopt strict disciplines. South Korea has recently embraced the international trade struggle to find success with the governance of the WTO. As a newly developed nation, South Korea should not join the concept of WTO 2.0. South Korea should continue to stick to the key discipline for traditional trade. This discipline is open markets. South Korea has embraced the WTO. As an example, American high technology firms have off shored factories and technologies that the firms’ tangible and intangible assets are protected.
Exploitation from joint venture partners. This article is about the looting of developing nations by developed nations. The United States was one of the developed nations that took advantage of Latin American. Today, the United States no longer practices political control for loans. Looting of a nation involves the immediate translation of political control into maximum appropriable gain. Such looting is facilitated when international banks are willing to turn natural resources into loans. An example is the discrete choice by an unchecked ruler making decisions regarding the development of a resource rich nation. The concept that resources serve as collateral and facilitate the acquisition of loans is discussed, and how rulers choose either to stay in power while facing the risk of being ousted, or loot the country’s riches by liquefying the resources through lending. The article addresses the unstructured lending from international credit markets that create incentives to loot the country. The article states that this incentive enhances the likelihood of looting causing political instability, and diminishing growth. Swanson, Bulte, Sarr, and Meissner (2011) wrote, “It may be more appropriate to encourage FDI rather than sovereign debt, again rendering recourse to domestic institutions necessary” (p. 378). The lesson for South Korea is not to obtain loans based on national resources. This may reduce the availability of funds in general; however the analysis indicates that this is positive for South Korea.
FDI analysis of South Korea
The United States and South Korea multination corporations have invested in each other’s economy by setting up subsidiaries, acquiring shares, and joint ventures. South Korea as invested over 10% in American Venture. An example of South Korea’s foreign direct investment would be the automotive industry in the United States.
Hierarchical attitudes. The gross domestic product (GDP) per capita purchasing power parity (PPP) is obtained by dividing the country’s gross domestic product, adjusted by purchasing power parity, by the total population. South Korea’s GDP at PPP exchange rates is valued at prices prevailing in the United States South Korea participates in the World Bank's PPP project that calculates these measures, so the resulting GDP estimates for South Korea are accurate. According to the World Bank, GDP per capita PPP in South Korea averaged $22,359.36 from 1990 until 2013, reaching an all-time high of $34,870.11 in 2013 and a record low of $12,086.76 in 1990. Taylor (2009) wrote, "While few empirically literate economists take PPP seriously as a short-term proposition, most instinctively believe in some variant of purchasing power parity as an anchor for long-run real exchange rates” (p. 136). Rates have been less volatile when utilizing the long-term PPP theory. Cultural adaptations to expect when conducting business
When dealing with subordinates, colleagues, and negotiation partners in South Korea knowledge of the cultural variations in management style will help the international business manager more effective. Familiarity of the Korean national culture may also help managers in the United States and South Korea predict ethical, political, social, or economic issues that may influence the multinational corporation. This knowledge may also be helpful in integrating operations through strategic alliances with South Korean companies. Knowing the different styles of decision making will prevent personality problems and avoided cross national border conflicts. Cultural differences are reflected in national values. These values affect behaviors that including how decisions are made. Values were measured using Hofstede’s four original dimensions. Albaum, Yu, Wiese, Herche, Evangelista, and Murphy (2010) wrote, “Although the concepts and dimensions of management style and cultural values are not new and have been studied widely, the connection between them is new” (p. 142). The technique used to survey marketing managers in each country was adapted to each nation’s cultural norms. The study was an attempt to extend the measurement of culture to the individual level by assessing the individuals’ beliefs in widely accepted cultural values. This has implications for strategic alliance formation and for formation of cross-cultural management teams in South Korea.
Considerations and accommodations to make towards South Koreans
Gross Domestic Product (GDP) and Gross National Products (GNP) measure the size and strength of an economy. Yingmei and Tang (2009) wrote, “We suggest finance-based measures should be reported alongside the conventional GDP-based measure” (p. 326). As such, these indicators motivate business development within the global community. Asian economies over the period of 1980-2004 have experienced capital flight. However, such conditions have drained financial resources for the region. There are better indicators to measure and evaluate GDP as it relates to capital flight. There are two measurement issues. The first is about the computation of the nominal value of capital flight and the second is about the unit of expression. Utilizing these two methods will calculate more accurately GDP numbers so that the economy is well prepared to absorb any capital flight during challenging times.
Conclusion
The United States conducts large amount of business with South Korea. Therefore, in order to be a successful global business manager, it is imperative that the American Businessmen learn the elements and dimensions of culture of South Korea. They must also learn the differences between the two countries and how these differences can affect how they conduct business. The Japanese way of life is quite different than that of the United States. The Japanese strive to be more considerate of others, attempt to maintain Wa or harmony, and tend to be non-confrontational. On the contrary, Americans have the opposite approach. However, if the American businessmen are mindful of the Japanese customs and are able to maintain harmonious working relationships, then he or she will be successful in conducting business in South Korea.

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