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A Study on Corporate Restructuring at Small-scale Enterprises

Author Cho Deok-hee, Yang Hyun-bong Date 2017.12.13 Page
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Corporate restructuring in Korea over the years has been considered a major issue mainly for large corporations and a few medium-size enterprises. No basic survey has been done on such restructuring by small enterprises with fewer than 50 staff, and thus such companies have been ostracized from the government’s restructuring policies. 

 

Yet Korea has more than 380,000 small companies in the manufacturing sector alone, and employees at these firms account for 55.9 percent of the overall employed population. Between 1998 and 2004 these businesses created nearly 80 percent of all jobs in the industry. Thus if these firms cannot improve their business performance, the Korean economy cannot achieve its immediate policy goal of reducing the income gap between large corporations and smaller companies, let alone create jobs. Worse, the Korean government has yet to conduct a basic survey on corporate restructuring by small businesses seems indifferent toward devising proper policy measures aimed at small companies.  

 

Fully recognizing the magnitude of this problem, this study explores the status of corporate restructuring at small manufacturing companies employing fewer than 50 staff in order to develop workable policies aimed at businesses such as these. To this end, the companies’ management performance was analyzed to determine if they needed corporate restructuring. The study’s authors also examined factors necessitating corporate restructuring, its implementation processes, and the outcome. This paper refers to Korea’s existing laws and regulations on corporate restructuring and benchmark policies devised by the American and Japanese governments. This study thus aims to recommend policy directions for the promotion of corporate restructuring at small businesses.