SYMBOLIC ADOPTION OF THE SIX SIGMA PROGRAM IN SOUTH KOREA

We argue that managerial incentives for tenure, compensation and power may influence the managerial decision on adoption of the Six Sigma program(a popular management technique). The adoption can be a symbolic action of managers showing their good will and strong expertise to both external and internal constituents, and the perceived good will and strong expertise influences the manager’s tenure, compensation and power. Among the factors affecting the strength of managerial incentive, we explore the roles of 1) CEO status (family managers versus professional managers) and 2) the ownership structure (institutional ownership and foreign ownership). Using a panel sample of 177 Korean firms listed on the Korea Stock Exchange, our analysis shows that 1) professional managers are more active in Six Sigma adoption, 2) foreign ownership is positively related to the adoption, and 3) the relationship between foreign ownership and Six Sigma adoption is strengthened in firms managed by professional managers.