[EAI Opinion Memo] The Complexity of Public Perception of Large Corporations

EAI Opinion Memo No.1

Author

Jeong Won-chil, Senior Researcher, EAI

A debate on economic democratization, initiated by political circles, is in full swing. The debate, sparked by the argument for a new paradigm in economic management, has now expanded to become a common issue for the political sphere, centering on 'large corporation reform.' Presidential candidates are also flooding the public with related pledges. So, what are the public's thoughts on large corporations? Are politicians accurately reading the public's sentiments?

Government regulation on corporate accountability is necessary: 82%

Public perception of 'large corporations' was negative. There is a sentiment that government regulation is needed to strengthen the social responsibilities of large corporations. This finding comes from an international survey on 'Perception of Large Corporations' conducted in January by EAI in collaboration with the UK's BBC and the international research firm GlobeScan.1)

To the question, 'Should the government use coercive power to ensure large corporations have greater responsibility towards the public and the environment?', 82% of respondents answered 'Agree.' Only 16% disagreed, and 2% were unsure or did not respond. The high agreement rate of 82%, even considering the normative perception of environmental and social responsibility, appears to reflect considerable distrust towards Korean large corporations, whose social influence is growing.

Among the Korean public, 70% answered that the social influence of large corporations is 'large.' Excluding 2% who were unsure or did not respond, 28% answered that it is 'small.' In contrast, regarding social trust, the response rate for 'trust' was 44%, lower than the 55% for 'do not trust.' Unsure/no response was 1%.

The reason for this low level of trust, despite their significant social influence, appears to stem primarily from the assessment that large corporations' practical contributions to solving social problems are insufficient. Only 28% of respondents answered that large corporations are 'doing well' in solving social problems, while a substantial 66% stated they are 'doing poorly.'

The negative evaluation of large corporations by the Korean public becomes even clearer when compared with survey results from other countries.2) Examining the average social influence score among the 22 participating countries, 62% of respondents indicated that the influence is 'large,' while 34% said it is 'small.' The proportion of respondents who answered 'large' in Korea is 8 percentage points higher. For social trust, 53% of respondents expressed trust, and 43% expressed distrust. In Korea, the rate of trust is 9 percentage points lower than the overall average.

The average for the contribution to solving social problems across the 22 countries was 47% for 'doing well' and 41% for 'doing poorly.' Ultimately, it can be interpreted that the Korean public holds the perception that the level of trust in large corporations is low relative to their influence, and their contribution to solving social problems is also insufficient. This perception leads to public opinion favoring regulation on corporate responsibility.

[Figure 1] Public Perception of Large Corporations (%)

* Unshaded areas in the graph indicate unsure/no response.

2011 Power Institutions Survey: Samsung ranked 1st in influence, Hyundai Motor 1st in trust

However, this distrust towards large corporations as a collective does not equate to distrust towards individual large corporations. Especially when compared to other organizations with significant social influence, individual large corporations are perceived relatively positively. Individual large corporations such as Samsung and Hyundai Motor receive very high ratings for their trustworthiness.

EAI has been conducting the 'Power Institutions Trust and Influence Survey' annually since 2005, with the exception of 2010, in collaboration with the JoongAng Ilbo.3) Among approximately 25 surveyed institutions, individual large corporations like Samsung, Hyundai Motor, SK, and LG have consistently received higher evaluations for both influence and trust than any other institution. In the 2011 survey results alone, Samsung was ranked first in influence, followed by Hyundai Motor in second place. Hyundai Motor was ranked first in trust, and Samsung second. SK ranked third in both influence and trust, while LG ranked sixth in influence and fifth in trust.

In contrast, political parties and government ministries received much more negative evaluations for both influence and trust. Combining the survey results for the Saenuri Party (Grand National Party), the Democratic Party (Democratic United Party), and the Democratic Labor Party, which have been consistently included since the first survey in 2005, and calculating the average for political parties, reveals that they have been evaluated as inferior to individual large corporations in both influence and trust since the 2005 survey. The survey results for government ministries such as the Blue House, the Prosecutor's Office, the Police, the National Tax Service, the Financial Supervisory Service, and the National Intelligence Service also fell short of the results for individual large corporations. Individual large corporations receive high ratings for both strong influence and trust, while government ministries show lower trust relative to their influence, and political parties are evaluated poorly in both influence and trust.

[Table 1] Average Scores for Influence and Trust by Target Group

[Figure 2] 2011 Power Institutions Survey Results Distribution (Points)

Complex Perceptions of Large Corporations

In summary, public perception of large corporations is multidimensional and complex. Large corporations have merits for sustaining the Korean economy despite difficult domestic and international economic conditions. Simultaneously, they also have demerits, having enjoyed privileges through government protection and societal sacrifices. Furthermore, as a collective, large corporations are perceived as powerful entities that prioritize their own interests and neglect social responsibilities, leading to a perception that justifies government regulation.

However, as individual entities, large corporations are perceived as trusted organizations compared to other influential groups. This trust appears to reflect not so much an evaluation of pure social contribution activities or corporate social responsibility initiatives undertaken by leading Korean corporations like Samsung and Hyundai Motor, but rather confidence in their competitiveness, having grown into organizations that provide products and services recognized on the global stage.

Given the multifaceted and complex nature of large corporations' contributions and public perceptions of both individual and collective corporate entities, the current emphasis on reforming large corporate groups in relation to economic democratization presents a problem by excessively highlighting only one aspect, either the positive or the negative. Policies based on one-sided, biased perceptions are unlikely to gain broad public support, making it an urgent time for efforts to present more sophisticated and balanced policy proposals. ■