Social Entrepreneurship and Regional Economic Development: The Case of Social Enterprise in South Korea

Abstract

Although many discussions of regional economic development have been made to this day, the regional economic development sector is constantly looking for new models to address the many challenges of each region in a sustainable way. This study aims to empirically examine the relationship between social entrepreneurship and regional economic development, focusing on government-driven social enterprises in South Korea. I conduct an exploratory study of government support for social enterprises in South Korea at the local and central government level and empirically examine the relationship between social entrepreneurship and regional economic development by using time sequential panel data collected over an eight-year period from 2007 to 2014. Results from panel regression (fixed-effect and random-effect) models indicate that social entrepreneurship measured as the number of government-driven social enterprises has a positive relationship with regional economic development. As claimed in numerous previous studies on regional economic development, the fixed-effect regression results of this study also indicate that physical capital, human capital, knowledge capital, and entrepreneurship are all significant and important factors shaping regional economic output. The results of this study suggest a new direction for policy that focuses on instruments to promote social entrepreneurship. Thus, governments of each region need to make efforts to promote job creation in social enterprises because they possess the ability to efficiently respond to the immediate needs of local social enterprises. These government-driven social enterprises can contribute to regional economic development through creating new jobs in South Korea.