Can Social Enterprises Be Sustainable Through Innovation and Social Performance-Based Incentives?
Chungwon Woo (Changwon National University, first author) & Hosung Son (Pukyong National University) Sustainable Development, 33, 7148–7165, 2025 · DOI: 10.1002/sd.3500
TL;DR — Using data from South Korea's Social Progress Credit program: technology orientation and the innovativeness of social entrepreneurship significantly strengthen technology development capability, which raises financial performance. But capability shows no significant link to social performance, and monetary incentives amplify financial — not social — outcomes. Incentive design for hybrid organizations needs rethinking.
Key findings
1. Innovation capability is the mechanism. Technology orientation and entrepreneurial innovativeness work through technology development capability, not directly — capability is the mediating asset social enterprises must build.
2. The dual mission does not come automatically. Technology development capability improved financial performance but had no significant effect on social performance, exposing a real tension in hybrid organizations rather than assuming synergy.
3. Paying for social performance mostly buys financial performance. Social performance-based monetary incentives strengthened the capability→financial link but had limited influence on social outcomes — a direct caution for impact-incentive policy design.
Method in one line
Empirical analysis of social enterprises participating in Korea's Social Progress Credit program, testing mediation by technology development capability and moderation by social performance-based monetary incentives, grounded in the resource-based view, composition-based view, and contagion theory.
국문 요약
한국 사회성과인센티브(Social Progress Credit) 프로그램 자료를 활용해, 기술지향성과 사회적기업가정신의 혁신성이 기술개발역량을 강화하고 이것이 재무성과를 높인다는 경로를 실증. 그러나 기술개발역량과 사회성과 사이에는 유의한 관계가 없었고, 금전적 인센티브 역시 재무성과는 높였으나 사회성과에는 제한적이었다. 사회적기업의 이중 미션과 인센티브 설계에 대한 실무적 시사점을 제공.
FAQ
Q. Why does this matter for impact investing and social-impact policy? Because it tests, on real program data, the common assumption that paying for measured social performance produces more social performance. The evidence says the money mostly strengthens the commercial side — so measurement and incentive structures need redesign if social outcomes are the goal.
Q. Which theories are used? Resource-based view (internal capability), composition-based view (resource-constrained firms competing through composition), and contagion theory (how incentives and orientations spread through the organization).
Q. Journal standing? Sustainable Development (Wiley/ERP Environment) is a leading journal in the sustainable development field; this paper was covered in Korean higher-education press when published.
How to cite
APA: Woo, C., & Son, H. (2025). Can social enterprises be sustainable through innovation and social performance-based incentives? Sustainable Development, 33, 7148–7165. https://doi.org/10.1002/sd.3500
BibTeX:
@article{woo2025social,
title={Can Social Enterprises Be Sustainable Through Innovation and Social Performance-Based Incentives?},
author={Woo, Chungwon and Son, Hosung},
journal={Sustainable Development},
volume={33}, pages={7148--7165}, year={2025},
doi={10.1002/sd.3500}}