Local government as a catalyst for promoting social enterprise

Abstract

This paper aims to advance our knowledge of the relationship between social enterprise and local government. As social enterprise lies at the crossroads of government, market, and civil society, dynamic interactions exist between all actors. While governments play an important role in developing social enterprises, so far scholars have paid little attention to the specific role of local governments in the social enterprise ecosystem. To help fill this research gap, this paper investigates what motivates local governments to promote social enterprises and how effective their efforts are. Applying resource dependence theory, we test two hypotheses: (i) the fiscal constraints on local governments are the driving force behind their promotion of social enterprises, and (ii) their efforts to support social enterprises are effective. Using the data of 223 South Korean local governments over the 2011-2017 period and applying event history analysis and fixed-effects models, we find that there is mixed evidence for fiscal constraints being the reason local governments promote social enterprise-it depends on which fiscal constraint measures and dependent variables are being analysed. But we find evidence that local governmental efforts to promote social enterprises are effective.