The Strong 'Ownership' That Built Samsung Could Be Reemphasized in Times of Crisis

Samsung Electronics Vice Chairman Lee Jae-yong is delivering a public apology regarding the succession of management rights and labor union issues at the Seocho-dong headquarters on the 6th. Photo by Moon Ho-nam munonam@

[Asia Economy Reporter Changhwan Lee] Although Samsung Electronics Vice Chairman Lee Jae-yong has abandoned his intention to inherit management rights, there are opinions that the advantages of owner management could be highlighted again if the group faces a crisis.

Since Samsung rose to become a world-class company, the role of owner management has been significant, and the dominant analysis is that the New Samsung envisioned by Vice Chairman Lee will also take a form that complements the strengths of owner management.

The greatest advantage of owner management is the ability to make swift decisions and bold investments based on strong leadership. It is analyzed that the persistent drive as an owner-manager greatly contributed to Samsung’s founders, the late Chairman Lee Byung-chul and second-generation Chairman Lee Kun-hee, growing the electronics industry?including semiconductors, home appliances, and smartphones?to world-class levels.

In the early days of Samsung’s electronics business, there were many criticisms and concerns about whether advanced industries could thrive in a developing country like Korea, and in fact, a lot of investment was made without immediate profits. However, Samsung made bold investments from a long-term perspective based on strong ownership and has now leapt to its current level.

A representative example is when Chairman Lee Kun-hee, during Samsung’s difficult period in 1993, gathered about 200 executives in Frankfurt, Germany, and emphasized innovation with the famous "Frankfurt Declaration," saying, "Change everything except your wife and children." This management style is virtually impossible for professional managers. It is also evaluated as a turning point that led Samsung to another leap forward.

Samsung’s proactive and bold investments in future growth areas such as system semiconductors, artificial intelligence (AI), next-generation communications, and biosimilars are also based on this strong ownership. However, owner management also has several issues, including excessive concentration of power in one person, succession problems, and lack of checks and balances.

Since Vice Chairman Lee has abandoned his intention to succeed management rights, it is clear that Samsung’s professional management system will be further strengthened in the future. However, there is also a forecast that if the group faces an overall crisis, the advantages of owner management, which can demonstrate strong leadership, will be highlighted again.

Vice Chairman Lee himself emphasizes the separation of ownership and management along with the responsibilities of major shareholders. A business insider said, "Managing a company in a way that maximizes the strengths of each within the legal framework may be the best approach."

This content was produced with the assistance of AI translation services.