Value Creation Mechanism of Social Enterprises in Manufacturing Industry: Empirical Evidence from Korea

Abstract

A variety of social enterprises (SEs) have recently emerged in many different countries in an effort to resolve diverse social problems. However, the value creation mechanism of SEs has not yet been disclosed. The purpose of this study is to reveal the value creation mechanism of SEs in manufacturing industry. To do so, we verify the role of social entrepreneurship and examine the effects of product innovation attributes and social capital on social value creation and financial performance by using structural equation modelling. Then, we conduct interviews with six experts in SE fields. According to the results of empirical study, the social entrepreneurship works as an antecedent of product innovation and social capital in SEs and the degrees of products’ simplicity, usability and standardization positively affect the social value creation of SEs. In addition, the social value creation works as a complete mediator between the product innovation of SEs and their financial performance. The interviews suggest policy implications for successful social value creation and sustainability of SEs. This research contributes towards further studies on innovation of SEs and provides social entrepreneurs with guidelines in planning their innovation strategy or developing their products.