[Viewpoint]Build a social enterprise culture

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[Viewpoint]Build a social enterprise culture

A signing ceremony for an agreement to support social enterprises that create new jobs and fulfill various social services took place at SK Telecom yesterday, with the participation of corporations and organizations of experts.

Social enterprises are new to us, but in Western society, where charities are common, they have a long history.

Social enterprises simultaneously pursue financial and social purposes. They serve society but also create continuous profits through competition and trade in the market. There are 55,000 social enterprises in the United Kingdom. Internationally famous social enterprises include Grameen Bank, founded by 2006 Nobel Peace Prize awardee Muhammad Yunus, and Room to Read, founded by former Microsoft executive John Wood, which has built 200 schools and 3,000 libraries in remote areas such as the Himalayas.

Societies with many social enterprises are righteous and healthy, and enjoy the drive of “creative capitalism,” or “humane capitalism.” In Korea, there are currently around 218 active social enterprises authorized by the Social Enterprise Promotion Law enacted in 2007. More and more citizens are taking an interest in social enterprises to find hope in an increasingly difficult financial situation.

However, it is not easy to foster social enterprises. And one could say it’s as difficult as fitting a camel through the eye of a needle to turn a social enterprise into an actual “business” that makes consistent profits. According to a survey of corporate activities by the Korea National Statistical Office at the end of 2008, Korean companies made an average of 69 won profit for every 1,000 won worth of goods sold. That means they earned 7 won by selling something worth 100 won - what did they do to earn that?

That 7 won is the result of searching through all colleges to find and cultivate bright and loyal workers, visiting banks endlessly to borrow money at an interest rate that is perhaps 0.01 percent lower than elsewhere, looking around different markets in different countries to find goods that will sell, working from early morning till late at night to lower spending, scolding and nagging employees, and being patient with the loud voices of angry customers.

Social enterprises are not much different from other companies; they have to make money, too.

Social enterprises are not charitable organizations. What they do is completely different from “welfare” operations that depend on money from the government, or contributed by companies or individual donors. Social enterprises are businesses that are operated with their own money, at their own risk. Ninety-nine percent of the budgets of successful U.S. social enterprises is money made by the companies themselves.

The government should step forward and provide the support needed to strengthen the business management capabilities of social enterprises. Considering that 50 percent of social enterprises started out as nonprofit organizations, social enterprises should be included in various corporate support programs for small and midsized companies. Indirect support measures, such as business management consulting and priority purchases, are urgent too.

Above all, we should seek out and encourage true social entrepreneurs who are equipped with a spirit of sacrifice and ethics, a strong business sense and who are willing to give their all.

It is necessary for Korea to create a pro-social enterprise culture to help consumers become aware of these businesses and buy from them, and to encourage people to volunteer their expertise to them, as in other developed countries.

Korean companies, which helped create the world’s 13th-largest economy, must learn that they ought to share their management abilities and know-how to social enterprises rather than giving one-time donations

Korea has a short history of social enterprises, but our interest in their development is growing quickly. Social enterprises have the potential to solve problems that have emerged in the process of developing a capitalist society - such as social polarization, unemployment and social exclusion.

With a government policy that looks toward the future and a genuine understanding of the value of social enterprises, I hope the number of conscientious consumers in our society will grow and that people will learn to work toward change.

In this era, when hardships lurk around every corner and competition grows more cutthroat every day, we must take responsibility and dedicate ourselves to social enterprises.


The writer is a professor at Pusan National University. Translation by the JoongAng Daily staff.


by Cho Young-bohk

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