Government's role in innovation limited

The Korea Times

The Korea Times

Opinion

Sun, September 24, 2023 | 00:42

New Technologies & The Law

Government's role in innovation limited

Posted : 2018-02-09 13:44

Updated : 2018-02-21 16:05

By Sim Chang-hyun

I got my first job at a social venture in 2010. Social ventures, also known as social enterprises, are a new type of business that aims to create social value as well as economic value.

The Social Enterprise Promotion Act (SEPA) came into force in 2007 as public attention on this business type started to grow, increasing the chances of success. The Korean government strived to promote this type of business by providing grants.

Under these circumstances the other co-founders and I were very eager to make an innovative change in this nascent sector, which we believed could become a future growth engine. Our company provided research and consulting services to other social enterprises, government agencies or corporate philanthropy organizations. We even had a joint venture with Gongsin, a Korean welfare company that supports underprivileged students with their educational needs, to publish a half-price workbook for high school students, having secured early stage investment from a venture capital fund.

After struggling for two years to survive, however, I found that the market fostered by SEPA had grown contrary to expectations. New social enterprises still lacked human resources and finance, and older ones stagnated and failed to continue their early momentum. I realized at that time that even legislation or rules could not always help create a new market and increase that market's growth.

The concept of a "sharing economy" reminds me of social enterprise when it comes to the relationship between new businesses and regulations. In this case, the market exists, and Korean regulators are now busy playing catch-up. They forced Airbnb Korea to focus only on rural areas and foreign tourists, and prevented Uber and other car-sharing businesses from fully fledged business operations. The government says that this is for the benefit of both the new business sector and existing ones that might be affected by the sharing economy, but I am concerned that regulations would have the effect of discouraging any business innovation that the sharing economy might spur.

Sim Chang-hyun works for HMP Law as a lawyer. He is interested in finance and business. The thoughts expressed in this column do not necessary reflect those of HMP Law.

simch@hmplaw.com