This article has been reviewed according to Science X's editorial process and policies. Editors have highlighted the following attributes while ensuring the content's credibility: The trauma of war has long-lasting reverberations, influencing business decisions made decades later, argue Eun Hye Jo and Jenny Jung-Wha Lee, accounting professors at Costello College of Business based at George Mason University Korea. Their recent paper in Journal of Business Research (coauthored by Larelle (Ellie) Chapple of Queensland University of Technology) examines how early-life experience of the Korean War (1950–1953) affected CEOs' responses to business challenges.
"The project had a personal motivation that emerged from a conversation about the Korean War. We realized that war and military service had meaningful connections to both of our family histories: Eun Hye's grandfather was a Korean War veteran, while Jenny's father was a retired South Korean Army lieutenant colonel. Growing up with these family histories exposed us to stories about war and military service and made this research question especially meaningful to us," comment the pair of Costello researchers.
The three-year conflict between North and South Korea caused more than 2 million casualties, over half of whom were civilians. Approximately 10% of the population of the peninsula lost their lives in the conflagration. The traumatic aftereffects of the Korean War on both sides may be intensified by the lack of formal resolution, with no peace treaty signed and tensions between the combatants continuing into the present day.
The research team collected financial performance data on Korean-listed companies from 2002 to 2023 (excluding the smallest companies and those in the finance industry); their data set comprised 24,703 firm-year observations. They segmented the data by CEO age, allowing them to analyze firm activity in light of whether the CEO in question was born before the Armistice Agreement that ended Korean War hostilities. They were particularly interested in sales downturns, which could act as trigger events for war-exposed CEOs.
Their theory was that these CEOs would have a stronger emotional response to a decline in sales, resulting in larger workforce reductions. The researchers found that when Korean firms were led by war-exposed CEOs, they exhibited lower employment stickiness—hiring about 22% less aggressively during sales upswings and cutting employment about 106% more sharply during downturns. On closer investigation, the researchers saw that the entire effect was concentrated among CEOs who experienced the Korean War between the ages of 4 and 15, as opposed to earlier childhood years, which do not usually produce lasting memories due to the phenomenon known as "infantile amnesia." "Our interpretation is that early-life war exposure may heighten sensitivity to downside risk.
War is an extreme environment marked by uncertainty, loss and resource scarcity, and exposure to that kind of instability during formative years may shape how individuals perceive threats and make decisions under pressure later in life," the Costello coauthors explain. As additional verification that their findings were due to war exposure in formative years and not a generational mindset or the effects of aging, the researchers performed birth-region comparisons between war-exposed CEOs. They identified a direct relationship between CEOs' downside risk sensitivity (as measured by employment stickiness) and the number of civilian Korean War casualties in their home environment as they were growing up.
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