Can Infused Publicness Enhance Public Value Creation? Examining the Impact of Government Funding on the Performance of Social Enterprises in South Korea

Abstract

Numerous countries employ social enterprise as an alternative way of addressing social, economic, and environmental problems, with this new approach steadily gaining strength over the last two decades. Despite this growth, few empirical studies have examined the effects of government policies on social enterprise development. Seeking to fill this gap, this study examines the impact of government funding on the social and economic performance of social enterprises in South Korea, framed by integrative publicness hypotheses. The integrative publicness framework posits that infused publicness by government funding can enhance public value creation. To investigate the impact of government funding on social enterprises, this study has gathered data from annual reports voluntarily published by Korean social enterprises in 2018. Regression was employed to analyze the data. The findings suggest that government funding is positively associated with social enterprise’s employment of the disadvantaged, community contribution, and democratic decision-making. In addition, government funding is related to a decrease in the business profitability of social enterprises, implying that it may lessen their profit-maximization. This study provides policymakers and managers of social enterprises with suggestions on how to measure the outcomes of social enterprises and offers real-world touchstones on how they can improve their creation of public value.