Stakeholder Environments of South Korean Social Enterprises

This study intends to explore the stakeholder environments of South Korean social enterprises. The stakeholder environment refers to the composition of social enterprises’ stakeholders and these actors’ significance in... [ view full abstract ]

This study intends to explore the stakeholder environments of South Korean social enterprises. The stakeholder environment refers to the composition of social enterprises’ stakeholders and these actors’ significance in social enterprises’ decision-making processes. The stakeholder environment reflects varied impulses influencing the South Korean social enterprise sector. In addition, this working paper contributes to exploring the governance and ownership structure of South Korean social enterprises.

The model of South Korean social enterprises offers a comparative implication to the body of social enterprise literature. Recent scholarly efforts have focused on clarifying the main characteristics from respective models of social enterprises and integrating these into one comparative framework (Defourny & Nyssens, 2010; Nicholls, 2006). Social enterprises have recently emerged as a new phenomenon in South Korea. The South Korean model of social enterprises is unique in terms of its development processes compared to those in the U.S. and Europe. Social enterprises, in their original form, were introduced by civic leaders in South Korea (Bidet & Eum, 2011). However, the explosive growth of these organizations was facilitated by the South Korean government (Jeong & Cai, 2011).

This study utilizes the mixed method of in-depth interviews and organizational surveys. This working paper begins by exploring ground theory-based on in-depth interviews, which examine the perception surrounding stakeholders of South Korean social enterprises. Subsequent organizational surveys intends to validate the findings from the interviews with the whole population of certified social enterprises. This survey asks which actors are considered as main stakeholders of social enterprises in South Korea, to what extent each stakeholder affects decisions of South Korean social enterprises, what the priorities of social enterprises in their mission and activities are, and in what place government agencies and their policies are ranked, in terms of their influence on social enterprises’ decision making.

The main findings and implications from this study are three fold. First, the social enterprises’ perception on governments’ intervention and promotion policy on social enterprises are quite complex and multi-faceted. The establishments of social enterprises in South Korea were significantly influenced by government policies. However, the extent to which social enterprises intend to utilize the government’s funding and institutional support are manifested in multiple ways.
Second, senior managers’ of South Korean social enterprises were found to keep the balance between upward accountability (toward government agencies and board members) and downward accountability (toward customers or clients).
Third, social enterprises in South Korea exhibit hybrid traits in terms of their objectives and main focuses. Economic and social goals were both equally recognized and appreciated by social enterprises in South Korea. Social enterprises gave a high score to the economic profit item; similarly, addressing social issues and reducing social costs were also given a high level of recognition.

Keywords: Social enterprises, stakeholder environments, governance, accountability, South Korea