Ownerless Companies Are Dangerous

The harassment of Samsung goes on without end. Over the past year and a half, prosecutors have reportedly summoned and questioned around 30 Samsung executives more than 100 times and carried out over 50 raids and searches. This is excessive and overbearing.

Trying once again to arrest Vice Chairman Lee Jae-yong, or seeking to tarnish his reputation, is also undesirable. South Korea has never had an especially business-friendly environment, but the recent attacks on Samsung have gone too far. There may be political reasons for pressuring Samsung, but compared with whatever political gains may be made, the decline in corporate value resulting from the destruction of Samsung’s corporate culture would be a great loss to our society.

Abusing the goose that laid the golden eggs and then cutting it open is foolish. Samsung has built the finest organizational culture in our society and achieved the best results. It is a company that has led our society. Treating it as an enemy lowers the level of our economy and is a foolish act that makes losers of us all.

Samsung represents Korean business. As a result, it has long been the symbolic target of anti-business sentiment. In particular, attacks on Samsung have been concentrated on Vice Chairman Lee Jae-yong. Fortunately, the system Samsung has built is so solid that it has held up well so far, but there is no guarantee that Samsung will be able to maintain its competitiveness in the future.

If Samsung’s corporate culture is distorted and weakened because of political risk and judicial risk, not only our economy but also the overall cultural standards of society could decline together. Anti-business political powers, civic groups, and labor forces point to the problems of owner-led management.

They pursue only the political benefits they can enjoy, rather than considering the harm that management without an owner would bring. Claiming that second- and third-generation management is problematic because management ability has not been verified, they dream of companies they themselves can control at will. Outwardly, they insist that firms should move to a professional management system, but inwardly, their real intention is to create quasi-public enterprises in which political authorities appoint the CEO and labor unions exercise power within the organization.

If corporate governance is changed politically and owner-led management is neutralized, turning firms into ownerless companies, such companies cannot be run properly. A company that has lost its ferocity will become one that watches political authorities rather than reads changes in the market. Instead of generating profits, it will degenerate into an organization that serves only interest groups.

An organization must have someone who plays the role of owner. Only then can it serve consumers and create value. At Samsung, Lee Jae-yong is that person. No one can replace Lee Jae-yong and produce comparable results. The government must not try to replace him. Such an attempt would only cripple Samsung.

Because political logic has gained so much more force than economic logic in our society, misguided experiments are repeatedly being made to decide even economic issues politically. Management uncertainty is now extremely high. Although the environment is difficult, I hope Samsung and Vice Chairman Lee Jae-yong will carry on the excellence of Samsung’s corporate culture and contribute to brightening the future of our society.

Sung-no Choi, Editorial Board Member of Future Korea, President of the Center for Free Enterprise (CFE)

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Original title: 주인 없는 기업은 위험하다

Author: Sung-no Choi

Date: 2020-06-24

Source: https://www.cfe.org/bbs/bbsDetail.php?cid=press&pn=20&idx=22859