Using Social Enterprises for Social Policy in South Korea: Do Funding and Management Affect Social and Economic Performance?
| Published date | 01 February 2017 |
| DOI | http://doi.org/10.1002/pad.1783 |
| Date | 01 February 2017 |
USING SOCIAL ENTERPRISES FOR SOCIAL POLICY IN SOUTH KOREA:
DO FUNDING AND MANAGEMENT AFFECT SOCIAL AND ECONOMIC
PERFORMANCE?
TAE HYUNG KIM AND M. JAE MOON*
Yonsei University,Korea
SUMMARY
This study examines the way the South Korean government utilizes social enterprises as a policy alternative to promote
employment and provide social services for the socially disadvantaged. As an example of “capable policy design”characterized
as high levels of instrumentality and government capacity, this study focuses more specifically on the social and economic
performance of Korean social enterprises. Using the Korea Social Enterprise Data, this study conducts an empirical analysis
to identify how government subsidies and management quality affect the social and economic performance of social enterprises.
The results show that government subsidies partially contribute to the enhancement of the enterprisesˈsocial performance and
economic performance. There are mixed results regarding the effect of management quality on the social and economic
performance of social enterprises. The results also suggest that general donations from citizens along with government subsidies
help social enterprises pursue social performance particularly in employment of socially disadvantaged people, while corporate
donations promote the provision of social services. This suggests that government subsidy is an important instrument in the birth
and growth of social enterprises as well as the social and economic performance of social enterprises but should be
complemented by corporate and general donations to sustain both social and economic performance in the long run. Copyright
© 2017 John Wiley & Sons, Ltd.
key words—policy capacity; social policy; South Korea; social enterprises; social performance; economic performance
INTRODUCTION
Can social enterprises be utilized as instruments for social policy? Social enterprises are often established by
non-profit organizations or socially responsible individuals and investors without any intentional government
policy involvement to address complex social issues such as education, disability, aging, poverty, and unemploy-
ment. They seek to solve social problems by presenting innovative and sustainable solutions (Engelke et al., 2015).
In South Korea, however, social enterprises have been actively introduced and promoted by the South Korean
government as a policy alternative to tackle unemployment and poverty affecting the socially disadvantaged
populations that were particularly impacted by the financial crisis of 1997 and the economic crisis of 2008.
Social enterprises were originally presented as a policy alternative in the midst of the financial crisis of 1997,
when unemployment and massive economic instability became major social issues in South Korea. Interest in so-
cial enterprises resurfaced in 2008, when South Korea faced another economic crisis and social services for socially
disadvantaged populations again became critical. With the growing demand for social services and employment
opportunities for the socially weak, the Social Enterprise Promotion Act was enacted to facilitate the establishment
of new social enterprises that would pursue both social goals (including the provision of social services and em-
ployment for the socially vulnerable) and economic goals (including increasing sales and business profits; Lim
*Correspondence to: M. J. Moon, Department of Public Administration, Yonsei University, 50 Yoonsei-ro, Seodaemun-gu, Seoul, Korea.
E-mail: mjaemoon@gmail.com
public administration and development
Public Admin. Dev. 37,15–27 (2017)
Published online in Wiley Online Library
(wileyonlinelibrary.com) DOI: 10.1002/pad.1783
Copyright © 2017 John Wiley & Sons, Ltd.
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