Social Performance and Profitability of Social Enterprises: Focused on Mission and Managerial Career

Abstract

[Purpose]Social enterprises, which are viewed as a viable solution to address social and economic issues, encounter greater costs in achieving their social objectives, posing challenges to their financial sustainability. Achieving a balance between social welfare and commercial logic is crucial for these enterprises. Against this backdrop, this study examines the impact of social performance on financial performance of social enterprises while considering the influence of operational characteristics. [Methodology]In this study, the study is conducted using a regression analysis equation including moderating variables. Operating income ratio is used as the dependent variable, and social performance is used as the independent variable. The social enterprise’s mission and CEO’s experience are used as moderator variables. [Findings]The findings reveal a positive impact of social performance on profitability, although its effectiveness is moderated by the degree of social problem－solving pursued and the CEO’s experience in the social ecosystem. These results are the same even when ROA was used as the dependent variable. [Implications]This study confirms the justification for social activities and highlights the importance of achieving a balance between social value and profit pursuit. Also, taking this into consideration, it is necessary to reflect the company’s social performance as information.