Social Enterprises and Their Role in Revitalizing Shrinking Cities—A Case Study on Shimizusawa of Japan

Abstract

Since their birth in the 1990s, social enterprises, as a kind of third-party organization with the attributes of both a not-for-profit entity and a profit-making enterprise, have played a significant role in the socio-economic development of cities, in particular those facing the challenge of shrinking. But why are social enterprises so deeply embedded in the regeneration process of shrinking cities, and how do they promote their multi-dimensional revitalization? In order to answer these questions, this paper presents a case study on Shimizusawa in Japan based on a literature review and field research. In line with the embeddedness and institution–function–instrument theories, it reviews the revitalization of Shimizusawa by involving a social enterprise in the adaptive reuse of industrial heritage sites and the development of industrial tourism, analyzes the establishment process and organizational characteristics of this social enterprise, and summarizes the four major experiences of its practice—that is, the governance structure of two types of institutions and two types of functions, the planning for both profitable and non-profitable activities, the operation of both for-profit and not-for-profit businesses, and the fund management of leveraging multiple parties to raise funds and reinvesting the profits locally. The extensive support provided by the Shimizusawa Social Enterprise that creates not only economic value but also social value justifies the significant role of social enterprises in the revitalization of shrinking industrial areas. This case study, together with its analytical framework, may serve as a meaningful reference for the revitalization of shrinking industrial areas in other parts of the world.