For a long time, its meaning was much broader and amorphous than it is today. Anyone can develop their own a priori conception of the SE, simply by placing more or less emphasis on either its economic or its social dimensions, both of which are wide-ranging (…) Today, people are discovering or rediscovering a third sector that exists alongside the private, for-profit sector and the public sector, although its designation and definition may vary from one country to another.
“The SE sector as a part of the economy that is made up of private organisations that share four characteristic features: (a) the objective is to serve members or the community, not to make a profit; (b) autonomous management; (c) a democratic decision-making process; and (d) the pre-eminence of individuals and labour over capital in the distribution of income”.
- How can the public value of the VCPP be defined, and how does the stakeholder in the current governance system participate and share roles to ensure the legitimacy of these values?
- How should the institutions and administrative systems of the VCPP be improved?
- Do the major actors involved in the operation of the village company have the necessary operational capacity? What are the related issues and methods for improvement?
2. Background Literature and Theory
2.1. Definition and Characterisitcs of Community Businesses
2.2. Policy Frameworks for Social Economy
2.2.1. Institutional Support for Social Economy around the World
- A wide variety of social and economic rationales driving government support for the SE sector, including access to public service; improving the quality, affordability, and equity of service provision; increasing social cohesion and generating employment.
- A positive partnership between governments and the SE sector in public service delivery.
- Various types and levels of governmental engagement with and support for the SE in the form of government recognition (existence of shared legal and/or operational definition of SE); degree of government support (direct and indirect measures); presence of enablers (supporting organizations, facilitation of public–private dialogue, information sharing, funding, etc.).
- Legal forms such as the Edward M. Kennedy Serve America Act in the U.S. enacted in 2009 or the Social Enterprise Promotion Act of South Korea enacted in 2007.
- Specific institutions supporting SE, such as Social Enterprise U.K. or the KoSEA.
- Other policy tools that nurture the social enterprise ecosystem, such as fiscal incentives, grants, diverse funds and bonds, awareness and promotional campaigns, incubation and scale up, and training.
2.2.2. The Concept and Development of the Korean Social Economy
The Korean case contrasts with the North American and European cases in that in Korea the state purposively popularized social enterprise, as opposed to the North American and European traditions where the origins of social enterprise are more closely linked to civil society…Korea is an especially intriguing case study given that ‘social enterprise’ as an organizational form was almost entirely absent from Korean society prior to 2007, yet has now become embedded into society in the sense that social enterprises are found in nearly every industry and municipal district. (p. 5)
2.2.3. Korean Institutional Context
- Potential social entrepreneurs tend to focus mostly on meeting the certification and subsidy requirements that are narrowly specified by the MOEL, rather than stimulating and broadening their imagination for social integration or social innovation.
- The central government’s focus on individual enterprises and weak links between national, regional, and local governments is likely to undermine the capacity of the SE to be integrated into socioeconomic development strategies for local communities .
2.3. Public Value Theory
2.3.1. Public Value Creation from a Practical Perspective
- Public value account: “What dimensions of public value do we create and how can we produce more net value in the future?” . Input (collective assets, financial and social costs, using state authority, etc.) and outcomes (mission achievement, negative and positive consequences, client satisfaction, justice and fairness, etc.).
- Legitimacy and support: “What sources of legitimacy and support do we rely on and how can we increase legitimacy and support in the future?” . Relations with government regulators, media, and the general public, visibility and legitimacy, credibility with civil society, etc.
- Operational capacity: Organizational outputs, productivity and efficiency, financial integrity, staff morale, capacity and development, organizational learning, etc.
- In terms of legitimacy (authorization) and support, it is important to enhance funder relations and diversification, volunteer roles and relations, visibility, legitimacy with general public, relations with government regulators, reputation with media, and credibility with civil society actors.
- In terms of operational capacity, it is important to pay attention to organizational output, productivity and efficiency, financial integrity, staff and partners’ morale, capacity and development, organizational learning, and innovation.
- In terms of creating public value, it is important to build organizational vision and mission, strategic goals, links among goals, activities, output and outcomes, range of outcomes, and activities and output that create outcomes.
2.3.2. Value-Based Policy Deliberation and Sound Governance
3. Research Methodology
3.1. Research Methods and Case Selection
3.1.1. Research Methods
3.1.2. Case Selection
- Literature review: Previous studies and administrative documents on the VCPP during 2010~2019.
- Interviews: Semi-structured interviews with personnel from 17 umbrella organizations (electronic and face-to-face communication).
- Workshop organization: Findings from an open debate session at the 2019 Annual meeting of Village Companies (held on 11 October 2019).
- Discussions and observation: Irregular meetings with public officials and various opinions from experts during several small reunions held from April to October 2019.
3.3. Conceptual Framework
- Governance: Partnership and respective responsibility of village companies, the ministerial department in charge, umbrella organizations, and local and regional governments.
- Administration: Entire administrative system of the VCPP, including planning and regulatory policy, budget management, and legal and institutional background.
- Legitimacy and support: Relations with higher authorities, institutional support, credibility with community business participants and umbrella organizations, and support from partners and civil society.
- Operational capacity: Organizational output, financial integrity, administrative efficiency issues, innovation, and learning issues.
- Section A: Public support- and stakeholders’ cooperation-related issues.
- Section B: Institutional and legal background related issues.
- Section C: Management capacity-related issues.
- Section D: Work system-related issues.
4. Findings and Discussion
4.1. Section A: Support- and Cooperation-Related Issues
4.1.1. Need for Connecting the Local Government’s Community Promotion Projects
4.1.2. Need for Inter-Ministerial Cooperation
4.2. Section B: Institutional Background-Related Issues
4.2.1. Need for the Village Company Promotion Act
4.2.2. Need for Improving the Four Principles of Village Companies
In order to receive government subsidies, several communities have been artificially formed and applied for the village company selection procedure. They have difficulty understanding the purpose and principles of the VCPP and their community bonding is quite weak. To improve such less desirable aspects, our center is implementing a preparatory program to promote community bonding for local residents who want to participate in the VCPP before they directly start commercial activities.
As the local area criterion is delimited on the administrative territorial scope, it is too homogenous, which does not reflect the different situations of each local region” (umbrella organization employee), “Some government officials are calling on village companies to extend public interest more tangibly and suggesting that a fixed rate of our sales be used for public purposes collectively. But for a majority of village companies, survival is the biggest achievement. (Village company participant)
4.3. Section C: Management Capacity-Related Issues
4.3.1. Need for Strengthening the Capacity and Responsibility of Umbrella Organizations
4.3.2. Need for Improving the Capacity and Role of the Ministry of Public Administration and Security
Village companies, which are expected to contribute actively to the local economy due to their high profitability, are selected first in the screening process and are also honored as excellent companies. However socially, it is hard to assess how much value they create, such as publicness and public interest. It is difficult to objectively set criteria for the screening process or select key performance indicators for such qualitative performance. Although it is in principle intended to provide supports to companies that engage in low-profit but high-public interest activities in the community.
4.4. Section D: Work System and Management-Related Issues
4.4.1. Issues to Improve the Information System of Village Companies
4.4.2. Improving the Performance Evaluation System of Village Companies
5. Conclusions and Suggestions for Policy Improvement
5.2.1. Management System Improvement of the VCPP
5.2.2. Multilevel Governance from the Principle of Subsidiarity Perspective
5.3. Limitations and Future Directions
Institutional Review Board Statement
Informed Consent Statement
Data Availability Statement
Conflicts of Interest
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|Country examples||Kenya and South Africa||Colombia, Egypt, and India||Canada, Chile, Italy, Malaysia, Poland, and Thailand||South Korea, United Kingdom, and United States|
|Recognition||No legal form for SE||No legal form for SE||Legal form for SE created or in process of creation||Legal form created for SE|
|Support||No policies or regulations for SE|
Small- and medium-sized enterprise policies available
|Policies to support SE or social innovation|
Small- and medium-sized enterprise policies available
|Policies and regulations for SE||National strategy or policy for SE with a large range of tools and programs to support them|
|Enablers||Some private organizations (e.g., universities and foundations) supporting SE||Growing number and variety of organizations supporting SE||Supporting organizations|
|Supporting organizations, including public agencies, forming a connected ecosystem|
|Level of SE Activity||Presence of SE as NGOs or companies in some sectors or geographies||Presence of SE as NGOs or companies in multiple sectors or geographies||Widespread presence of SE within existent legal forms or as Non-Governmental Organizations, companies, multiple sectors, or geographies||Extensive and organized SE sector|
|Ministry of Employment and Labor (MOEL)||Creating jobs at social enterprises; subsidizing business development expenses; fostering (young) social entrepreneurs; developing social enterprise growth support centers; providing a centralized platform for marketing social economy enterprise (SEE) products; prioritizing SEE products for public procurement; managing the fund of funds (FOF).|
|Ministry of SMEs and Startups (MSS)||Fostering collaboration among small businesses; fostering small and medium-sized enterprise (SME) cooperatives; fostering social startups; managing the social impact fund; providing policy finance for SEEs; providing finance exclusively for small SEEs; providing special-case loan guarantees for SEEs.|
|Ministry of Culture, Sports, and Tourism (MCST)||Fostering the SE in culture and the arts; running Saturday culture schools; subsidizing the construction of small theaters; subsidizing the construction and operation of small museums; running reading and culture programs at small libraries; fostering sports clubs; fostering tourism cooperatives.|
|Ministry of Trade, Industry, and Energy (MOTIE)||Fostering community businesses (CBs) (R&D and non-R&D); developing SE innovation towns; enhancing design specialty social enterprise’s design innovation capability; supporting global expansion of SEEs.|
|Ministry of Health and Welfare (MOHW)||Fostering self-sufficient enterprises; fostering social enterprises providing social services; fostering self-sufficient associations of persons with developmental disabilities; managing projects for providing integrated care services for local clients.|
|Ministry of Education (MOE)||Fostering school cooperatives; supporting humanities and social science research centers; developing entrepreneurial education programs at universities; fostering local lifelong education.|
|Ministry of Land, Infrastructure, and Transport (MOLIT)||Supporting urban renewal projects; fostering communities as part of urban renewal (community management cooperatives); providing social housing.|
|Ministry of Agriculture, Food, and Rural Affairs (MAFRA)||Fostering social agriculture; managing the New Energy Plus Program for rural communities; supporting educational, cultural, and other activities (festivals and student exchange programs included) for rural residents.|
|Korea Forest Service (KFS)||Recruiting and fostering forestry-specialized social enterprises; managing the Forestry Employment Advancement Center; fostering communities cultivating new varieties of forest resources.|
|Ministry of Public Administration and Security (MOPAS)||Fostering village companies; fostering local initiatives for creating jobs for young adults.|
|Financial Services Commission (FSC)||Providing loan guarantees via the Korea Credit Guarantee Fund (KCGF); establishing SEE evaluation systems.|
|Ministry of Economy and Finance (MOB1), etc.||Fostering cooperatives; incubating cooperatives of scientists and engineers; fostering the SE for the environment; managing innovative technology programs; managing New Deal 300 for fishing villages.|
|Local governments||Setting up centers to promote the SE in different regions; reducing fees for SEEs using national and public assets; reducing local taxes and increasing other financial and tax benefits.|
|Methods||List of Data||Principal Contents|
|Previous studies||Research on village companies’ factual survey and support systematization plan ||Assessment of the Village Company Promotion Program (VCPP) market situation, performance, and business environment through a thorough inspection of active VCPPs (carried out in 2015)|
Survey of the degree of satisfaction and perception by VCPP members on the state support policy
|Research on the performance of the village company ecosystem capacity building project ||Development of strategies for VCPP competitiveness and business diversification|
|Administrative documents||2019 list of village companies|
2019 list of umbrella companies
Internal work papers of MoPAS for the preparation of the Village Company Promotion Act (draft)
|Interviews||A total inspection of 17 umbrella organizations and electronic communication carried out during the period from 12 to 21 June 2019||Qualitative survey on the current status, principal tasks, and work limitations of umbrella organizations|
|Face-to-face interviews with 10 umbrella organizations (24~25 June and 13 August 2019)||Management issues such as lack of budget and poor human resources structure|
Limitations in the performance management of the VCPP
Need for institutional improvement (at the state level)
More active engagement of local governments Lack of community bonding and public spirit in some village companies as their sole purpose is business profit
|Workshop||Open debate session at the 2019 Annual Meeting of Village Companies|
(11 October 2019)
|Problematic issues of four of the VCPP’s operating principles|
Increasing village companies‘ contribution to local community wellbeing
Improvement of the VCPP’s management and reporting system
Institutional problems such as standardized the VCPP’s selection criteria, rigid public contracts, etc.
|Discussions and Observations||Free discussion session with the policy managers in charge of the VCPP|
(held in 7 August 2019)
|Need for easily applicable performance indicators (quantitative and qualitative)|
Difficulty in identifying the current operation status of village companies
|Mid-term discussion of our research with policy managers in charge of the VCPP and three invited experts (26 September 2019)||Excellent Village Company Reward Program: How do we define “excellence“ in community businesses?|
Discussion on performance indicators for job creation capacity
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