Governance and Performance of Social Enterprises in South Korea: A Mixed-Method Approach
Social enterprises have been increasingly expanded in South Korea since the enactment of the Social Enterprise Promotion Act of 2007. Little knowledge on governance and performance of social enterprises in South Korea exists. However, its understanding plays a crucial role in achieving sustainability of social enterprises (Cho, Lee, Kan& Song, 2013). As such, this study first describes the current status of social enterprises in South Korea. Then, in a mixed-method approach, the study aims: 1) to explore how social enterprises have been governed in South Korea, and 2) to examine the role of organizational factors in improving the performance of social enterprises.
Methods
Two independent studies were conducted to achieve the study aims. In the first study, using a snowball sampling procedure, eight Chief Executive Officers (CEOs) or Chief Operating Officers(COOs)of social enterprises were interviewed to understand types of change and management experiences of social enterprises. The in-depth Interviews took approximately 2 – 3 hours and phone calls were made to five of them to obtain additional information. Categorical aggregation or direct interpretation methods were used for data analysis of interview transcripts. In the second study, a purposive sample (N = 235) of social enterprises was recruited from among all 565 social enterprises certified from the Ministry of Labor by 2011. Participants completed a 95-item self-report questionnaire using a 7 point Likert scale.
Hierarchical regression analysis was employed to investigate the relationship between various organizational factors-strategic factors, management system, external environment and organizational culture- and social enterprises' economic and social outcomes controlling for objective organizational factors.
Results
From the in-depth interviews, five categories of management process emerged: 1) new challenges starting through new opportunities; 2) overcoming the hurdle of the new challenge; 3) facing changes on a new path; 4) tension and difficulties in balancing between two goals; and 5) managing for better growth. Also, social enterprises were classified by four categories: 1) business type; 2) resource mobilization;3) promoting business organizational culture; and 4) length of time in operation. The quantitative study demonstrated that strategic factors emerged as the most significant factors affecting both economic and social performance. Human resource management, governmental and corporate support, and innovative organizational culture were positively associated with economic performance. High quality marketing support, community support, and governance capacity were positively associated with social performance.
Conclusion and Implications
The findings of the two studies have implications for social enterprise researchers and managers. The findings of the first study suggest the types of challenges social enterprises have faced in South Korea in recent years. The findings of the second study indicate that leaders of social enterprises should manage human resources effectively, promote innovative organizational culture, and make efforts to increase process-oriented support from government and corporations to promote sustainability of their enterprises.
References
Cho, S. M., Lee, J. H., Kan, K. H., & Song, J. Y. (2013). A review of social enterprise research: What are recent trends? Journal of Korean Social Welfare Administration,15(1), 105-138.