Abstract (eng)
“Social Entrepreneurship
as an answer to social issues in South-Korea”
This master-thesis focuses on social entrepreneurship in South Korea, and explores the question whether certified Social Enterprises are able to alleviate social issues which South Korea is facing.
Social Enterprises in Korea have to be certified and are being supported by the government since the adoption of the "Social Enterprise Promotion Act" in 2007. They may not act profit – oriented and must explicitly pursue a social purpose. This involves the provision of jobs or social services to the socially disadvantaged. The goal is not only to create more jobs, but also to provide social services in order to relieve problems of an aging society.
As the number of certified social enterprises is growing, research efforts grow correspondingly. Scientific inquiry has been conducted mainly in the fields of business and management. Especially long-term sustainability and capital structure of social enterprises is being questioned by many scholars as social enterprises largely rely on government subsidies and lack market-driven investment from private investors (Moon, 2012). Therefore, interest is steadily rising among researchers in terms of performance measurement and sustainability (Jung, Seo, & Jang, 2013; Kim J.I. 2013).
Social enterprises can be used as a significant tool in fighting social and economic pressures and are offering one path to a healthy society and to social sustainability. In the present work, I analyze to what extent current certified social enterprises in South Korea have the potential of solving key social issues.
My research question therefore reads as follows:
Do Korean Social Enterprises have the potential of solving key social issues?
To see how social enterprises perform in Korea, I will answer the research question in two main parts:
1. The first part explores the social environment and institutional background in South Korea, detecting key social issues in society which can be tackled by social enterprises. These are issues relating to an aging society, the employment market, education, and corresponding challenges. Do social enterprises have the potential to tackle these issues?
2. Answering that question, the second part analyzes the current situation of social enterprises in South Korea. This explorative study is performed on the basis of literature and document analysis and my own field research through open interviews with decision-makers and interviews with social entrepreneurs in South Korea. The analysis of quantative and qualitative data provides fundamental information on social entrepreneurship in Korea. I am introducing social entrepreneurship in its general importance and prominence in Korea by analyzing its potential of solving the three key social issues described above.
Since the topic of this thesis has not yet been elaborated in this form, I carried out an explorative study following four steps adapted from Schmidt, C. (in Flick et al., 2005, p. 448) as framework for my thesis.
1. Creation of Categories: examination of the material; categories are framed. These are three categories of framing social issues in Korean society: aging society, employment and education.
2. Analysis of data: qualitative and quantitative data collection through primary and secondary research: literature and document analysis, open interviews with decision-makers and interviews with social entrepreneurs in South Korea.
3. Description of examples: Seven concrete examples of Korean social enterprises.
4. Interpretation of results: Answering the research question whether social enterprises have the potential to solve social problems.
Result
Reviewing the purpose of this thesis, I examined three social issues, answering my research question:
Do Korean Social Enterprises have the potential of solving key social issues?
Social enterprises in Korea do already contribute a lot to society. However in view of the big social problems that plague the society and the economy they are like the famous "drop on a hot stone." This results from their limited number of about 800 companies and, despite a greater density of social enterprises in certain regions, the potential of social businesses is not yet fully exploited. My work revealed, firstly, that Social Enterprises find it difficult to gain access to funding and receive a low degree of recognition for their work among the public. Secondly, social enterprises have a weak position in the market and, therefore, are not very competitive.
To assist social enterprises in their early stage, these are primarily kept alive by government policies. Should the support by the government be eliminated, it is expected that in the face of a harsh market competition, existing social enterprises are in the long term forced to either leave their social purpose behind, or to fall back into their non-profit structure, from which many of them stem from.
In the areas of education and employment the potential is not yet exploited, even though social enterprises were, in the first place, introduced to tackle unemployment. However, they are not able to offer long-term, high-quality and high-paid jobs including welfare benefits, therefore they are not attractive for the common and young workforce. Also the low number of existing social enterprises weakens their effectiveness.
In terms of education, I conclude that social enterprises do not contribute much to the issue of educational pressure among young people. However, this could be discovered as a marked niche for new social enterprises in future.
My assumption is, that it would be important to increase the accessibility of low-income households to after-school learning, in order to lower equity issues. Affordable but high-quality after-school education could be offered by social enterprises to relieve the strains on the family’s budget. However, it is important that the government seeks to support such institutions where high quality of education is assured. This would lower the high cost of education and people could afford to have more children, counteracting demographic transition in future.
In terms of aging society, social enterprises showed their largest positive effect, since older people are often employed in social enterprises and, thus, their financial situation - especially in the view of the low pensions - can be improved. Also, there are many older people who benefit in particular from the services of social enterprises. However, there are just not enough social enterprises to make a big difference: by 2013, their number was much lower than planned. As of today, Social Enterprises are not yet able to tackle the big issues of an aging society. However, I still believe that, along with an appropriate framework, they have a high potential to do so.
Although the economic situation of social enterprises is still weak, they do show potential to alleviate the problems described above.
Therefore, an appropriate and efficient business model has to be developed that allows social enterprises to realize their full potential.