INTRODUCTION The historical development of large scale capitalist business entities is a frequently canvassed topic of research across the economics, business history and organisational structure disciplines. Most of these studies have focussed on large scale capitalist enterprises in advanced countries such as the United States, England, Europe and Japan. 2 In contrast, scant attention has been paid to these enterprises in the newly emergent capitalist economies of the 1 I am indebted to Lawson Smith, Diane Fieldes and Ian Hampson for numerous helpful comments and suggestions in relation to an earlier version of this paper.
Expressions of opinion, other than those referenced in the conventional way are my own. 2 See For examples, Chandler, 1962, 1990; Lazonick, 1991; Prais, 1976; Fligstein, 1990; Schmitz, 1993. 1 East Asian regions, especially those in South Korea (hereafter Korea). This is surprising, given the dominant role of family-controlled conglomerates, the chaebol, in the course of Korea’s rapid industrialisation. 3 This paper addresses the evident gap in the literature through a detailed, in-depth case study of a leading industrial conglomerate, Hyundai Business Group, in Korea from its origins in the 1940s to the 1990s.
One of the prevalent themes in the study of large scale industrial enterprises is the evolutionary nature of capitalism, including the logic of economic transformation. Based on his strategy and structure framework, Chandler charts the transformation of American capitalism from that of single entrepreneur-owned and controlled enterprise4 to stock exchange listed companies governed by professional managers, who initiated the development of large scale and multi-divisional industrial capitalism in the early twentieth century, in response to market forces (Chandler, 1962, 1977).
Some studies have provoked controversy by asserting that variations in the timing, degree and forms of growth as between European and American firms, gave rise to somewhat disparate enterprise and country-specific paths of capitalist transformation. (Schmitz, 1993: 28-48). However, many studies have thrown up somewhat similar patterns of capital transformation, for example, those of large scale industrial enterprises in Europe. 5 Lazonick (1991) identifies a different pattern in Japanese capitalist transformation whereby ‘collective capitalism’ superseded the family-controlled zaibatsu.
Large scale Japanese conglomerates, the family-controlled zaibatsu, emerged in the early twentieth century with strong support from the imperial state. Over time, the ultimate control by family members of the business and managerial activities of zaibatsu was lost to the top management of core companies in the zaibatsu, who implemented vertically integrated business systems across For example, the top 30 chaebol contributed over 90 per cent of the nation’s gross national product (GNP) in 1991 (Bank of Korea, 1990). They employed about 20 per cent of the total Korean workforce in 1985 (Cho Dong-seong, 1991: 138).
4 For further definition of the entrepreneur capitalism, see ‘family’ capitalism in Church, 1993: 18, and ‘proprietary’ capitalism in Lazonick, 1991: 25-27. 5 For arguments of variations in the historical transformation, see British case studies in Elbaum and Lazonick, 1986 and of similarities, Schmitz, 1993; Lazonick, 1986; Chandler et al. , 1980, Chandler, 1990. 3 2 core and satellite companies to obtain competitive advantages for all conglomerate activities (Lazonick 1991: 36-43). 6 The process of Korean capitalist transformation is generally characterised as ‘state initiated family capitalism’.
It is argued that the chaebol emerged as a consequence of the Korean state’s rapid industrialisation programs, and that its business operations and governance were under the direct control of family owners (Rhee, 1994; Eun-Mee Kim, 1997; Jones et al. , 1980; Kang, 1990; Kuk, 1988; Yang Yoo-jin, 19917). Besides this argument, because of the evident similarities, the Korean chaebol is often compared with the zaibatsu in pre-World War II Japan. 8 However, such arguments are susceptible to criticism on several grounds.
First, the general lack of historical analysis concerning the capitalist transformation of the chaebol. There is an on-going shift of chaebol ownership from the founder to the second generation9, which may produce a different pattern of capitalism in the future. Secondly, the studies tend to underestimate the role of professional managers in the historical transformation of the chaebol. These managers underpinned the hierarchical managerial structure, which enabled family dominated top management to retain central control of increasingly extensive, complex conglomerate businesses.
Thirdly, previous studies were limited in their capacity to comprehend the evolutionary growth patterns and structures of the chaebol because of their predominant interest in the state-business relationship or political economy of Korean development. This research focus is quite understandable, given the ‘corporatist’ (Moon-kyu Park, 1987), ‘developmentalist’ (Amsden, 1989), and ‘interventionist’ (Wade, 1990) role of the state in the rapid industrialisation of Korea’s economy.
In this paper, it is argued that any account of the historical transformation of the chaebol cannot ignore the related issues of business growth strategy and structure, and the dominant role of the founder and family members. This is not to deny the role of the state in the For further details of strategy and structure developments of zaibatsu in the pre- and post-World War II period, see Nikagawa, especially Part I. 7 In this paper, Korean names are given in their proper order, with the surname proceeding the given name.
However, in the case of Korean authors writing in English, the order natural to English is preserved. 8 See for an example, Tamio, 1986. 9 For example, of 50 top chaebol in Korea, 22 chaebol have completed the succession by the second generations in the late 1980s. Cho Dong-seong, 1991: 407. 6 3 transformation of Korean capitalism, but rather to ensure that an insightful politicomicroeconomic account of the chaebol’s historical development is obtained.
The paper examines the historical transformation of Hyundai Business Group from its humble origins in the 1940s, to a large scale industrial conglomerate in the 1990s. The analysis is divided into three parts, following the distinctive stages of growth patterns and structure of Hyundai, which also reflect socio-political and economic changes in Korea. In the conclusion, the historical transformation of Hyundai is compared with that of other Korean chaebol and business enterprises in advanced countries, in an endeavour to identify possible variant forms and distinguishing characteristics of Korean capitalism.
FAMILY BUSINESS AND PATRIARCHAL CONTROL IN HYUNDAI: 1946-1960s Between the late 1940s and mid-1960s, the small family business of Hyundai was transformed into a modern industrial enterprise engaged principally in construction activities. When, Korea adopted an economic policy of rapid industrialisation in the 1960s, Hyundai was chosen as a representative construction company by the Park military government. This enabled Hyundai to aggressively expand and diversify its businesses and achieve economies of scale and scope in production and market share in the heavy and machinery industries from the 1970s onwards.
In the process of transformation, the managerial structure was formalised to underpin the founder’s continuing control over business and managerial activities. Hyundai had its origins in a rice wholesale business established by its founder Chung Juyung in the 1930s and an automobile repair shop established in the early 1940s, during the Japanese colonial period (1910-1945). The Hyundai Construction and Civil Engineering Company (HECC) was founded in 1947.
Until the mid-1950s, the growth of HECC’s construction business was negligible. It operated as a small civil engineering subcontractor, undertaking mostly simple maintenance and repair work (Park Byung-yun, 1982: 68-69). The close ties that Hyundai’s founder developed with the state were a major factor in the chaebol’s eventual transformation. HECC obtained a series of contracts with the American Military Forces in Korea (AMFK) during the Korean War (1950-1953), and emerged as one 4 of Korea’s leading construction companies, with well established political ties.
It joined a construction cartel, whose members were awarded the government’s major war recovery construction projects implemented under foreign aid schemes. 10 In being awarded the First Han River Bridge Reconstruction Project in 1957, one of the largest national projects, at 32 million won, HECC became Korea’s sixth largest construction company (Lee Jong-nam, 1985: 102-107; Kong Jae-wuk, 1994: 221-222, 236; Lee Jung-jae, 1994: 107-109, 127-138).
Despite engaging with other leading chaebol in corrupt business activities during the 1950s which exposed it to some political risk, HECC was selected as a representative construction company by the in-coming Park Chunghee military government (1961-1979) under its policy of rapid industrialisation of the Korean economy. 11 In contrast, other large construction companies, such as Daedong and Chungang, had a less favoured relationship with the government, which allowed HECC to secure a position of market leadership.
This market position was enhanced in 1961 by the introduction of the Limit of Bidding Qualification by the Total Contract Amount of the Previous Year of the Bidder and the Minimum Cost Bidding System in relation to government projects. As a result, during the First (1962-1966) and Second (1967-1971) Five Year Economic Development Plans (FYEDPs), HECC was successful in obtaining a series of large national infrastructure construction projects, such as highways and dams, power plants and factories, enabling it to grow rapidly.
The vital role of the state is readily apparent in an analysis of the contribution that government projects made to the total value of contracts obtained by HECC. Their contribution to HECC earnings grew from 41 per cent (732 million won) between 1953 and 1961 under the Rhy government to 88 per cent (44,555 million won) between 1963 and 1971 under the Park government (HECC, 1982: 579, 638-639, 1096-1143). 10 This is so-called, ‘Jayoudang (the Liberal Party) Five Main Contractors’, which initiated by Daedong Manufacturing Co.
, whose owner was chief officer in the party’s political finance department. Usually 10 per cent of the total amount of the contract was donated as political funds to the Rhy government (1948-1960) (Lee Jung-jae, 1994: 107-109, 127-138). 11 The Kyungpu Highway Construction Project (428kms length, 1968-1970) constitutes a classic example of HECC- government links and their style of doing business in this period. President Park Chunghee personally asked Chung Juyung to provide the government with a fully costed plan of the construction project before the government called for tenders.
The project, as awarded to HECC, was worth 9,442 million won, and was the largest in the history of Korean construction at that time (HECC, 1982: 655-656, 1410). 5 Once it was well established at home, HECC entered the overseas construction market with the Pattani-Narathiwat Highway project (1966-1968) in Thailand. HECC then went on to projects in Vietnam, Guam, Papua New Guinea and Australia. This diverse international experience provided the basis for its rapid expansion into the Middle East construction market in the 1970s, and resulted in HECC becoming the leading Korean construction exporter.
12 However, of all HECC’s ventures in foreign markets, its participation in the economic boom of the mid-1960s associated with the Vietnam War, contributed most to its growth during this decade, as was the case for other chaebol. The annual earnings of HECC grew from 1, 500 won in 1947 to 200 million won in 1959, and then to 19,000 million won in 1969 (HECC, 1982: 588-590, 614). Vertical integration of construction businesses During the 1950s and 1960s,
Hyundai’s growth strategy was premised on the ‘one-set’ approach. This ‘one-set’ strategy constituted a typical diversification strategy of the chaebol in the 1960s, the objective of which was to vertically integrate related business areas in order to obtain a combined competitive advantage and capability. The core company, HECC, generated a sizeable demand for building materials in connection with the large scale construction projects it obtained, mostly from the government.
Hyundai met this demand internally, by establishing seven subsidiaries during the 1960s, six of which were dedicated to the production, for internal use, of various construction materials such as slate, cement and concrete. These subsidiaries supplied construction materials to HECC at a lower cost than that obtainable from external suppliers. 13 Hyundai Motor Company (HMC), established in 1968, was also incorporated into the ‘one-set’ system to augment the heavy construction equipment capacity of HECC, when its large scale projects required a greater use of complicated heavy construction equipment.
The ‘one-set’ approach to construction was vital to sustaining the leading position of HECC in the construction market, which was based of necessity on a low cost and high volume business strategy. Given that HECC was largely dependent on government projects during this period, the introduction, in 1961, of the Minimum Cost Bidding System forced HECC to For example, between 1966 and 1973, 43 per cent or $US281. 9 million of total overseas construction sales by the 15 largest Korean companies, went to HECC (HECC, 1982: 598-590). 12 6 further pursue low cost business operations.
The Limit of Bidding Qualification by the Total Contract Amount of the Previous Year of the Bidder, also introduced in 1961, was yet another reason to focus on volume oriented construction projects as this secured its position with respect to the number and value of contracts to be awarded by the government in the following year (HECC, 1982: 576-577, 637-638). Although HECC’s business activities expanded rapidly throughout this period, they were undertaken in a relatively disorganised manner owing to a sheer lack of managerial capability.
This made HECC excessively dependent upon a government-mediated external environment as the primary source of growth. Development of formal patriarchal control Until the mid-1950s, the management of Hyundai was typical of a small scale single family business employing less than 100 workers. Its managerial structure was informal, organised on the basis of Chung’s kinship, his friendships with business associates, and engineering experts. Chung was intimately involved in daily management decisions, and managers were assigned tasks by him directly (HECC, 1982: 141, 539-551, 561; Kim Beoyong-ha, 1991: 259; Cheon Beom-seong, 1984: 62-85).
However, this protean, idiosyncratic managerial structure and style yielded to development of a formal managerial structure, largely based on kinship. For example, when the first formal managerial structure was adopted in 1950, Chung’s two younger brothers and one brother-inlaw were placed on the top management board with four of Chung’s friends. The formalisation of management was undertaken in parallel with the growth in scope and size of the business. Figure 1 shows the evolution of the organisational chart from the late 1940s.
By the mid-1960s, the sectional organisation of HECC had largely been converted to a department oriented one. 14 The continued expansion of the business was the factor which contributed most to the evolution of HECC’s organisational structure (HECC, 1982: 544-550, 573-574, 627-628; Monthly Chungkyeong Munhwa, December 1984: 150-151). 13 Here, Chandler’s term, the ‘visible hand’ (1977) can be applied in this context, i. e. the supply and processing of every major resource occurs within the extended business enterprise. 7 Figure 1 1950 Changes in the organisational structure of HECC, 1950-1971 Late 1950s 1965 1971.
Top Management President President VicePresident Unchanged Unchanged Chairman Unchanged Unchanged Planning Management Office Management sector General Affair SU Accounting Sec General Affair Dept Accounting Dept Factory Management Dept Material Management Dept Technology Dept General Affair Sec Unchanged Unchanged Unchanged Planning Sec Unchanged Unchanged Factory Work Affair Dept Unchanged Business sector Cement Dept Overseas Work Dept Unchanged Civil Engineering Dept Unchanged Architecture Unchanged Electric Dept Unchanged Machinery Dept Unchanged Trade Dept Unchanged Danyang Cement Factory Hyundai Cement Co.
Commercial Apartment Management Dept Pusan Office Year 1953 1960 1966 1971 23 120 846 1,575 Employment size SU:Sectional Unit, Sec. : Section, Dept. : Department. Source:Derived from the name lists and organisational chart in HECC, 1982: 544-545, 549-550, 573-574, 627628. Table 1 shows that the number of top executives increased from a single person, President Chung, in 1950 to eleven in 1964 and seventeen in 1968. The expansion of hierarchical positions at the top management board level included adoption of the chairman system.
Expansion at the top management level was necessary for Chung Juyung to maintain effective and efficient control over the increasing number of subsidiaries in the various areas of the business. Each of Hyundai’s essential subsidiaries was managed by a member of his family. 15 The kinship management structure was instrumental in Chung maintaining central control of 14 The ‘section’ stands for a organisational unit hierarchically located between a department (Bu) and subsection (Gae). It is usually organised by five to eight members including a manager.
15 Chung Inyung, the first brother was appointed president of HECC in 1968; Chung Seyung, the third brother was appointed president of HMC in 1968; Chung Sunyung, and the second brother, as president of Hyundai Cement in 1970. 8 the businesses of Hyundai and HECC (HECC, 1982: 623-625; Cheon Beom-seong, 1984: 91). 16 Table 1 Changes in managerial structure of HECC by the number of position holders, 1950s to 1960s Year 1950 Late 1950s 1964 Jan. 1968 1970 Chairman 1 1 President 1 1 1 1 Vice President 1 1 1 5 3 2 4 2 Chunmu 4 7 11 6 Sangmu 6 na na na 7 Leesa Total 1 9 11 17 15 Leesa was excluded in the total number due to its inconsistent data.
The executives selected for the data were based on employment condition. Those who were appointed by the shareholders meeting were selected here, and other managers whose employment conditions were determined by company regulations were excluded. Source: Derived from HECC, 1982: 549-550, 572-573, 623-625. The emergence of a cadre of professional managers within a structure dominated by the family hierarchy was a significant, albeit inevitable, development. Of 22 managerial executives hired in 1970, 11 were the product of the Open Recruitment System (ORS) for 4 year university graduates, a system which Hyundai had first implemented in 1958.
These recruits were internally promoted from their entry point at the bottom rung of the white collar employees’ ladder where they were supervised by the founder’s kin and personal associates. The professionalization of management effected a significant gain in the scope and quality of decision making. A typical example was the evolution of planning functions. The first formal planning function was developed in the form of a section in 1965 and of a department in 1967 in HECC to support the strategic action of top management.
In conformity with the rapid growth of HECC and Hyundai, it became a planning management office organised with four sections in 1969, while its function and size further expanded to cover various policy developments in business planning, personnel and finance (HECC 1982: 627). This allowed the top management of Hyundai to maintain more effective control over its rapidly growing diversified businesses. Direct supervision of operational workplace matters by top management was gradually transferred to a developing professional management class.
As a 16 For example, Chung Sunyung (Vice-President, management), Chung Heeyung (Leesa, a younger sister, Tokyo Branch) and her husband, Kim Youngju, (Vice-President, heavy machinery, 1970). This kinship pattern has remained to this day. Hence, the term `top management’ or `Hyundai top management’ implies the founder, Chung Juyung and his family appointees. 9 result, various aspects of Hyundai’s business activities, including work methods, employment and union relations, were gradually rationalised. The formalisation of management was constrained however by the overall scarcity of managerial resources relative to demand.
For example, informal and ad hoc practices emerged as one of the critical issues in the resistance of workers (including middle managers) employed on the Pattani-Narathiwat Highway Project (1966-1968) in Thailand. This construction project was the largest in the history of HECC and Korea at that time. Also, the ‘one-set’ approach was not systematically developed to sustain the long-term growth of Hyundai as a whole. The supportive construction material businesses were totally subordinated to the core construction business of HECC, as opposed to operating as quasiindependent business units, with HECC as their major customer.
Top management often restructured its businesses to resolve unsatisfactory situations by way of merger or formal separation. Despite their shortcomings, the management structure and practices employed by Hyundai in this period functioned sufficiently well to allow development of monopolistic capitalism in the 1970s. DEVELOPMENT OF MONOPOLY CAPITALISM AND COMBINED PATRIARCHAL AND MANAGERIAL HIERARCHY IN HYUNDAI: 1970s-EARLY 1980s During the 1970s the Park Government, as part of its policy to rapidly industrialise the Korean economy, promoted the establishment of large scale chemical and heavy industries.
This policy prompted some of the chaebol to aggressively diversify into these industries. Hyundai was able to diversify into the automobile and shipbuilding industries by establishing the Hyundai Motor Company (HMC) in 1968 and Hyundai Heavy Industries (HHI) in 1974. This diversification was based on the construction business of HECC, which took on projects requiring heavy and industrial machinery, thereby creating an internal market for such equipment.
To this end, the existing ‘one-set’ approach for low cost market competition, was revised to suit the various heavy and machinery industries in which Hyundai was now engaged. Heavy and machinery industries became the dominant business of three major companies of Hyundai: the heavy construction works of HECC, the automobile production of HMC and the shipbuilding of HHI. This enabled Hyundai to develop a monopolistic production and market position in the Korean economy.
Though HECC faced financial insolvency with the end of the economic boom generated by the Vietnam war, the decline in overseas contracts was compensated for by obtaining a series of large scale government construction projects which were part of the Third and Fourth FYEDPs in the 1970s. 17 The domestic market position of HECC was further strengthened by changes in the bidding system for government contracts, especially the Turnkey Base Contract System introduced by the government in 1977, to improve the engineering capabilities of Korean companies.
This was critical to HECC being able to participate in the most advanced construction projects such as nuclear power plants, as a main contractor (HECC, 1982: 658-719). However, the most important business development was its entry into the Middle East construction market with the Arab Shipbuilding and Repair Yard project ($US114 million, 1975-78. Bahrain). With its success in this benchmark project, HECC expanded its market position in the region through winning various large and heavy industrial projects such as the Jubail Industrial Harbour Project ($US940 million, 1976-1982, Saudi Arabia).
The aggressive entry into the Middle East market had important implications for the growth of HECC and Hyundai. With the resultant sharp increase of its total sales18, this market expansion enabled HECC to become an international construction company no longer dependent on its domestic market, which decreased from over 80 per cent of total projects up until 1975 to less than 30 per cent between 1976 and 1981.
As will be discussed below, the rapid expansion of its heavy industrial construction projects created a large scale internal demand for materials, enabling it to enhance its monopoly position in the domestic construction market during the 1970s. (HECC, 1982: 706, 735, 913, 1088-1089). In 1968, Hyundai set up HMC with support from the Park government. Like existing Korean automobile companies, HMC began as a completely knocked-down (CKD) assembler, under Assembly and Technological Cooperation Agreements with the Ford Motor Company of the USA.
In early 1973, the partnership between HMC and Ford ended due to disagreements over 17 In the 1970s, typical construction projects from government bodies were an iron and steel mill for Pohang Steel Corporation (1970-1980), a series of Kori Nuclear Power Plants (1971-1978), a series of subway projects (1972-1980) and chemical industrial plants in Ulsan Industrial Park (1972-1974). 18 It increased from 54, 540 million won in 1975 to 135,048 million won in 1976 and to 1,659,215 million won in 1981. 11 managerial control of HMC.
19 Consequently, in 1976 HMC developed and produced its own model, the Pony, using a low cost concept (around $US2,000) of a small sized passenger car (under 1,500cc) with the technological support and 10 per cent capital participation of Mitsubishi Motors of Japan. Based on the success of the first model, the initial stage of a mass production system was established in 1979 to annually produce 100,000 passenger cars, with the development of the models, Pony II and Excel (HMC, 1987: 34-38; HMC, 1992: 362, 364-547; Monthly Chungkyeong Munhwa, February 1986: 166-167).
However, Hyundai’s expansion was hit by the second oil price hike, a crisis from which it then recovered with the assistance of the industrial restructuring policies of the new Chun Doohwan military government (1981-1988), which granted a monopoly of the production of small-sized passenger cars to HMC. Internally, HMC changed its production strategy from being content with the small domestic market to an export focus, entering the export market in 1983 with the shipment of automobiles to Canada.
As a result of the establishment of the initial stage of its mass production system in the late 1970s, its sales sharply increased from 528 million won in 1968 to 26,092 million won in 1976 and 430,149 million won in 1982 (Lee Ho, 1993: 121; HMC, 1992: 418, 548-628, 1084, 1099). The establishment of HHI in 1974 was a significant milestone in the history of the Korean economy and the turning point for its entry into large scale shipbuilding industry, which, with the automobile industry, was one of the strategic industries in the government’s economic policies.
Thereafter, whenever the shipbuilding industry hit a crisis, the government intervened to protect it. 20 For example, in the aftermath of the first oil shock of 1974, the Park government implemented the New Policy for Heavy and Chemical Industries to offset the loss of exports through generous loans and tax policies. HHI received the most assistance of all Korean shipbuilding companies, gaining 67. 2 per cent of all government-backed orders from 1975 to 1980. As will be discussed below, the expansion of HHI was also associated with the expansion of HECC into the Middle East construction market.
HECC functioned as a supportive base through its requirements for various heavy industrial products, such as offshore steel structures and barges. Sales rapidly increased from 58,840 million won in 1974 to This was an inherent conflict with Ford, which cooperated with HMC under its international market strategy to confine HMC to its regional domestic market as a distributor. 20 For this aspect of government assistance in details, see Amsden, 1989. 19 12 992,876 million won in 1983 and HHI became the leading international shipbuilder in 1983 (HHI, 1992: 391-392, 459, 461-463, 547, 1487).
The total sales of Hyundai increased more than a hundred fold over the period from 1973 to 1984? from 5,200 million won to 69,792 hundred million won. Its contribution to the national economy increased from 8. 56 per cent to 9. 5 per cent of GNP between 1978 and 1980 (Park Dong-sun, 1979: 364; Kuk, 1988: 67; Lee Sung-tae, 1990: 16). Table 2 shows the rapid growth of Hyundai with the significant role of HECC, HMC and HHI in Hyundai clearly apparent from the late 1960s.
As detailed above, Hyundai’s rate of growth increased sharply from the mid-1970s with its diversification away from a construction dominated business base into large scale heavy industrial businesses. The role of the three main companies (HECC, HMC and HHI) in the growth of Hyundai’s total sales declined from 93 per cent in 1973 to 51. 35 per cent in 1980. This followed from the increased role of Hyundai’s other supporting subsidiaries which occurred as a result of the systematic organisation of monopolistic production and market strategies in the heavy and machinery industries from the late 1970s.
Table 2 Total annual sales of Hyundai, HECC, HMC and HHI, selective years from 1968 to 1980 Year Group Total(A) HECC HMC HHI Total(B) Ratio(%: B/A) 1968 129 124 5 na 129 100. 00 1973 520 315 179 na 484 93. 07 1977 14,799 5,360 930 4,309 10,500 70. 95 1978 19,049 6,353 2,158 4,013 12,424 65. 22 Unit: Hundred million won 1979 1980 22,428 32,620 6,173 10,517 2,690 2,249 2,051 3,751 10,914 15,751 48. 66 51. 35 Total sales amount in 1968 is calculated by only those of HECC and HMC due to absence of other data.
Source: Derived from Yun In-hak, 1991:67; Park Dong-sun, 1979:364; Lee Jong-seon, 1989: 19; HECC, 1982:1088-1089; HHI, 1992:1487; HMC, 1992:1084; Maeil Economic Newspaper, 1985: 802. Vertical and horizontal integration of heavy and machinery industries The previous ‘one-set’ approach, involving vertical integration of various construction businesses of HECC in the 1960s, was revised in relation to Hyundai’s large scale heavy and machinery industries in order to gain the benefit of economies of scale and scope in the 1970s. Table 3 details increases in the number of Hyundai subsidiaries, and when they were incorporated. It reveals that most companies operating in 1985 were f