Samsung, Lotte and the Problems With Chaebols: QuickTake Q&A

Turmoil at two of South Korea’s biggest companies is fueling scrutiny of the family-run conglomerates that dominate the nation’s economic production. They’re known as chaebols, and activist shareholders have long pressed to unravel their complex and insular corporate structures. While Samsung and Lotte Group are going through very different crises -- Samsung had to abandon a popular smartphone due to batteries that caught fire; Lotte’s founding family faces trial on charges of embezzlement and tax evasion -- both now face questions about corporate leadership, governance and culture.

It’s a corporate dynasty. The grandchildren of Samsung’s founder, for instance, control a sprawling empire with interests in electronics, shipbuilding, construction, insurance, theme parks, advertising and film production - nearly 60 businesses in all. Chaebols differ from conglomerates in the U.S. and elsewhere both in terms of their out-sized influence on the country’s economy and their dynastic rule.