Doctoral Dissertation Research: Cultural Analysis of Risk Management in the Korean Venture Capital Industry

William Marsh Rice University, Houston TX

Investigators

Abstract

0108938 Marcus / Chung This dissertation research project by a cultural anthropology student examines how recent attempts in South Korea to establish and promote the growth of venture capital industry have been shaped by salient Korean cultural institutions. The project will study risk management in the venture capital industry, defined as firms that fund technology-intensive enterprises characterized by high risk with the potential for high return, as affected by traditional Korean values of the primacy of social relations over finance; the quality of human relations; and the quality of emotional reactions. Prior to the establishment of a venture capital industry in South Korea, entrepreneurs usually relied solely on their own savings, often from informal credit associations, gifts and loans from family and friends, and sometimes credit from lending institutions, to finance their business projects. Many of the strategies used to understand and minimize the risk of capital loss involved the cultivation of culturally specific social bonds. Using a variety of qualitative methods, this project will describe and assess the degree to which these culturally informed social practices inform venture capital investment in four firms: a foreign venture capital company; a domestic venture capital company; a start-up communication company seeking funding; and a more traditional rotating credit association. Hypotheses relating the specifically "Korean" nature of transactions to the level of foreign involvement in the relationship will be tested. The new knowledge created by this project will help locate the intersection between cultural and capitalistic frameworks in this domain of business. By understanding Korean influences on venture capital investment, we will further our understanding of the influence of US culture on similar business. In addition, the research advances our knowledge of this important region of the world, and contributes to the training of a young social scientist.