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The Effect of Cash Incentive Projects on the Social Value Performances of Social Enterprises: An Empirical Analysis of SK’s Social Progress Credit in Korea

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  • Joon-Bum Yi

    (Department of Business Administration, Seoul National University of Science and Technology, 232 Gongneung-ro, Nowon-gu, Seoul 01811, Korea)

  • Se-Hak Chun

    (Department of Business Administration, Seoul National University of Science and Technology, 232 Gongneung-ro, Nowon-gu, Seoul 01811, Korea)

Abstract

Social enterprises seek to maximize benefits to society and the environment while obtaining profits. Social enterprises are increasing in number; however, their size and growth rates are very small. In addition, many social enterprises face difficulties in obtaining profits through social activities that generate social value, even though they are supported by government policy. Previous research has focused on the relationship between social performance and financial performance, compensation, and policy making, as well as the effect of incentives on social performance within organizations. To our knowledge, there is lack of empirical research on cash incentives for activities that generate social value. This paper analyzes the behavior of companies with regard to fostering a social enterprise ecosystem and a cash incentive system for social enterprises. In particular, we investigate the relationship between SK’s cash incentive system, which is called social progress credit (SPC), and the activities of social enterprises, and we examine which social value activities are affected by a cash incentive system. Furthermore, through empirical analysis, this paper analyzes how the amount of cash for incentives is determined by specific social activities, such as social service performance, employment performance, environmental performance, and social ecosystem performance, as well as by the size of the social enterprise and its financial performance (i.e., revenue and net profit). The results show that employment performance is the most important factor for incentive payments, reflecting the social atmosphere and government policy in Korea, and that it can be a simpler measurement of performance than other social performance measures. Moreover, the results show that there is a significant positive (+) relationship between incentive payments and financial performance, such as sales and net profit of social enterprises. In addition, it was found that more incentives were paid to small social enterprises with higher sales growth.

Suggested Citation

  • Joon-Bum Yi & Se-Hak Chun, 2022. "The Effect of Cash Incentive Projects on the Social Value Performances of Social Enterprises: An Empirical Analysis of SK’s Social Progress Credit in Korea," Sustainability, MDPI, vol. 14(10), pages 1-14, May.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:10:p:6310-:d:821159
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    References listed on IDEAS

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    1. Saerom Lee & Lisa E Bolton & Karen Page Winterich & Vicki MorwitzEditor & Lauren BlockAssociate Editor, 2017. "To Profit or Not to Profit? The Role of Greed Perceptions in Consumer Support for Social Ventures," Journal of Consumer Research, Journal of Consumer Research Inc., vol. 44(4), pages 853-876.
    2. Chen, Lujie & Feldmann, Andreas & Tang, Ou, 2015. "The relationship between disclosures of corporate social performance and financial performance: Evidences from GRI reports in manufacturing industry," International Journal of Production Economics, Elsevier, vol. 170(PB), pages 445-456.
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