Seoul: Outside directors at South Korean companies are disproportionately represented by those with a background in academia and the government, a survey showed Wednesday, raising concerns over a lack of board-level business expertise compared with global competitors.

According to Yonhap News Agency, the survey conducted by the Korea Chamber of Commerce and Industry (KCCI) last year on 160 corporate outside directors revealed that 36 percent said they came from academia, while 14 percent had a background in the government. The findings highlighted a significant gap in business experience among outside directors in South Korea. Only 15 percent of these directors had executive business backgrounds, a stark contrast to companies in the United States and Japan. At S and P 500 companies in the United States, 72 percent of outside directors had business experience, while the figure stood at 52 percent among Nikkei 225 firms in Japan.

The KCCI attributed the trend in South Korea to local regulations under the Fair Trade Act, which classifies a company owned by an outside director as an affiliate of a large business group unless exempted. Industry watchers suggest that this rule effectively deters entrepreneurs from joining boards of listed companies.

When asked about areas of policy changes regarding board operations, 45 percent of respondents called for improved guidelines to enhance director qualifications, while 28.8 percent noted the need for discussions on expanding the liability of outside directors. A KCCI official emphasized the importance of viewing outside directors not merely as watchdogs but as strategic decision-making partners, especially in a time of intensifying global uncertainty and industrial competition.