The role of Social Innovation and Entrepreneurship Development Fund in fostering social entrepreneurship in Hong Kong: A study on public policy innovation

Abstract

In tandem with governments across the globe embracing social innovation and entrepreneurship as deliberate policy tools in tackling complex social challenges, the Hong Kong government has for over a decade injected hundreds of millions of dollars in an attempt to cultivate and expand Hong Kong’s social economy. Policy adcovacy on social enterprises in Hong Kong can be traced back to the late 1990s, a period which coincided with the economic recession at the turn of the millennium (Tang, Fung, Au, Lee, & Ko, 2008). During the early developmental period, the public policy mainly focused on incentivizing nonprofits to develop business-like activities. Policy tools in promoting social enterprise development was primarily via the establishment of public grants, which stipulated that only legally registered nongovernmental charitable organizations are eligible to apply. Characteristics on social enterprises was placed on its 'dual-mission' to achieving social objectives and self-sustainability (Home Affairs Bureau, 2008). Under this institutional environment, the social enterprise sector in Hong Kong was disproportionately represented by actors from nonprofit backgrounds (Kee, 2016) and was heavily criticized as a homogenous environment that lacks innovativeness, diversity, and inclusivity, voice for a 'change' at the sectoral level had emerged from the civic society (Lee, 2016; Yu, 2016). In recognition to this, the Hong Kong government has shifted its policy focus in relation to social enterprise from one that aims to create employment for the disadvantaged, to one that emphasizes social innovation. Correspondingly, the government implemented the Social Innovation and Entrepreneurship Fund in 2013 to 'establish or support schemes and experiments with a view to attracting, inspiring or nurturing social entrepreneurship to develop innovations that aim at creating social impact and build social capital for supporting poverty relief in Hong Kong'. The Fund exercise a combination of strategic policy mechanisms to drive innovation in the social entrepreneurship environment, and this include (1) establishing financial instruments to support innovative initiatives, (2) lowering barriers for potential actors to participate, (3) and providing autonomy to innovate. It is in itself a policy innovation because no other public funding in Hong Kong has ever adopted its particular mechanisms aimed at fostering social innovation.With this deliberate effort, it is anticipated that it could instigate institutional change in the social entrepreneurship environment. This paper empirically evaluates whether, and how the SIE Fund foster innovation, and relatedly shape the development of social entrepreneurship in Hong Kong. Based on a quasi-experimental design to identify changes in the social entrepreneurship environment before and after the inception of the SIE Fund in relation to the design and implementation of the SIE Fund’s policy mechanisms. We demonstrate how innovation in public policy facilitated the diversification, inclusion, and expansion of the social entrepreneurship environment. Findings carry substantial policy implications, particularly to our neighboring East Asian societies characterized by a strong government, and whose societies face similar structural, demographic and socioeconomic challenges that necessitate innovative solutions. References: Lee, J. C. (2016). Social innovation and entrepreneurship in Hong Kong: a public policy dimension. In Y. Chandra and L. Wong (eds.), Social Entrepreneurship in the Greater China Region (pp. 62-83). London, UK: Routledge. Tang, K. L., Fung, H. L., Au, K. Y. F., Lee, J. K. C., & Ko, L. S. F. (2008). Social enterprise in Hong Kong: Toward a conceptual model. Retrieved from http://www6.cityu.edu.hk/projectflame/resources/pdf/1.pdf Yu, C. H. (2016). Social enterprise in Hong Kong and the United Kingdom. Retrieved from https://www.legco.gov.hk/research-publications/english/essentials-1617ise05-social-enterprises-in-hong-kong-and-the-united-kingdom.htm