To address the complex challenges in international development, the role of social enterprises, particularly social ventures, is increasingly vital. These enterprises employ innovative and sustainable approaches to tackle multifaceted issues, by blending social objectives with economic gain and bridging corporate structures and nonprofit organizations. They offer effective solutions to development challenges through innovative approaches and technological integration, fostering a close collaboration with marginalized communities and local groups in developing countries. Nevertheless, activities and studies on the role of social enterprises in international development, especially in terms of individual corporate activities, remain limited due to institutional constraints and scarcity of information available. This study focuses on the features of social enterprises to illustrate their roles and contributions within the context of international development cooperation. By focusing on social ventures as the main form of social enterprise in international development, this study attempts to move beyond previous limitations and yield practical insights on facilitating the participation of social enterprises in international development, and to increase their impact.

Following an introduction of the study, Chapter 2 lays the groundwork for understanding some essential characteristics of social enterprises. Our research highlights the lack of a universal definition for social enterprises and the varying scope of these organizations across different countries. In Chapter 2, we examine discussions at the OECD and UN, along with the background and status of social enterprises in major countries.

Our review found that the countries have formed distinctive social enterprise institutions according to their macro policy background. We also discovered that they apply flexibility on the definition and scope over time. Notably, the UK, France, and Denmark, which saw the development of social enterprise institutions starting in the late 1990s, promoted social enterprise as a means to complement government welfare. Therefore, these nations emphasize the main feature of social enterprises as businesses that prioritize social value. In contrast, the development of social enterprises came into prominence in the Netherlands during the 2000s. In the Netherlands, social enterprises flourished as skilled personnel from civil society organizations entered the private sector. Unlike other countries, the Netherlands maintains a flexible perspective on determining social enterprises, foregoing any legal limitations on the forms of social enterprises. Well-known for its vibrant tradition in civil society engagement, the United States recognizes social enterprises through various legal frameworks. Flexibility is allowed in the social values pursued by each enterprise. Likewise, international organizations such as the OECD and the UN also provide flexible definitions of social enterprises. The organizations position social enterprises as key players in addressing evolving and intricate development issues.

In South Korea, institutions for social enterprises were developed during the 1990s with a strong focus on job creation. As a result, a narrower official stance toward “social enterprises” was formed, compared to the other countries discussed in this chapter. In a broader perspective, other forms of social enterprises also exist in Korea, such as self-supporting enterprises, cooperatives, village enterprises, and social ventures. This study focuses particularly on social ventures, which are defined most inclusively and have the institutional capacity to engage in international activities.

Chapter 3 compares and analyzes approaches and support programs in the UK, Netherlands, and the United States. These countries actively promote private sector participation in international development. For example, the UK has been supporting social enterprises since the 2000s, mainly through capacity-building. Since 2015, there is a shift towards indirect impact investment – through development finance institution, from direct capacity support.

The Netherlands has traditionally underscored the pursuit of national interests by encouraging private sector participation in international development. It is currently pursuing social value by requiring corporate social responsibility in all business-engaged international development activities. In addition to technical support (consulting, networking), the Netherlands also provides financial support, often employing indirect support for local companies in developing countries through development finance institutions.

The United States maintains robust private sector involvement in international development. The U.S. promotes the participation of socially innovative enterprises in line with USAID’s Private Sector Engagement (PSE) policy. Enterprises are supported through financial aid, advisory support, networking, and research collaboration. The U.S. distinguishes itself from other donors by providing direct funding to social ventures through development finance institutions (DFIs), therefore, leveraging additional private investment.

In contrast, Korea ‘s support programs for social ventures remain at a nascent stage. KOICA’s Creative Technology Solution (CTS) supports the initial business development of startups and ventures with innovative technology. Under the KOICA Innovative Business Solutions (IBS) project, there have been co-financing with domestic social impact investors to discover, nurture, and support local startups in developing countries.

The following chapter provides a review of Korean social ventures, including those participating in KOICA’s CTS program, as well as case studies of companies active in international development cooperation. Findings indicate that most KOICA CTS participants are registered as ventures, not as social ventures or (preliminary) social enterprises. They are predominantly classified as impact ventures or conventional ventures with some commitment to social value. On the other hand, companies interviewed for the case study identified themselves as social ventures, highlighting a gap between institutional classification and self-perception.

Examples of social ventures engaged in international development cooperation include Enuma Korea (education), Vuno (healthcare), Wiplet (water), Cornerstone T&M, Greengoods (rural development), Verywords, Envelops, and Pharos Marine (technology, environment, energy). These enterprises were initiated or adapted their business goals to prioritize social value creation in developing countries. Many leverage innovative technologies or mature business models to establish profitable structures, while utilizing public support to enhance their business model and to secure investments. In addition, many of them work closely with local stakeholders, ranging from the government to NGOs and community residents.

Lastly, Chapter 5 analyzes and presents the findings to identify key constraints in stimulating social venture participation in international development cooperation: (1) the gap between institutional frameworks and on-the-ground realities, (2) the lack of opportunities, and (3) the scarcity of entrepreneurs in development cooperation. To address these challenges we suggest a revision of policies related to social enterprises. In Korea, the Social Enterprise Promotion Act, enacted in 2007, has remained largely unchanged, failing to adequately reflect today’s social challenges and corporate realities. Drawing on the UN’s experience of amending social enterprise roles to address evolving demands, as well as OECD Guidelines on social enterprise institutions, adjustments to the social enterprise framework are essential. This should include revisions in the certification system and an expanded scope for social enterprises to reflect contemporary challenges, such as aging population, inequality, and environmental issues. Furthermore, it is imperative to enhance the efficacy of the institutional framework by providing tangible benefits to businesses. Many companies participating in the KOICA CTS are registered under the venture enterprise system, which offers substantial benefits such as tax exemption, low interest rate loans, R&D support, and so on. This stems from how registration as social or social venture enterprises provides no tangible benefits to these businesses, which in turn highlights the need for incentives within the social enterprise framework, as seen in the U.S., which provides practical incentives to enterprises with social missions.

Secondly, there is a need to expand programs that potential entrepreneurs can access. This will lead to fostering social enterprises involved in international development cooperation as well as revitalizing the private sector ecosystem in international development. Taking on from the lessons learned, current programs such as the KOICA CTS and IBS can play an even more pivotal role in attracting and fostering potential entrepreneurs in international development. In the long-term, it would be beneficial to explore impact investment for enterprises tackling development issues through development finance institutions, as in the cases of the UK, the Netherlands, and the United States.

Lastly, there is a need to cultivate entrepreneurs who possess a strong understanding of and interest in international development. The social ventures reviewed in this study can be broadly categorized into two types: those that focus on developing innovative solutions aimed primarily at developing countries ("social purpose-driven" ventures) and those that aim to apply innovative solutions to the local challenges in developing countries through entrepreneurial spirit (“innovation-driven" ventures). Strengthening the developmental impact of innovation-driven enterprises while enhancing the business models of social purpose-driven enterprises will improve the sustainability of their solutions and operations. The Dutch example could serve as a useful reference in reinforcing development objectives within existing programs. At the same time, it is also crucial to identify and nurture potential entrepreneurs who are willing to modify their business activities to fit developing countries.

This study aimed to gain comprehensive understanding of the form and characteristics of social enterprises in Korea to increase their participation in international development. The study seeks to assess the effectiveness of support programs and identify challenges from the perspective of the businesses. Furthermore, as a policy study, it compares Korea’s social enterprise systems and programs with those in other countries to identify areas for improvement. This research provides an overview of social enterprise development in international organizations, various countries, and Korea. It also documents the experiences of companies involved in these activities. Subsequent policy researches are expected to bridge the gap between policy and business activities. We also hope that the business cases analyzed in the report will serve as valuable references for increased participation of social entrepreneurs in international development cooperation.