What Does the Social Value Orientation of Young Entrepreneurs Mean to Economic Performance?

Background/Purpose: With the social consensus that the pursuit of social values is a major strategy for corporate survival, companies are focusing on social value creation as a “key” to sustainability, not a profit structure that focuses on economic performance as in the past. Reflecting this trend, young entrepreneurs that are able to achieve innovation and growth with pursuing social values are attracting much attention. However, up to now, most research on youth entrepreneurship has been focused on quantitative growth, and no research has revealed how social value orientation affects economic performance. The purpose of this study is to examine the effect of social value orientation on economic performance among young entrepreneurs. Through this, it is expected to be a very important cornerstone for proving a virtuous cycle of social and economic performance in youth startups.

Methods: The data used in this study came from the Korea Youth Panel (KYP) that is a longitudinal research for young people aged 15-29 all over country until 2018. The 12thwave KYP in this study sample included 370 people whose annual sales (show equal variance with normal distribution statistically), which the economic outcome. For structural equation model (SEM), m-plus 7.0 was used and the dependent variable was annual sales. The independent variables in this study included entrepreneurship, basic competency, foreign language skills and professional abilities as the capacities of young entrepreneurs. The intervening variable was social value orientation composed of social contribution, future potential, development. Finally, demographic factors (gender, age) and corporate factors (Biz scale, type, age) were controlled.

Results: First, the structural equation model appeared goodness of fit as χ²(df)=7.915(8) p-value=0.4418, CFI >.09, RMSEA <.01. Second, the results showed only the basic competency of the young entrepreneurs’ capacities had a direct impact (β=.041*) on economic performance. Third, to explore the mediation effects, entrepreneurship and professional abilities, which had no direct effect, had an indirect effect on economic performances through social value orientation (ES→SV: β=.150** PA →SV: β=.131**, SV→EV: β=.049*). And basic competency, which had direct appeared, appeared to have an indirect effect through social value orientation. However, foreign language skills had no direct and indirect effects on economic performances.

Conclusions and Implications: The social value orientation of young entrepreneurs is a very important mediating factor in linking youth's entrepreneurship, basic competencies and professional competencies to economic performance. This is a very valuable empirical study that challenges the existing paradigm in which social values were treated only for secondary purposes in corporate activities or businesses. In other words, it has been found that social values can reach their competencies as economic achievements when they are aimed primarily at young people's business activities or start-ups. So, it is necessary to establish a virtuous cycle system in which young entrepreneurs can achieve both social and economic performance simultaneously by treating social value as a major business element in youth entrepreneurship training and youth entrepreneurship support policies.