The term "Chaebol" (재벌) is derived from the Korean words "chae" (wealth) and "bol" (family), which indicates the family-centered nature of these conglomerates. Chaebols typically consist of a large company or several groups of interconnected companies, often owned and controlled by a single family. The culture within these conglomerates is similar to a family structure, in which the father (chairman) plays a central role, and loyalty to him is more important than meritocracy. This form of management is rooted in the neo-Confucian values prevalent in Korean society, where unwavering commitment to superiors is an undeniable priority. The growth of these companies can be traced back to the post-Korean War era (1950-1953); when the South Korean government, under President Park Chung-hee, initiated a series of economic reforms aimed at industrialization. During these reforms, various incentives such as subsidies, tax exemptions, and easy access to credit were provided to boost the growth of key industries and compete with foreign companies, which led to the emergence of these large, powerful companies. Large family-owned businesses in South Korea have been the driving force behind the country's rapid economic development in the post-Korean War era. Companies such as Samsung, SK Group, Hyundai, and LG, which originated from government-led industrialization efforts in the 1960s, have come to dominate the South Korean economy, accounting for a significant portion of the national GDP and exports. They are often maintained and controlled by founding families, and due to their extensive influence in various sectors, they shape the economic landscape in South Korea.

Despite the pivotal role of chaebols in economic growth and South Korea's rapid economic advancement, particularly during the Asian Tiger era (1960s-1990s), when the country experienced an unprecedented GDP growth rate, they have been repeatedly accused of monopolistic practices and systemic corruption. The chaebols' dominance over the South Korean economy and reliance on a limited range of exports make the country more vulnerable to sector-specific shocks. Their dominant market position, due to the suppression of competition, especially against small and medium-sized enterprises, has also been criticized, leading to concerns about inequality and a lack of innovation in the economy. The centralized nature of their operations has often led to economic disparities, with smaller businesses and the service sector facing significant barriers. The unforgiving labor market and the underperforming service sector have exacerbated income inequality and limited further growth opportunities across the economy. The emergence of chaebols has created a dual economy characterized by a high-performing manufacturing sector and a stagnant service industry, contributing to systemic inequalities and affecting income distribution and job opportunities. Furthermore, the numerous scandals involving some of these companies' leaders in recent years have further fueled public distrust and sparked debate about the need for comprehensive reforms to improve corporate governance and transparency. This issue is even evident in the often-watched movies and TV series of the country's television networks, with many criticisms and ironies about this type of power system. However, we see that due to the existence of some advantages such as high salaries, many educated young South Koreans are in intense competition to get hired in one of these companies. Today, chaebols create millions of jobs in the South Korean labor market, still have significant cultural influence, and their power and financial support often translate into significant impacts on the media and cultural exports such as K-pop and Korean dramas.

The complex relationship between chaebols and the South Korean government has often been fraught with accusations of collusion and favoritism, making regulatory efforts aimed at curbing their influence highly complex. Initiatives such as the Monopoly Regulation Act have been implemented to promote fair competition; however, given the ability of such companies to adapt and adjust to new conditions, the effectiveness of these measures remains a subject of debate. Currently, the future of chaebols is an important aspect of the national discourse surrounding economic reform and corporate responsibility in South Korea.

Mehdi Salami, Expert at the Center for Political and International Studies

 (The opinions expressed are those of the authors and do not purport to reflect the opinions or views of the IPIS)