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What is a Social Enterprise?

Concept

A social enterprise is an organization that lies between for-profit and non-profit enterprises. It prioritizes social objectives while engaging in business activities such as the production and sale of goods and services.
According to the Social Enterprise Promotion Act in Korea, a social enterprise is defined as an organization certified by the Minister of Employment and Labor that pursues social purposes such as providing social services or jobs to vulnerable groups to enhance the quality of life for local residents, while carrying out business activities including the production and sale of goods and services.
Unlike for-profit companies that focus on generating profit for shareholders or owners, social enterprises are distinguished by their primary pursuit of social goals, such as providing social services and creating jobs for disadvantaged groups.

Advancing Social Value

Creating Economic Value

Traditional non-profit organizations

Non-profit organizations engaged in revenue-generating activities

Corporate Social Responsibility

For-profit companies engaged in corporate social responsibility activities

Traditional corporations

The domain of social enterprises

Background

After the financial crisis, the government rapidly expanded public jobs such as temporary public work and self-support programs through fiscal support. However, as these did not lead to stable employment, debates continued regarding the effectiveness of government-funded jobs.
In the 2000s, with the emergence of jobless growth and increasing demand for social services, discussions began in earnest on introducing the European model of social enterprises as an alternative. The debate was concretized around using the third sector, such as non-profit corporations and organizations, as a model for creating stable jobs and providing quality social services.

Significance

Realization of a sustainable economy and social integration through the promotion of social enterprises

Provision of sustainable employment opportunities

Integration of vulnerable groups into the labor market

Expansion of meaningful and quality jobs
Revitalization of local communities

Integration of local communities

Regional economic development through expanded social investment
Expansion of social services

Fulfillment of new public service demands

Innovation in public services
Spread of ethical markets

Expansion of corporate social contribution and ethical management culture

Fostering of responsible consumption culture

Types of Social Enterprises

Social Service-Oriented
Job Creation-Oriented
Hybrid
Community Contribution-Oriented
Other (Creative/Innovative Models)

Public Institutions’ Priority Purchase System for Social Enterprise Products

This system requires public institutions to give purchasing priority to the products and services of social enterprises in order to strengthen their self-sufficiency. The profits generated from purchasing social enterprise products are reinvested into creating new jobs and revitalizing the local economy, thereby establishing a virtuous cycle.

(The scope of social enterprise products is defined in Articles 7 and 8 of the Social Enterprise Promotion Act as goods and services provided by social enterprises certified by the Ministry of Employment and Labor.)

Relevant Legislation

Article 12 of the Social Enterprise Promotion Act (Priority Purchase by Public Institutions)

Heads of public institutions, as defined in Article 2(2) of the Act on Promotion of Purchase of Small and Medium Enterprise Products and Support for Market Expansion, must promote the priority purchase of goods and services produced by social enterprises (hereinafter referred to as “social enterprise products”).

Methods of Purchasing Social Enterprise Products

Direct Purchase When an institution makes a purchase directly, it may choose between in-house procurement (direct order or through the national electronic procurement system, “Nara Marketplace”) or procurement through the Public Procurement Service.

Indirect Purchase When a public institution enters into a contract with a company that is not a social enterprise, it may require the purchase of goods or services from social enterprises during contract execution.

If social enterprise products are purchased in this way, the purchase amount is recognized as part of the contract performance within the contract amount (based on quantity, price, or subsidy, not purchase payments).
However, the contracted company must obtain and retain supporting documents such as purchase contracts and tax invoices from the social enterprise (submission not required).

Purchase Channels for Social Enterprise Products

Online: Access the integrated e-bidding platform for the social economy, e-store 36.5 (www.sepp.or.kr), to browse and purchase products and services.

Offline: Inquire at Store 36.5 retail locations.

Social Responsibility

What is a Social Enterprise?

Concept

Background

Significance

Provision of sustainable employment opportunities

Revitalization of local communities

Expansion of social services

Spread of ethical markets

Types of Social Enterprises

Public Institutions’ Priority Purchase System for Social Enterprise Products

Relevant Legislation

Methods of Purchasing Social Enterprise Products

Purchase Channels for Social Enterprise Products

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