Research Reports
Outcome Evaluation of Rural Social Enterprises and Improvement of Support Policy
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AuthorOh, Naewon
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Publication Date2010.10.01
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Original
Recently, while our concern about the social enterprise has grown, the anxiety of its sustainability has raised. However, the sustainability must be evaluated differently from general enterprises, because its social effects should be included in the social enterprise's performance.
The result of survey shows that business performances of social enterprises located in rural areas are generally balanced in terms of profit and cost. Their business volumes in terms of revenue are quite small by 440 million won. Their financial independency rate reached about 70 percent. This figure is over our expectation and is not low compared to foreign enterprises. Thirty percent of supports come from government supports and the weight of donation and mother body support is very low. The high level of government support can cause problems in the sustainability according to the change of government policies.
The average number of employee of social enterprises is 22.5 persons. About the half of them comes from the vulnerable class. This fact shows that social enterprises contribute to the generation of employment and labor integration. Even though five persons of employee per 100 million won of revenue is higher than general business, the government policy for employment generation may have an effect on the unstability of business.
We confirmed that the lower level of investment and the disadvantage of market conditions are difficulty in social enterprise business of rural areas. They cannot mobilize investments because of low profits and cannot easily approach to the financial institutes due to the lower level of security and profitability. Also, they have many disadvantages such as the lacks of capital and technology, inefficient labor, customers with low purchasing power, and the weak industrial infrastructures.
Under these unfavorable conditions, we suggest several alternatives to support social enterprises in rural areas. First, government monopolistic certification system need to be modified in order not to damage the intrinsic meaning and practice of the social enterprise. Various voluntary efforts happening in the rural areas are needed to be admitted as a social goal directed activities.
Second, government support should be provided differently according to substantial activities and business difficulties, not uniformed labor cost. Included are investment support connected with government departments' programs, the generation of funds, affirmative action of supplementing markets and etc.
Third, business model should be developed and provided appropriate to the realistic characteristics of rural areas. The entry into agricultural production, distribution and processing is very important. However, it is very risky due to competitiveness. The core task is to build business model in connection with regional persennel and materials. The cultural arts activities would be a good business model in term of the quality of life and strong regional competitiveness.
Researchers: Nae-Won Oh, Chang-Ho Kim and In-Hey Kwon
Research Period: 2010.1~2010.10
E-mail Address: naewonoh@krei.re.kr
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