The Comparison of the Impact of Worker's Self-Leadership on the Organizational Performance of Social Enterprises and Commercial Enterprises in Korea

Background & Purpose:  Social enterprises in South Korea have been increased rapidly since Social Enterprises Promotion Act in 2007. This significant growth is attributed to the proactive government policy that actively supports social enterprises including financial supports for labor and business operation. Social enterprises (SEs) pursue not only economic profits but also social purpose as they use market principles to solve social problems. They are distinguished from commercial enterprises (CEs) based on the fact that they pursue economic profits to achieve a social purpose. However, it is very difficult for SEs to pursue the conflicting dual outcomes; the social purpose as non-profit organizations and economic success as CEs.

This difficulty can be exacerbated due to the regulation of the government that requires for SEs to employ vulnerable workers such as the elderly and the disabled people. However, workers of SEs are expected to have high self-leadership based on the characteristics of social enterprises, which enhances workers' active participation in decision-making process and ownership. However, very little is known about self-leadership among workers of SEs in comparison to those of CEs. Understanding self-leadership is important because it contributes to workers' level of responsibilities and the level of organizational performance. The purpose of this study, therefore, is to compare self-leadership among workers of SEs and CEs, and its impact on social and economic organizational performance  in Korea.

Methods:This study used a convenience sampling from SEs and CEs certified by the ministry of employment and labor in Chungcheongnamdo, one of the 14 providences, in Korea. Participants in the survey were 153 employees from 24 SEs and 150 employees from 12 CEs.  By using standardized measures such as Manz’s (1992) self-leadership which consisted of sub-factors (e.g., strategy of constructive thought patterns, natural reward strategy), organizational performance (Baum et al., 2001), and social performance.

Results: The study found that the overall self-leadership in SEs was significantly higher than CEs (t=-2.317, p<.1). Among the sub-factors of self-leadership, strategy of constructive thought patterns (t=-1.696, p<.05) was higher, and natural reward strategy (t=-1.92, p<.1) was lower than CEs. Regarding the overall organizational performance (t=-6.019, p<.001) and social performance (t= -7,176, p<.001),  SEs reported higher than CEs on both scales but economic performance (t=-2.924, p<.05) was lower. Based on the multivariate analysis predicting the organizational performance among the two sectors,  strategy of constructive thought pattern (β=0.213, p<.05) and behavior-focused strategy (β= 0.243, p<.01) had a significant impact on the organizational performance for SEs, while strategy of constructive thought pattern (β=0.211, p<.05) and natural reward strategy (β=0.181, p<.05) had a significant impact on the organizational performance for CEs.

Conclusions & Implications: This study shows the differences of workers’ self-leadership and organizational performance between SEs and CEs, and the impact of self-leadership on organizational performance. Findings suggest that SE worker’s awareness on self-leadership and organization performance was higher than commercial companies, as they seem to share the organizational vision and goals that can improve the company's competitiveness. It will contribute to creating more social performance and economic performance of SEs.