Title: Controlling and Organizing the Network Structure of Korean Business Groups, 1997-2003
Description: This thesis examines organizing and controlling mechanisms within the network structure of Korean business groups, chaebols, for the family-based corporate ownership and control under environmental uncertainty. Research focuses on the groups' changing patterns of inter-firm network structures, the maneuvering strategy by utilizing relational configurations of business groups for the family members' robust control, and the effect of network structure on the corporate performance of affiliated firms. Considering the financial crisis of 1997 in South Korea and the aftermath of this crisis as a natural experiment, social network analysis is used for analyzing each of the 178 cases for 28 chaebols during 1997 to 2003. Although retaining a centralized, hierarchical form of group structure with the tau statistic, the overall inter-firm configurations of each business group, as result of concrete but simplified images of network configurations by blockmodel analysis and the comparison of them with idealized models by simple matching analysis, show the existence of variations within a monolithic form in synchronic comparison and the changing trend to be a less centralized, hierarchical form along with stable transitive patterns in diachronic comparison.

Family-based corporate control, by strategically intertwining affiliated people as vicarious agents to carry out the interests of family members and sending these combinatorial equity ties to a few major firms occupying core positions, is guaranteed without losing its substantial controlling power. It is argued that, borrowing from Bourdieu's "condescension strategy," this strategically contrived control is a proactive and reactive strategy in response to environmental pressure even though this strategy is effective in certain intercorporate conditions. The estimated influence of inter-firm network structure on the corporate performance of affiliated firms is minimal in multilevel analysis. In contrast, affiliated firms having direct connections with family members show relatively better corporate performance than those that do not have these connections. The implication of this result is that the network structure of chaebols tend to be shaped, maintained, and reorganized for family-based, effective, overarching corporate control at the business group level rather than for efficient corporate performance of affiliated firms at the firm level.

Finally, this thesis suggests that corporate control and corporate gain do not always go hand in hand, and economic practices need to be understood by the simultaneous consideration of pecuniary and not necessarily pecuniary but still related interests, such as control and social relations where economic practices are anchored in.