Managing Diversity: An Exploratory Comparison between Chaebols and Large U.S. Firms

Abstract

Based on theoretical considerations, this exploratory study investigates the organizational mechanisms through which diversified firms are effectively managed without loss of control. Empirical results based on samples from Korea and the U.S. show that structural mechanisms such as strategic control and contingency arrangements were not so significantly associated with divisional performance, whereas socio-cultural mechanisms such as shared values and corporate-level training, were significantly and positively associated. In addition, Korean chaebols appear to have leveraged socio-cultural mechanisms better than large U.S. firms, and thus, have had an advantage in continuing to diversify.