The Institutional Embeddedness of Social Enterprises in Welfare State Regime: The Case of South Korea

During the last 20 years, we have witnessed the emergence of social enterprises in Western societies as a response to the problems of welfare states and markets. Facing low fertility and aging of the population with decreasing abilities of welfare states, social enterprises were developed to provide services and work opportunities for the socially and economically disadvantaged. Recently, the Korean government has developed social enterprises as its key social program for unemployment and welfare services. The economic crisis in late 1980s has created unprecedented massive unemployment. After the government enacted the social enterprise promotion act in 2007, it has approved 109 social enterprises and announced a plan to increase the number of social enterprises annually to 1000 by year 2010. The Ministry of Labor spent 7.3 billion Won in 2003. In 2007, the budget increased to 1.3 trillion Won.

Despite increasing number of social enterprise in Korea, neither a clear conceptualization nor explicit strategies for social enterprises have been proposed. A majority of academic studies on social enterprises are still in a preliminary stage by offering case studies or working on a definition and typology of social enterprises on a conceptual level (Kim and Ban, 2006; Um, 2005; Kim, 2007; Kim, 2006; the Korea Foundation for Working Together, 2006; Jung, 2005, 2006; Im, 2007).

In the present study, I will examine how the nature of pre-existing welfare programs has shaped the nature of the Korean social enterprises through the institutionalization of interest groups and the competing agenda of different state organizations (e.g., the Ministry of Labor and the Ministry for Health, Welfare, and Family Affairs). I will also examine the characteristics of the Korean social enterprises, based on the 109 officially approved social enterprises, which reflects the institutional conditions previous welfare programs and state agenda. The emergence of the Korean social enterprises will demonstrate how institutional innovation in welfare policies is strongly shaped by the nature of a pre- existing welfare state regime. Finally, I will discuss the key conditions for the dilemma that the Korean social enterprises will experience.

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