The Awakening of Social Enterprise in South Korea

While taking part in the KEYS Economy Club at school and being a volunteer at GIC, these experiences have led me to carefully think about the hot issues surrounding Korean Air’s former vice president. If you have not heard about this incident, a key Korean Air executive was upset about nuts served to her in a bag on a departing plane and projected her rage on an innocent flight attendant. This story was even published in Bloomberg Business. The story was reported as follows:

The daughter of the chairman of Korea Air Lines Co, Heather Cho, was in a first class seat on a flight leaving from New York’s John F. Kennedy International Airport bound for Incheon International Airport when she took issue with a flight attendant who handed her macadamia nuts in a bag and not on a dish. Cho, the vice president of the airline, summoned the cabin crew chief to ask whether the flight attendant was following the in-flight service manual. When the crew chief could not answer the question promptly, Cho ordered the crew chief to disembark, prompting the pilot to return the plane to the gate. However, the aircraft had already left the gate at John F. Kennedy International Airport for takeoff. It took no more than 2 minutes to return to the gate to deplane the crew member. The flight finally arrived at Incheon 11 minutes behind schedule.¹

I came to be interested in this article, by seriously thinking about this issue from an economic perspective.  It reminded me of the ideals of entrepreneurship by way of noblesse oblige, not to mention touching upon social issues. Many companies have transferred ownership from public to private because the ownership of these companies has been divided due to allocation of stocks. One person can be a representative of a company, but not its sole owner. As a result, his or her behavior can have a great influence on the company’s image. It is important to improve the company’s image through advertising, but more importantly its executives should keep in mind that they play a leading role in the company’s image to the public through exemplary leadership.

Of course, the major goal of all enterprises is to make profits for shareholders. However, to keep the best image possible, I believe these corporations should consider the consumers as the most important asset in their business activities. Simultaneously, entrepreneurs should practice ethical entrepreneurship to create more jobs for people, activate their demographic market, and maximize profits, some of which should be returned to the public sector for social improvements. In short, entrepreneurs should be ethical.

¹ Bloomberg Business Week “Korean Air’s Cho Quits”

Also, ethical entrepreneurship should be accompanied by noblesse oblige. Noblesse oblige is a French phrase literally meaning “Obligation of Nobility.” It is the concept that nobility extends beyond mere entitlements and requires the person with such status to fulfill social responsibilities, particularly in leadership roles. It is sometimes used to summarize a moral economy wherein privilege must be balanced by duty towards those who lack such privilege or who cannot perform such duty. It has been used recently primarily to refer to public responsibilities of the rich, famous and powerful, notably to provide a good example of behavior or to exceed minimal standards of decency. It has also been used to describe a person taking responsibility for something in order to solve an issue or save someone else.²

In South Korea, a typical example of ethical entrepreneurship is Yu-Han Pharmaceutical Company. Its president, Yu Il-Han, is one of the most respected entrepreneurs. Yu returned almost all his wealth to society, which he thought made his company become even more successful. He became a symbol for the realization for noblesse oblige and practiced admirable entrepreneur ideologies. At first, his company sold medical products to Korean people, which were only imported from America. However, in 1933, the company produced a domestic antibiotic ointment, antiphlamine. On its own, the drug became very successful. In those days, most pharmaceutical companies advertised their medical products as a panacea for every disease. They mostly used newspapers to attract consumers. However Yu’s company tried to gain its credibility by making the public know why medical products were being made and who invented and manufactured them. With his evolutionary transparent business policies, Yu surprised many people in those days.

For the first time in a Korean business, Yu created an employee stock option plan as a part of sharing the business’ profits with his workers. In addition, he introduced a system using management experts to run the company right before he died. Without giving it to his sons, Yu returned almost all of his wealth to the society he loved so much. As someone once said, the thing which he left for society was not money but a great conscience which will never be forgotten.³

Now society, as a whole, needs to realize the ideals of noblesse oblige and beyond that of the privileged class. The Giving Pledge, organized by Warren Buffet and Bill Gates, is a campaign to encourage the wealthiest in the world to make a commitment to give most of their wealth to philanthropic causes. It focuses on the idea that generosity will spread.⁴ However, the campaign’s problem is its limitation to only billionaires. As a part of the solution to this problem, the roles of social enterprises are considerably important and should extend to any and every one.