Korea needs foreign-born CEOs
Fourteen Korean companies made Fortune magazine’s 2011 Global 500 list, with Samsung Electronics leading the national pack. In terms of number of companies on this annual ranking of the world’s largest corporation by revenue, Korea ranks eighth.
The country’s presence on the list of multinational companies is noticeable. However, with the conspicuous absence of foreign-born CEOs among them, I wonder how multinational Korea really is.
Many U.S. corporations have foreign-born chief executives. Citigroup’s CEO is Indian. Alcoa’s CEO is German. Eastman Kodak’s CEO is Spanish. Hartford Financial Services Group’s CEO is Irish, to name a few.
The leaders of countless American businesses are from the U.K., France, the Netherlands, Italy, Australia, Sweden, Israel, South Africa, Hungary, Cuba, Egypt, Morocco, Lebanon, Hong Kong, Taiwan, Pakistan, and so forth.
The citizenship of a CEO does not matter to shareholders. Revenue from growing overseas markets does.
At one time, the immigrant’s definition of the American dream was moving to America, buying a home, becoming a citizen and starting a small business. Today, that dream includes running one of the nation’s largest multinationals.
The dream has also extended beyond America. In the U.K., there is wide acceptance of leaders from across borders. For instance, Barclays’ CEO is American, Burberry’s female CEO is American, Vodafone’s CEO is Italian and the Body Shop’s CEO is French.
In Australia, the CEO of Westpack was born and raised in South Africa. The CEO of Qantas is Irish and the CEO of ANZ Banking Group is Indian.
Over in Switzerland, 41 percent of the board members at the 100 largest Swiss companies are not Swiss nationals, according to a Guido Schilling & Partner AG study.
Multinational companies of Canada, France, Germany, Italy, the Netherlands, Spain, Hong Kong and Mexico have foreign-born CEOs. Two of the three Singaporean banks save UOB have foreign-born CEOs.
Japan corporations are also foreign-born CEO friendly, with the list including Sony (American), Olympus (British), Nissan Motor Company (Brazilian), Mitsubishi Motors (German) and Nippon Sheet Glass (American).
Japanese shareholders are pleased with foreign CEOs for their ability to reduce overheads and to help their companies become more international by better integrating diverse domestic and foreign operations and by attracting capable non-Japanese managers, engineers and product designer.
Several factors fuel the surge of international executive postings, including the continuing globalization of business, accelerating demand in an increasingly competitive global marketplace for the best leadership talent, the need for leadership that can stretch across borders and the increased willingness of many countries to assimilate executives from different cultures. Foreign-born executives seem to fare particularly well in the pharmaceutical and life-science industries in which cross-border mergers are common.
Korea shines when it comes to going abroad, ranking 12th and 9th in the world in terms of GDP and trade volume, respectively. But when it comes to globalization, which reflects global connectivity, integration and interdependence, Korea comes in at 57th after Singapore, Malaysia and Japan, according to the KOF globalization index.
Perhaps the difference in Korea’s FDI outflow and inflow is most telling. Ranking 22nd for FDI outflow but 40th for FDI inflow, the nation superbly assumes her globalized posture on foreign soil but shows a nationalistic attitude in her homeland.
In contrast, the Hallyu phenomenon shows the power of foreign inclusion. K-pop’s popularity in Asia, Europe and the U.S. has been attributed partly to the talent and diversity of vocal groups comprised of young Koreans in the educated-abroad-early generation and second generation of Korean emigrants as well as foreigners.
We could see a similar wave of business success if multi-national chaebol corporations were to start filling corner offices with foreign-born CEOs. The diversity would spill out into the hallway, and into Korea’s political, economic and social landscape as well.