Globalization Strategies of South Korean Electronics Companies After the 1997 Asian Financial Crisis

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Acknowledgements

The authors are grateful for valuable comments provided by anonymous referees and Chris Leggett, Jung-Soo Seo and Helen Kang. All errors, however, remain their own.

Notes

 1. The emergence of a large, active and independent trade union movement from 1987 contributed to a sharp rise in labour costs. Average wages in manufacturing increased from $US296 in 1984 to $US723 in 1989 (Korea Labor Institute, 1994). Furthermore, the Korean Won appreciated from 827.4 to 679.6 to the US dollar during the same period (The Bank of Korea, 1999).

 2. Dunning (1993) explains these three motives as Market-Seeking, Trade-Seeking and Strategic Asset Seeking foreign direct investment. See also Suh et  al. (2000) .

 3. This is explained by the theory put forward by Knickerbocher (1973) .

 4. Among them, the four largest conglomerates, Hyundai, LG, Samsung, and Daewoo, accounted for more than half of South Korea's debt (Hankyoreh Newspaper, 24 March 1998).

 5. For example, the exchange rate rose from 844.2 Won in 1996 to 1415.2 Won in December against the US dollar (Kwon and O'Donnell, 1999, p.278).

 6. HEI changed it name to Hynix in 2001, after the management was handed over to the creditors.

 7. SE only developed its own colour TV models in 1976, with technological support from a Japanese multinational company, and 10 million units of black-and-white TV were produced up to 1981.

 8. A typical example of the government's leadership was a series of collective research and development projects in developing 16M DRAM and 64M DRAM between these three companies in the late 1980s and early 1990s.

 9. However, all subsidiaries, except for Zenith, were 100 per cent wholly owned by the head office. LGE only acquired 57 per cent of Zenith, due to the large amount of capital required.

10. Korean firms by and large, use less outsourcing and more vertical integration compared with Japanese firms and Chinese firms in Hong Kong and Taiwan. Suh and Seo, 1999 ).

11. This is another reason why the wholly owned subsidiary was a preferred mode by HEI. As these subsidiaries are part of a global production system, and access to the host country market is not an issue, tighter control in management and quality was the priority.

12. Except for HEI. HE Scotland divested from the European market.

13. See Suh et  al. (2000) for a detailed explanation related to this point.

14. In Porter's terminology, it is the dynamic relationship between the Diamond, and the creation of the firms' competitiveness. In Dunning's OLI, it is the relationship between the ownership and location advantages.