In Search of a Korean Management Style || Awareness of Social Responsibility by Korean Managers in Marketing Practices: A Sociocultural Explanation

Awareness of Social Responsibility by Korean Managers in Marketing Practices: ASociocultural ExplanationAuthor(s): Il-Chung WhangSource: International Studies of Management & Organization, Vol. 28, No. 4, In Search of aKorean Management Style (Winter, 1998/1999), pp. 19-25Published by: M.E. Sharpe, Inc.Stable URL: http://www.jstor.org/stable/40397423 .

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Int. Studies ofMgt. & Org., vol. 28, no. 4, Winter 1998-99, pp. 19-25. © 1999 M.E. Sharpe, Inc. 0020-8825/ $9.50 + 0.00.

Il-Chung Whang

Awareness of Social Responsibility by Korean Managers in Marketing Practices A Socioculturel Explanation

The social responsibility and ethics of businessmen have been much studied. Although it has been criticized for lacking a theoretical basis, research on social responsibility and ethics in the area of marketing has become a popular area of study in the last thirty years. In fact, after the great burst of the consumer movement led by Ralph Nader, this line of study blossomed in the United States and other developed countries.

In contrast, very little systematic research in this area has been conducted by Korean academics, notwithstanding numerous consumer complaints of unethical marketing practices. Perhaps the difficulty of collecting appropriate data has prevented researchers from conducting this kind of research. Moreover, the majority of marketing scholars in Korea might have opted to look at marketing practices from the point of view of the seller rather than from that of the buyer.

The term "social responsibility" is variously defined by different people. Here it is defined rather loosely as some kind of obligation to deal with the social and ethical problems it is believed business organizations have.

On the bases of limited research findings and loose definitions of social responsibility and ethics in marketing practices, this article discusses the plausible causes of the existing incongruence between the superficial awareness (or principles) and the underlying intention (or actual judgment) of Korean managers. Special attention is placed on exploring the influence of sociocultural values and characteristics on this incongruence, and suggestions are made for narrowing the gap. The approach is, in essence, descriptive and exploratory. Explanation of the incongruence is supported with survey data and secondary materials.

The author is director of the Esquire Cultural Foundation, Seoul, Korea.

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20 IL-CHUNG WHANG (KOREA)

Awareness and practice of social and ethical issues

From the survey conducted for this study in 1996, it was found that Korean managers (N= 150) have a rather positive awareness of social responsibility and ethics (see Table 1). The survey was conducted for the participants of top management development programs of five universities in Seoul and one in Taejon, Korea. For all items in the table, with one exception, the mean values lie at three points or more out of a four-point scale, which implies willingness to bear responsibility one way or another when a business encounters social and/or ethical issues in its daily marketing activities. The survey also showed that the majority of the respondents either agreed or strongly agreed that they would bear responsibility, except on the question of hiring a manager from competitors. Little difference in the distribution was found among different groups of respondents, such as owners versus professional managers or managers of small versus large firms.

The outcome of the survey was expected to some extent, because Korean business managers have been taught to comply with social expectation throughout their educational process and their later exposure to mass media. Also, the outcome accords with the efforts of many large firms in Korea to set up offices of customer services. However, as shown in the ensuing discussion, the incongruence is often observed between the awareness and actual practices of responsibility in the marketplace.

According to data, compiled by the Korean Consumer Protection Board, a nonprofit organization operating with government subsidies, the number of consumer complaints has increased greatly in the last few years (see Table 2).

Other data compiled by the National Council of Consumer Protection Organi- zation in Korea, a private nonprofit organization, show the same growing trend in cases of consumer counseling and complaints (see Table 3). One possible cause of this trend may be that, as the kinds of goods and services put on the market increase, so do the number of defective parts and services and therefore the number of complaints and cases of counseling. However, this economic growth factor alone may not be enough to justify the high rate of growth in complaints.

As for the unfair trade and competition cases handled by the Fair Trade Commission of the Korean government, Korean firms, particularly large firms, have committed a wide range of violations of law (see Table 4). It is likely that nowadays more such illegal and ethically questionable marketing practices are conducted by Korean businesses.

The following examples are representative. One involves newspaper and magazine publishers' refusal to disclose paid circulation. Ironically, the publishers involved in this case are members of the Audit Bureau of Circulation, estab- lished in Korea a few years ago. Only some newspaper companies have agreed to disclose circulation numbers so far. Yet these newspapers were the first to



AWARENESS OF SOCIAL RESPONSIBILITY 21

Table 1 Percentage of responses for the questions related to support of social responsibility

Cumulative Contents of questions percentage*

Providing after-sale services for a product after an expired warranty 83.8 period

Canceling an installment payment order after a cancellation period 65.3 Providing unasked customer services 90.9 Pricing the cosmetics at a price much higher than total costs 90.9 A collusive agreement against price undercutting among competitors 72.5 Hiring a marketing manager from competitors 39.2 Preventing customers from throwing away chewing gum without 73.9 rewrapping it

Promoting heavily to sell a large car that pollutes the air excessively 88.4 Imposing heavier responsibility on business in the future 1 00.0

N= 150. ♦ Percentages of "agree" plus "strongly agree" in supporting social responsibility.

Table 2 Number of cases of counseling and complaints filed with the Korean Consumer Protection Board

1988 1990 1992 1994 1996

Cases 17,624 32,801 86,126 110,944 174,453 Annual rate of - 44.0% 62.2% 9.0% 26.9% increase*

* Each year's growth rate is added and divided by two. Source: Korean Consumer Protection Board, Annual Reports.

issue accusations questioning the social responsibility and ethics of business.

They have, however, themselves ignored their responsibility to their customers -

namely, the advertisers and advertising agencies. A second example is that of an automobile purchaser who recently found that

the car had defective parts and that the wrong size of engine had been installed. The seller refused to accept responsibility for correcting these deficiencies until the frustrated car owner publicized the case through the mass media (Chosun libo, September 9, 1993).

These cases show that there is an incongruence between what the managers say and what they actually do. There is also an incongruence between what the managers say and what their frontline subordinates actually do. These cases are



22 IL'CHUNG WHANG (KOREA)

Table 3 Number of counseling and complaints filed with the National Council of Consumer Protection Organization in Korea

1988 1990 1992 1994 1996

Cases 84,998 132,801 143,396 175,600 309,753 Annual rate of - 28.1% 6.3% 8.8% 38.2% increase*

* Each year's growth rate is added and divided by two. Source: National Council of Consumer Protection Organization, Consumer, January- February issue of the respective years.

Table 4 Number of cases indicted by the Fair Trade Commission, Republic of Korea

1992 1994 1996

Unfair trade practices (total) 1 57 382 61 5 Free gift 28 23 66 Discriminative transaction 18 55 53 Deceptive advertisement 25 145 182 Abuse of predominant position 62 70 190 Others 24 89 124

Source: Fair Trade Commission, ROK, Annual White Paper.

perfect examples of "managers talking a lot about social responsibility, but do[ing] little about it."

Causes of incongruence: Sociocultural explanations

It may be true that the incongruence between superficial awareness and actual behavior with regard to social responsibility in marketing practices would exist in any situation. Therefore, the real problem is not whether or not such incongruence exists, but its extent and causes. While the extent of the incongruence is beyond the scope of this paper, the discussion here focuses on possible causes. Moreover, although various other causes might be listed, the discussion here is limited to the analysis of sociocultural influences on Korean managers, that is, the causes inherited from tradition and embedded to shape national characteristics.

The Korean ethical foundation, like the Japanese to a certain degree, is deeply rooted in the five ethics of Confucius and the five ethics of Buddhism. These ethical doctrines may be characterized as the ethics of interdependency and




mutual obligation. On these ethical foundations other values developed. The benevolence of Confucius and mercifulness of Buddhism have been the domi- nant ethical values of the Korean people.

The rigid class structure of Korean traditional society, however, which was maintained throughout the Yi dynasty (1392-1910), applied Confucian ethics largely to the gentry, leaving common people to follow the ethics of Buddhism, which tends to bind their behavior with fatalism. It may mean that Confucian virtues of mutual obligation applied only to the cultured gentry.

For the gentry, the family was the most important basic unit, overruling other social institutions. On the other hand, for the common people, the basic virtue imposed on them was absolute obedience, which easily provoked undesirable behavior of distrust, alienation, and protest against the ruling class.

Let us illustrate how these traditional values and traits have affected the behavior of Korean managers and serve as a source of the incongruence pre- viously mentioned.

First of all, connectionism and exclusivism, both strongly rooted in family collectivism, have tended to pay less attention and respect to outsiders, while those people or organizations considered to have certain ascribable relationships to the family or the group would often receive extra favor and care. Here, connectionism may be explained as a form of intimate network or relationship among acquaintances. On the other hand, exclusivism refers to discrimination between those who have intimate relationships and those who do not. This could easily lead to favoritism, so that the notion of strong connectionism may often develop the notion of less care for outsiders and outside events, including social problems, which are largely related to social responsibility and ethics. Such values may lead to the incongruent behavior of Korean marketing managers.

Second, the traditional classification of the ruling class and common people has also contributed to this incongruence. The ideology of the ruling class has largely been transplanted into modern Korean business organizations. Particu- larly, in large business organizations, the higher-level managers may perceive themselves as being in positions of dominance and power rather than of responsibility. Old bureaucratism, often accompanied by arrogant and authoritative behavior, is found not only in the political sector but in the business sector as well. Thus, managers have often failed to understand the social problems present at the front lines of marketing and have also failed to comply with the ethical principles that they have set. In this respect, the perception and behavior of the traditional ruling class, which are well respected and emulated by Korean managers, as well as by government officials, seem to have had a far-reaching effect on contemporary Korean business managers. What with the overemphasis on ethical ideals and the exaggeration of social responsibility, the degree of incongruence mentioned above has often appeared to be greater than it should be.

Third, Korean business managers have hardly emphasized ethical elements in daily practices. In particular, the small-business owners and their managers do



24 IL-CHUNG WHANG (KOREA)

not pay serious attention to fulfilling their social responsibilities. For them, the incongruence described above is a fact of business life. Because their status in the hierarchy is low, the businessmen, particularly, small-business owners, as- sume that society does not recognize their economic and social contributions anyway. Consequently, they do not feel a strong sense of social obligation. Therefore, the incongruence between the superficially retained awareness and actual judgment must inevitably be maintained to some extent.

Fourth, since Korean business managers - indeed, Koreans in general - are fundamentally ingrained with an overoptimism that is largely influenced by the creed of Buddhism, they often neglect serious thought about socially related issues. Expediency and/or short-sightedness regarding vital social issues, such as coercive selling, lack of truth in advertising, negligence in recycling packaging materials, and so on, are common. In particular, when "a weak sense of commu- nity as a whole and lack of public-mindedness" (Choe Nam-Son, 1975) are mixed with optimism and expediency, it may be difficult to expect conscious and constructive efforts by Korean business to implement social responsibility in marketing.

Another conspicuous characteristic of Koreans, the generosity or tolerance of Confucius, would induce lenient marketing practices. The people tend to be generous and tolerate questionable practices to a large extent, and they do not take the matter of unethical practices in marketing seriously unless it causes serious harm to a particular group. In part because people do have their own judgment based on their experiences, because they have preconceived ideas and expectations about prevailing business practices, and because they often conceal their own opinions and sentiments, they do not take immediate action. In turn, they also do not believe seriously in any creed or code of conduct that many businesses provide as an honest guideline for marketing practices. As a result, some Korean managers take advantage of this generosity of the people and dare to commit unethical and even unlawful acts.

Concluding remarks

Various plausible explanations are presented in this paper of the incongruence between the superficial awareness and the actual practices of Korean marketing managers. Recent public pressures and changing marketing practices in Korean business have helped reduce this prevailing incongruence, but it may take some years to replace old traditional elements with ones that are appropriate in the promotion of ethical practices.

The explanations offered here suggest some generalizations concerning the incongruence. First, there is an incongruence between awareness and practices on the part of Korean marketing managers with respect to fulfilling social responsibility.

Second, one plausible explanation for the existing incongruence may be found




in the characteristics of the Korean cultural tradition. Third, cultural doctrines, such as benevolence and mercifulness, have often

served rather positively, but some other traditional heritage, such as hierarchical authoritarianism, has had a negative effect on social responsibility in marketing.

Fourth, for Korean managers, particularly those in marketing, it is vital to be aware of the obligations rather than rights and authorities. Through the process of continuous education and discussions among businesspeople, scholars, and government officials, the scopes and limits of their responsibilities should be clearly defined and understood.

Finally, in order to build a society on the ethics of interdependence at the heart of Confucian doctrine, it is also necessary to teach and to promote the obligations of the public toward society. Without this kind of joint effort, the efforts made by business will be in vain.

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Chosun Ubo [Daily Newspaper, in Korean]. September 9, 1993, p. 18. Choe, Nam-Son. "The Koreans Seen Through History. Studies on National Ethics [in

Korean], 4 (1975), 243-253. Choe, Jae-suk. Social Characteristics of Koreans [in Korean]. Seoul: Kaemun-sa, 1965. Chong, Sun-mok. "The Image of Man in the Korean Traditional Culture." Kwang Jang

[The plaza, in Korean] (December 1980), 20-23. Han, Sang-bok. "The Korean Patterns of Life and Ways of Thinking: Tradition and

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Murphy, P.E., and Laczniak, G.R. "Marketing Ethics: A Review with Implications for Managers, Educators and Researchers." In Ben M. Enis and Kenneth J. Roering (eds.), Review of Marketing. Chicago: American Marketing Association, 1981.

Shin, Yu-keun. Characteristics and Issues of Korean Business [in Korean]. Seoul: Seoul National University Press, 1984.

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In Search of a Korean Management Style || Awareness of Social Responsibility by Korean Managers in Marketing Practices: A Sociocultural Explanation