Understanding the rise and decline of shareholder activism in South Korea: the explanatory advantages of the theory of Modes of Exchange

Abstract

The extent to which Korea has become a fully-fledged neoliberal state has been subject to debate. We argue that the recent rise and fall of shareholder activism in Korea is related to the coexistence of neoliberal and developmental state characteristics. Uncertainty as to "the rules of the game" during this uneven transition has provided the chaebol with an opportunity to defuse the radical potential of shareholder activism. Through an analysis of media reports this article argues there is a relationship between the rise of fall shareholder activism in Korea and a retreat from neoliberalism. It then discusses advantages of the theory of Modes of Exchange to make sense of these developments.

From Catch-up to Convergence? Re-casting the Trajectory of Capitalism in South Korea

“…Thus, chaebol were the main targets of the post-crisis reform and were forced to improve their corporate governance by introducing independent directors in their board. Furthermore, the shares and voices of foreign shareholders became more important and influential in corporate governance (Dalton and Rama, 2016).…”

“…Indeed, whereas several authors (Jayasuriya, 2005;Pirie, 2007;Wong, 2011) have argued that the changing external and internal circumstances have diminished the developmental states' capacities to devise and execute coherent technoindustrial strategies, others argued that a continuity of East Asian capitalism remains in several aspects. For instance, Dalton and Rama (2016) pointed out that the recent rise and fall of shareholder activism in Korea is related to the coexistence of neoliberal and developmental state characteristics. Also Kalinowski (2015) observed that East Asian capitalism remains as a distinct state-led model that differs from the liberal, neo-corporatist, or welfare state capitalism in the West, in terms of its reaction to the global economic crisis in 2008 by conducting much bigger fiscal stimulus packages.…”

From Catching Up to Convergence of the Latecomer Firms: Comparing Behavior and Innovation Systems of Firms in Korea and the US

“…If Korea can now be classified in the same group as the United States (US), United Kingdom (UK), or LMEs in terms of performance measures of economic growth and income inequality as Lee and Shin [9] verified by a cluster analysis, then this shocking result raises an important puzzle of how Korea can thus be classified despite the possible existing differences in its underlying institutions, such as national innovation systems, corporate governance, financial system, and the role and power of the government. Indeed, whereas several authors [11][12][13][14] have argued for some tendency of convergence, and observed that the changing external and internal circumstances have diminished the developmental states' capacities to devise and execute coherent technoindustrial strategies, others argued that a continuity of East Asian capitalism remains in several aspects [15][16][17].…”