This post aims to give an introduction to social entrepreneurship in South Korea.

The idea of more sustainable growth and social entrepreneurship started to attract attention from policy makers after the 1997 financial crisis which caused great unemployment, especially among vulnerable groups such as elderly. Different policies to support these groups were adopted. (for more background info, see Bidet, Eum “Social Enterprise in Korea: History and Diversity”)

This attention ultimately led to the the introduction of the Law on the Promotion of Social entrepreneurship in 2007. This law aims to support the development and introduces a legal status for social enterprises. A social enterprise is defined by the state run Korea Social Enterprise Promotion Agency (KoSEA) as:

A company or organization which performs business activities while putting priority on the pursuit of social purposes. Read here more on what are considered social purposes and business activities.

KOSEA identifies five types of social enterprises:

· Job-creation Type: The main purpose of the enterprise is to offer jobs to vulnerable social groups.

· Social Service Provision Type: The main purpose of the enterprise is to provide vulnerable social groups with social services.

· Mixed Type: Job-creation Type + Social Service Provision Type

· Other Types: A social enterprise of which realization of social purposes is difficult to judge on the basis of the ratio of employment or provision of social service.

· Local Community Contribution Type: An enterprise which contribute to the improvement in the quality of life of the local community. (newly defined in 2011).

Seoul

Social enterprises can obtain a legal status provided by the Ministry of Labour and Employment Affairs. The certification of social enterprises is coordinated by the Ministry of Labour and Employment Affairs and KoSEA and can be a quite intense process . Once obtained such as status funds to cover salary expenses can be provided. There are now over 1600 certified social enterprises. One of the biggest and oldest certified social enterprises is A Beautiful Store, a chain of 120 charity and recycling shops in 16 different cities in Korea that employs marginalized groups and distributes profits to charities.

Although the definition of KoSEA focuses on employment and social services, social enterprises can be found across sectors. A few interesting examples of social start ups that demonstrate the variety of the field: Dr Noah toothbrushes produces toothbrushes made from bamboo grown in Vietnam. In this way it provides income for bamboo farmers, supplies cheap toothbrushes for the BoP and reduces the use of plastic. Playplanet aims to connect travelers in Asia with locals to and make tourism more social and sustainable. The Test Kitchen produces organic crackers, employs elderly and wants to (re)connect them with youth.

Korea has a relatively small, but lively scene of incubators, accelerators, contests and co-working spaces. Hive Arena aims to create a community of ‘tech for good’, MYSC acts as both an impact investor and match maker between social enterprises and corporates, sopoong is the leading investor and incubator in social ventures, Root Impact works to build the social enterprise ecosystem. Cow and Dog is another co working (Cow) space aimed at doing good (Dog). And the B Corp movement is starting to take ground in Korea as well, now home of 10 B Corps. Chaebols are involved in social entrepreneurship, SK provides all kinds of support, starts social enterprises and is a partner of the KAIST MBA on social entrepreneurship.

Hive Arena — Seoul

So the most important aspects of an ecosystem (policy infrastructure, finance, corporate involvement, support, networks) seem to be in place. A recent research of the Global Social Enterprise Network and Thomson Reuters Foundation even named Korea the 7th best country in the world ‘to be a social entrepreneur’. I will reflect on this position in a later post (seems a bit high to me).

So, let’s take a look at some of the challenges. The most named problem is the image of entrepreneurship. Being an entrepreneur does not have the same ‘hero’ status as in the US and most of Europe. Failure is not celebrated in Korea. Why would one take enormous risks and become a social entrepreneur? A career at a chaebol is still the preferred option. ‘Cultural change’ (if possible) will take considerable time.

Another problem is the dominant economic position of chaebols, which makes it difficult for all SME’s to access markets, including social enterprises. Seoul Metropolitan Government (SMG) is trying to improve access to markets for social enterprises and has adopted a Socially Responsible Public Procurement policy. And there are examples of chaebols and social enterprises teaming up where social enterprises can benefit from the market access of the big companies.

While government support gives a boost to the development of social enterprises, it also can also block the developments of a healthy business model. A 2015 study even found a negative correlation between government funding and the growth of social enterprises. The challenge for the coming years is to implement government support that aligns more with the needs of entrepreneurs.

In the following posts I want to dive into these challenges, learn more on the motivations of social entrepreneurs (why are they doing what they do?) and their views on Korean society.

Stay tuned!

Thanks to Diana Won for editing!