The research team led by Professor Junghee Bae from the Department of Social Welfare at Sungkyunkwan University analyzed the full population dataset of certified social enterprises in South Korea to compare the social and economic performance of Work Integration Social Enterprises (WISEs) across different legal forms—nonprofit, for-profit, and cooperative organizations.
Work Integration Social Enterprises are organizations that pursue both social and economic goals by providing employment opportunities to vulnerable populations who are marginalized in the labor market, while generating revenue through business activities. These enterprises play a crucial role in promoting social integration and economic self-sufficiency among disadvantaged groups. In South Korea, under the Social Enterprise Promotion Act enacted in 2007, organizations must adopt legally recognized forms—such as corporations, social welfare foundations, nonprofit organizations, or cooperatives—in order to receive official certification as social enterprises.
The findings reveal that even among social enterprises with the same objective of creating jobs for vulnerable populations, performance varies significantly depending on legal form. In particular, nonprofit social enterprises were found to employ a larger number of vulnerable individuals and to have a higher proportion of such employees in their workforce, indicating stronger social performance compared to for-profit and cooperative counterparts.
Moreover, nonprofit social enterprises demonstrated relatively higher net income by leveraging diverse revenue sources, including government subsidies, private donations, and public-sector market sales. In contrast, for-profit and cooperative social enterprises showed relatively higher working hours and wage levels for vulnerable employees. However, these organizations tended to rely more heavily on private market revenues, which was associated with comparatively lower overall financial performance.
This study highlights that the choice of legal form plays a critical role in shaping both social value creation and financial sustainability in social enterprises, providing empirical support for institutional theory, which emphasizes the influence of institutional environments on organizational performance. In particular, amid the recent rapid growth of corporation-type social enterprises in South Korea, the findings suggest the need for balanced ecosystem development and stronger policy support for nonprofit social enterprises, especially in light of their effectiveness in achieving the core mission of employing vulnerable populations.
The study was published in the leading international journal in the nonprofit field, Nonprofit and Voluntary Sector Quarterly, Volume 55, Issue 2.