Exploring Technology Innovation Factors, Government Support and Performance of Development-Related Social Enterprises: Evidence from South Korea

Abstract

Growing demand for social services and products based on technological innovation has fueled expectations for technological innovation as a source of sustainable competitiveness for small- and medium-sized enterprises and, increasingly, social enterprises. This is especially the case for development cooperation programs that leverage social enterprises, which has resulted in increased funding from the public and private sectors for social enterprises promoting innovative development solutions. However, despite this enthusiasm, there is little clarity on whether this approach has actually been making substantial inroads in achieving intended development impacts. To fill this critical research gap, this study explores technology innovation factors as internal resources of a firm, based on the resource-based view (RBV), and investigates: (1) the relationship between technology innovation factors and performance of social enterprises; and (2) the moderating effect of government support between technology innovation and performance of social enterprises. Using an online survey method, this research collected sample data from 36 development-focused social enterprises headquartered in South Korea, from the 76 firms eligible to participate in the research. Based on a unique dataset of 36, first, this study performed multiple linear regression analysis to examine the effect of technology innovation factors, focusing on entrepreneurship, R&D capabilities and external cooperation of firms, on the social and economic performance of firms. Second, this study further employed a hierarchical regression to test whether government support moderates the causal effects of technology innovation factors on the social and economic performance of social enterprises. The results of this study present a positive relationship between innovative entrepreneurship and economic performance. In addition, this study identified a negative moderating effect of government support on the relationship between technology innovation, particularly R&D capabilities, and economic performance. Specifically, while R&D capabilities alone do not significantly influence a social enterprise’s economic performance, as companies receive more government support, the effect of R&D capabilities on economic performance becomes weak. As such, we contend that government support may, under certain circumstances (e.g., such as the level of technology), conflict with an enterprise’s pursuit of economic performance.