EAI Fellows Program Working Paper Series No.14

Abstract

Although China, Japan, and Korea have shared a common cultural tradition of broadly defined Confucianism, which as whole is quite different from the Western tradition, their modern fate diverged after the East came to contact with the West around the middle of the 19th century and throughout the 20th century, the three countries followed different paths for modernization, national building and industrialization that also produced different results. However, in the last few decades, the paths of these countries begin to converge. With China shedding its communist ideology, and returning to a more market oriented economic development strategy that approximates the path that other East Asian countries followed, and increasingly drawing its inspiration from China’s own tradition and resources rather than from exported ideologies, it has become more imperative to critically examine similarity and differences among these three countries. This paper attempt to analyze what is believed to have continuing bearing on the actual operation of contemporary business organization. As an initial part of a larger project on comparative study of institutional template in these countries, this paper exclusively focuses on the traditional family structures in China, Korea, and Japan., under the concept of "institutional template."

Author

Professor Hong Yung Lee received his B.A. from Yonsei University, Seoul, Korea and his Ph.D. from the University of Chicago. His research areas of interest include the domestic politics of China and Korea, and political economy and international relations in East Asia. He authored Politics of Chinese Cultural Revolution (UC Berkeley, 1978) and From Revolutionary Cadres Party Technocrats in Socialist China (UC Berkeley, 1991), and edited Prospects for Change in North Korea (Institute of East Asian Studies, 1994); Korean Options in a Changing International Order (Institute of East Asian Studies, 1993); Political Authority and Economic Exchange in Korea (Oruem Publishers, 1993). He teaches courses on East Asian politics and political economy, and on international relations, and is currently working on a book length manu on "Comparative Study of Institutional Templates of China, Japan, and Korea."

 This paper was submitted to "EAI Fellows Program on Peace, Governance, and Development in East Asia" supported by the Henry Luce Foundation based in New York. All papers are available only through the online database.

---

When viewed from a comparative perspective, one of the puzzles raised by the East Asian political economies is why the economic institutions in China, Japan, and Korea are organized and operate differently from each other, despite the fact that they share a similar cultural heritage, and the face similar challenge as late industrializing countries. Similarly, why do various organization and institutions performing different tasks within a given society demonstrate certain isomorphic relations, though economic institutions that perform similar tasks in different countries are organized differently?

Such a question generally leads to the acceptance of the institutional approach’s main premises – namely that any economic organization – including a business firm — is "embedded" in the broader historical and cultural context of a given nation.1 In other words, though business organizations might have been created for specific tasks that need to be performed regardless of nation, they are imbedded in and directly affected by networks of institutionalized relationships, which are in turn different in each society. 2Further elaborating the implications of this, some scholars argue that a certain degree of isomorphism between the economic institutions and non economic institutions of a given country is a prerequisite for any successful economic performance. “Asian economies have worked so well because they have created organizational arrangements and management practices that give them a competitive advantage. Japan, South Korea and Taiwan each pursue business strategies that suit their social arrangements -- their cultures, their traditional ways of organizing and managing affairs, and their governmental structure.”3 In other words, factors specific to each of the East Asian countries are accountable for its economic performance.

Because of this institutional isomorphism and imbeddedness, an institution will evolve in a path dependent way, shaping new institutions and organizations that are created for well defined objectives. What makes various institutions be isomorphic to each other in a given country is conceptualized as “template.” In other words, it is not the institution itself, but rather the institutional template that defines the range of choices an agent can select in creating a new type of institution, be it pertaining to the state or business or the relationship between the two. Such path dependency means that agents are allowed a certain amount of autonomy when shaping new institutions and organization, but only within the limits of the existing institutional template with which the agents are familiar. Such considerations also affects the choices one makes in creating a new organization, the choice that will certainly in turn modify the institutional template...(Continued)