SME Central Association Formalizes Corporate Succession Academic Research with Management Society

[Asia Economy Reporter Moon Hyewon] The Korea Federation of Small and Medium Business (KOSME) has formalized academic research on business succession from a management perspective.

On the 19th, KOSME held an academic session titled "Small and Medium Enterprises and Business Succession Special Session" online in collaboration with the Korean Academic Society of Business Administration.

This academic session on business succession is the first since the establishment of the Business Administration Society in 1959. Professor Yoon Taehwa of Gachon University, who chaired the session, stated, "Although Korea's business history has surpassed a century, the issue of business succession has not been addressed in academic fields until now. As a result, compared to other countries, there is a lack of research data, leading to many negative perceptions of business succession and a failure to develop systematic policies. This academic session with KOSME is significant in that it officially formalizes academic research on business succession from a management perspective."

Professor Lee Younghan of the University of Seoul, in his presentation on "The Necessity of Tax Support for Business Succession and Improvement Plans for the Special Gift Taxation System for Business Succession," pointed out, "The succession and maintenance of the founder's management philosophy and ideals determine the competitiveness of long-standing companies, but the burden of inheritance and gift taxes causes side effects such as business abandonment through sales or tax avoidance strategies."

He added, "Unlike Germany or Japan, where no gift tax burden occurs at the time of gifting, our system has low special exemption limits and tax burden issues. To improve this, it is necessary to expand the current special taxation limit from 10 billion KRW to 50 billion KRW and to convert the 10% (20%) taxation to tax exemption."

Professor Park Jongseong of Sookmyung Women's University, in his presentation on "Improvement Plans for the Business Succession Deduction System to Revitalize Business Succession," noted, "The business succession deduction was initially designed to foster artisan (匠人) companies, so the pre- and post-conditions are strict. Currently, since the greater purpose is to maintain employment and contribute to economic development through business succession, the term should be changed to 'business inheritance deduction' and the system should be supplemented to enable smooth business succession."

He also proposed allowing full industry changes so that small and medium enterprises can actively respond to the Fourth Industrial Revolution, and suggested improving the system to separate ownership and management succession by introducing professional managers to prevent business closures when heirs give up succession.

Designated discussants included Kim Heejung, manager of KOSME; Song Gongsuk, CEO of Watos Korea; Lee Yongju, director at the Ministry of Strategy and Finance; and Professor Choi Wonseok of the University of Seoul.

Meanwhile, the meeting was originally scheduled to be held at Songdo Convensia in Incheon but was switched online due to the spread of COVID-19.

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