Chaebol Structure

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DEFINITION

A business conglomerate structure that originated in South Korea in the 1960s, creating global multinationals with huge international operations. The word "chaebol" means "business family" or "monopoly" in Korean. The chaebol structure can encompass a single large company or several groups of companies. Each chaebol is owned, controlled or managed by the same family dynasty, generally that of the group's founder. Samsung, Hyundai and LG Group are among the biggest and most prominent chaebol.

INVESTOPEDIA EXPLAINS

A charge often leveled against the chaebols is that they have impeded development of small and medium-sized businesses in South Korea, creating massive imbalances in the economy. While the South Korean government has made occasional attempts to curb the power and influence of chaebols over the years, these efforts have met with mixed success.


While the chaebol structure is often compared with Japan's keiretsu business groups, there are some fundamental differences between the two. Chaebols are generally controlled by their founding families, while keiretsu are run by professional managers. Chaebol ownership is also centralized, while keiretsu are decentralized.




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