The emerging discussion on the SEPA caused conflicts between the government and civil society, due to the fact that each actor reacts to institutional pressures with different strategies following from the different interests that they have (Oliver 1991). Some civil society organizations considered the concept of social enterprise to have been developed by work-related civil society organization5 which had collectively reacted to the government’s attempt to define the standards for Social Enterprises. In this section, I will present how top-down and bottom-up actors
5 Work-related civil society organizations in this thesis are a part of civil society which is autonomous
from the state, voluntary and self-generating (Diamond 1994). Among others, work-related civil society organizations advocate that employment policies have to be planned and implemented in a long-term perspective rather than providing simple and short-term work opportunities to vulnerable people in local communities (Choi 2009).
competed against each other over the institutionalization of social enterprises based on the results of the analysis of the contents of the debate and of the reactions to the SEPA. The main arguments that civil society raised related to the limited definition of social enterprise in the SEPA, to the speed of the institutionalization process and to the impact of the SEPA.
6.4.1 Contents of the Debate and Reactions to Each Other
6.4.1.1 Conflicts with out-group actors during the initial institution-
building process
Relatively powerless actors are also able to promote their understandings of a new organizational form so that they are accepted by other actors in the institutional- building process (Seo and Creed 2002). In the initial process of constructing the institutional meaning of Korean Social Enterprise, actors interacted with each other by pushing their own discourses to be included in the official discourse of Social Enterprise. More specifically, the active interaction started in March 2005 when the MoL organized the SEPA Task Force Team. According to Rao, Morrill, and Zald (2000), collective actions emerge under certain conditions in order to achieve the goals of actors’ activities. As a matter of fact, the establishment of the “Civil Society Solidarity for Social Enterprise Development (CSSSED)” against the SEPA Task Force Team shows how civil society organizations confronted the emerging certification system collectively by representing field-level social enterprises.
Interestingly, during the initial institutionalization process of the SEPA, the CSSSED was the only actor who was against the legislation and the contents of the SEPA. More specifically, the CSSSED criticized the SEPA in terms of 1) definition of Social Enterprise (criteria and governance of Social Enterprise); 2) fast institutionalization (background of the legislation, use of self-sufficiency enterprises, and maturity of the field); 3) and effectiveness of the SEPA (certification system and conflicts with other related laws), as shown in Table 6-2. The details of their arguments against the SEPA will be presented in the next Section.
Table 6-2 Conflicts over the Content of the SEPA between Advocators and Opponents
Against the SEPA In favor of the SEPA
Actor CSSSED, some self-sufficiency
enterprises
Ministry of Labor, Korea Labor Institute, Intermediaries
Governance Cooperative governance is the key of social enterprise.
Cooperative governance will make the decision-making process inefficient.
Use of self- sufficiency enterprises
They have already been
working as social enterprises in the field. The SEPA has to use their resources and networks and transform them into social enterprises.
They could not make big progress during the last few years. There is the need to find a new type of organization who can deliver social services and create work opportunities efficiently at the same time.
Certificatio n system
Social enterprises who do not need subsidies should be registered and not certified. Only social enterprises who want to receive subsidies are required to be certified.
There can be a misuse of government subsidies.
Government funding should be controlled and monitored when it is invested in a certain type of organization.
Maturity of the field
The Korean social enterprise field is not ready to be
institutionalized. There are not many organizations that can be certified as social enterprises. Further investigation on the field is needed before the enactment of the SEPA.
The Korean civil society has sufficiently matured to produce social enterprises and to accept the concept of social enterprise provided by the SEPA.
Fast institutionalization is the key characteristic of the Korean government.
Legal Framework
The separate law – SEPA is in conflict with other laws (e.g. NBLS).
Criteria of Social Enterprise
The SEPA as an employment law requires social enterprises to employ 40% of the
vulnerable people, which is wrong.
Social Enterprise is supposed to solve employment and social welfare problems at the same time.
Background of the
legislation
The government does not consider the Korean context.
Employment and social welfare issues where emergency issues need to be solved with a new policy.
6.4.1.2 Definition of Social Enterprise
According to institutionalists, the role of institutional entrepreneurs is central given that they “define, justify and push the theory and values underpinning a new form” (DiMaggio 1988: 18). The CSSSED who did not agree with the official definition of Social Enterprise provided by the government, defined and presented
their own definition of social enterprise which reflects their previous field-level experiences. From the perspective of the CSSSED, the governmental definition of Social Enterprise neglected the most important characteristic of social enterprise, namely cooperative governance. While the CSSSED insists that having a cooperative governance is the key of social enterprises, actors in favor of the SEPA believed that a cooperative governance would make the decision making process inefficient. BB7, one of leaders of the CSSSED, commented that:
“We have tried to include the cooperative governance of social enterprises as a characteristic of Social Enterprise in the SEPA. The MoEL, instead, was more concerned with emphasizing the social mission of social enterprises. However, we insisted that social mission and governance should go together, but the MoEL did not accept the idea of a cooperative governance. At the end, the MoEL simplified cooperative governance as a participation of multi-stakeholders and not as a membership of workers. (BB7, Deputy Director, P SE Network, 22 May 2014,
17:14PM-18:25PM)”
The will of the CSSSED to include cooperative governance as one of the main characteristics of a Social Enterprise could be seen from the Legislative Bill on Social Enterprises that was the result of a joint effort with Jin, Young from the Hannara Party. Article 12 of this legislative bill on the promotion and the support for Social Enterprises clearly mentions that:
“A Social Enterprise consists of members, and these members include workers and users, investors, contributors (donors), volunteers and others who are involved in the activities.”
For the members of the CSSSED, which are mostly organizations developed around self-sufficiency activities, it is important to emphasize the community spirit along with social solidarity and to revive communities through social enterprise activities. By highlighting the role of community and social solidarity, they do not expect to exclude vulnerable people in society and the labor market.
With regard to the definition of Social Enterprise, the CSSSED criticized the criteria of Social Enterprise as described in the SEPA. More specifically, the initial legislative bill of the SEPA clarifies that the employment ratio of vulnerable social groups should be greater than 40% for a Social Enterprise to be certified. However, the CSSSED was concerned that first, the ratio given to Social Enterprises is too high, and second, that these criteria will affect the public image of Social Enterprise as an organization only for vulnerable social groups. BK8 mentioned that:
“It is wrong for people to perceive a social enterprise as a place where disabled people bake bread or vulnerable people do public work. The value and meaning of social enterprises have been ignored in this fast institutionalization process. (BK8, CEO, H SE, 18 June 2014, 13:38PM-15:00PM)”
DW2 also proves that the value of social enterprises has been ignored because of the wrong direction taken by the SEPA:
“The criteria that limits the employment ratio of vulnerable social groups does not fit the value of social enterprises. The government was just showing off the fact that they are helping vulnerable social groups by adding that criteria in the SEPA. (DW2, Researcher, U Institute, 10 June 2014, 13:58PM-16:03PM)”
According to Rao, Morrill, and Zald (2000); Tracey, Phillips, and Jarvis (2011), a new organizational form will gain legitimacy when social actors realize that it corresponds to their interests and values within an institutional context.
Similarly, the reason to promote the cooperative discourse so that it is included in the SEPA was related to the idea of gaining the legitimacy of the workers’ cooperatives which they had created, but had never been institutionalized. Even though the activities which had taken the organizational form of the workers’ cooperatives had spread all over the country thanks to media coverage, workers’ cooperatives were established and managed as unauthorized organizations or public limited companies because there was no legal form that fitted the governance of cooperatives (The Solidarity Network of Cooperative Social Economy 2012). For this reason, the CSSSED tried to solve the problem of the legal status of workers’ cooperative by pushing this characteristic related to cooperative governance to be included in the official discourse of Social Enterprise. BB7 proved that:
“Structuring the SEPA as a workers’ cooperative law was our main concern in the group. For this reason, we suggested criteria and other characteristics of workers’ cooperative to be included in the legislative bill of Social Enterprise, based on the cases of Italian cooperatives. We expected that we could solve all the legal and institutional problems of workers’ cooperatives that we had in practice through the SEPA. (BB7, Deputy Director, P SE Network, 22 May 2014, 17:14PM-18:25PM)”
6.4.1.3 Fast institutionalization (backgrounds of the legislation and
the use of self-sufficiency enterprises)
From the perspective of the CSSSED, the institutionalization process of Social Enterprises took place too quickly. According to them, a fast institutionalization did matter because the government was not concerned by the political, social, and historical contexts and by the relationships between different actors in the field. Instead, the government seemed to be attracted by the new term – social enterprise. As a matter of fact, BK8 added that:
“The Ministry of Labor institutionalized the idea of civil society. The MoEL asked and paid for a few organizations to develop social enterprises even before the historical and philosophical perception of social enterprise was sufficiently mature. A policy which deals with both the economy and welfare should relate to all important social issues, like poverty and education, but the government made the
hasty decision to institutionalize the concept without developing a deep concern for the matter or discussing it with other actors merely because the term “social enterprise” sounds new and fancy. (BK8, CEO, H SE, 18 June 2014, 13:38PM- 15:00PM)”
However, from the government’s perspective, this fast institutionalization has been considered as a unique and taken-for-granted characteristic of the Korean government, as highlighted by BD3:
“Reacting quickly to changes in society is a characteristic of the Korean government. If the government reacts when a social issue becomes serious, it means that we are already late. Getting society back on track by reacting to changes quickly and by carrying out institutionalization processes is important. We have learnt from experiences, such as the fast economic development led by the government, that this works. (BD3, Manager, C Government Department, 15 June 2014, 18:09PM-
17:44PM)”
From the CSSSED perspective, as a result of a fast institutionalization of social enterprises, previous organizational forms, such as self-sufficiency enterprises, have been excluded from the institutional field, as emphasized by BK8:
“If the government wanted to promote social enterprises, they could have used the network of self-sufficiency that already existed in the field. This is because self- sufficiency movements also started with the same objective as social enterprises. At that time (in 2006), more than 200 self-sufficiency centers already worked very well in the Korean context. But, the government neglected this because of the result- oriented culture and the relationship between the MoEL and MoW. (BK8, CEO, H SE, 18 June 2014, 13:38PM-15:00PM)”
However, the government considered the self-sufficiency movement to have limitations with regard to the generation of sustainable outcomes in terms of creating work opportunities and delivering social welfare services. BH5 who carried out research on the limitations of the previous related policies mentioned that:
“Organizations who participated in previous government programs were very dependent on government funding. From the MoEL perspective, these organizations did not exhibit any characteristic of “enterprise”, but they were more like voluntary organizations who are running programs with government funding. That’s why the government found the need to build a new organizational form that can cover the limitations of previous organizational forms, such as self-sufficiency enterprises. (BH5, Professor, E University, 23 June 2014, 13:05PM-14:22PM)”
As I concluded in the previous Section 6.3.1.1., the MoL perceived the previous policies promoting work and social welfare to have failed to deliver social welfare programs in a sustainable way. For this reason, the MoL selectively interacted with certain actors and therefore some field-level organizations, such as self-sufficiency enterprises and voluntary organizations, were excluded in the initial process of the institutional-building of Social Enterprise.
6.4.1.4 Impact of the SEPA (certification system and conflicts with
other related laws)
The CSSSED also criticized the initial Legislative Bill of the SEPA provided by the MoL for to its effectiveness. First, they questioned the reason why a certification system is needed to promote social entrepreneurship activities. In their legislative bill, they insisted on the fact that social enterprise groups have to be separated, based on the willingness of social entrepreneurs to receive government funding. The CSSSED considered that some social enterprises were already making profits and therefore do not need government subsidies, so they would not be interested in a certification because the benefits of being certified are mostly related to financial support. Instead, the CSSSED emphasized the need for a registration system of Social Enterprises for those organizations who prefer to receive only educational or consultancy supports (Environment and Labor Committee in the National Assembly 2006).
Second, the CSSSED also pointed out that the contents of the SEPA are in contrast with other related laws and policies. For example, although the SEPA emphasized the “entrepreneurial” side of Social Enterprises, a private company could not be certified as a Social Enterprise based on the Commercial Law. Also, although
the SEPA promotes the establishment and the later stages of new businesses based on an innovative social entrepreneurial idea, a Social Enterprise cannot apply for a support program of the Small and Medium Business Administration (SMBA) based on the Small and Medium Business (SME) law. As a matter of fact, BB7 was concerned that these potential and practical conflicts would affect the effectiveness of the SEPA and claimed that there was a lack of understanding by the government on what field level practitioners need:
“We knew which laws or policies can be used to promote social enterprises since we have supported field level practitioners. However, the government and the members of parliament do not know and understand the field. Establishing a new law (SEPA) was not necessary. Instead, one specific law (NBLS) could have been amended to promote social enterprise activities. Because they do not know the field level difficulties in practice, we were concerned that the SEPA would not be so helpful and effective at the early stages of the legislation. (BB7, Deputy Director, P SE Network, 22 May 2014, 17:14PM-18:25PM)”