Analysis on Impact of Public Agency’s Social Responsibility Management on Competitiveness and Promotion Strategies of Pervasive Effect in Local Community*

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  • ABSTRACT

    This study focuses on the fact that the public agency conducts the social responsibility activities strategically in order to fulfill the goal of ensuring competitiveness based on the instrumental viewpoint of interested parties. This study categorizes the structural equation model into independent variables, mediating variables and dependent variables. Independent variables consist of the economic responsibility of the public organization, social contribution and environmental responsibility. Mediating variables consist of customer satisfaction and reputation of the public organization. Dependent variables consist of the public organization’s competitiveness. Analysis results of this study show social contribution and ethical management especially affect the competitiveness of public agencies. Especially, social contribution affects the reputation of public agencies and customer satisfaction, and reputation of public agencies and customer satisfaction mutually affect each other, and the reputation of public agencies affects the competitiveness.

    As the improvement plans for public agencies' social responsibility management reinforcement and improvement plan for the riffle effects to regional community, following plans were suggested; first, improvement of understanding about public agencies's social responsibility and reinforcement in verification, second, substantiality of public agencies's social responsibility activities (expansion of execution program with high perception, job creation and consideration of socially disadvantaged people), third, public agencies's ethical management reinforcement, fourth, vitalization of social responsibility management through social networking (structuralization of network between regional community institution, collaboration with regional community according to public agencies's relocation to innovation city).


    본 연구에서는 이해관계자理論의 도구적 관점에 근거하여 공공기관이 경쟁력 확보라는 목적을 달성하기 위해 전략적으로 사회적 책임활동을 수행한다는 사실에 초점을 두었다.

    본 연구에서는 공공기관의 사회적 책임에 대한 이론과 모형을 검토하고, 구조방정식 모형을 활용하여 공공기관 사회적 책임활동이 고객만족과 기관의 평판에 어떤 영향을 미치고, 종국에는 기관의 경쟁력에 어떠한 영향을 미치는 지를 분석해 봄으로써 향후 공공기관의 사회적 책임활동을 제고하기 위한 방안을 제시하였다. 사회적 책임경영이 공공기관의 경쟁력에 미치는 영향을 분석하면 왜 공공기관이 자발적으로 사회적 책임 활동을 수행해야 하는 이유를 발견할 수 있을 것이다.

    본 연구에서는 구조방정식 모형의 측정 모델을 독립변수, 매개변수, 종속변수의 세 가지로 구분하며, 독립변수는 공공기관의 경제적 책임, 윤리경영, 사회공헌, 환경적 책임으로, 매개변수는 고객만족, 공공기관의 평판으로, 종속변수는 공공기관의 경쟁력으로 구성하였다. 분석결과 사회공헌과 윤리경영이 특히 공공기관의 경쟁력에 영향을 미치는 것으로 나타났다. 특히 사회공헌은 공공기관의 평판과 고객만족도에 영형을 미치며, 공공기관의 평판과 고객만족도는 상호 영향을 미치며, 공공기관의 평판은 경쟁력에 영향을 미치는 것으로 나타났다.

    공공기관의 사회적 책임경영 강화 및 지역사회에의 파급효과 제고방안으로 첫째, 공공기관의 사회적 책임에 대한 인식 개선과 검증 강화, 둘째, 공공기관의 사회적 책임 활동 내실화(체감성이 높은 실행 프로그램 확산, 일자리 창출과 사회적 약자 배려), 셋째, 공공기관의 윤리경영 강화, 넷째, 사회적 네트워킹을 통한 사회적 책임경영 활성화(지역사회 기관 간 네트워크 구조화, 공공기관의 혁신도시 이전에 따른 지역사회와의 상생협력) 등 방안을 제시하였다.

  • KEYWORD

    Public Agency , Social Responsibility , Social Responsibility Management , Competitiveness , Local Community , Public Enterprise

  • I. Introduction

    The social responsibility of a company is becoming a global trend to the extent that it was selected as one of four agendas in World CEO Business Summit which was held before 2010 G-20 Seoul Summit. The national awareness is getting higher that companies should not only pursue the profit maximization but also should promote the active campaign in an organic relationship with society, and that they should contribute to actualize the ‘human value’ by pursue not only the company development but also the social responsibility(Oh, Hang Dong, 2010: 1-3).

    The social responsibility was in the early days regarded as a voluntary activity such as manger’s act of charity or contribution, but it has developed to the level of dutiful responsibility which is understood as the return of social profit. Recently the social responsibility of a company is recognized not as its cost but as a concept of investment to increase its asset value. Thus has emerged a viewpoint that the social responsibility of a company and its pursuing of profit should be regarded not as an oppositional relationship but as a complementary one. Since 2011, Porter has emphasized even ‘Creating Shared Value’ (CSV) beyond ‘Corporate Social Responsibility’ (CSR). The shared value is created by combining the social value (public profit) with the economic value (company’s profit) which was the goal of conventional corporate activity. That is, a company should not only cling to maximize the profit for shareholders but also pursue to promote the profit of various interested parties such as employees, cooperative companies, local community, government, and etc..1)

    The development of social responsibility in Korea grew mature in the foreign exchange crisis in 1997, when the transparency of the corporate restructuring process was emphasized and the corporate ethic was recognized as the foundation of the survival and competitiveness of a company. During the time of Roh Moo-hyun administration, most companies came to be interested in ethical management with responding to the negative opinion against companies when the controversies were provoked about illegal political fund, fraudulent accounting, illegal inheritance, and etc. of big companies. And then, the transparent management, social contribution and environmental management, and etc. were emphasized. During the process of this discussion about social responsibility, the aspect of social contribution was strongly presented, and correspondingly public agencies and companies are now operating various programs of social contribution.

    While at first the CSR started in the company sector, recently public agencies are being required for positive social responsibility such as not only in the roles of economy and policy but also in various social contributions. The government has evaluated the social responsibility activities of public agencies since 2006. As of the end of year 2011, the budget of public agencies was \4,280 billion which amounts to 34.65% of GDP, and their assets was \7,660 billion which amounts to 61.98% of GDP. The budget of public agencies occupies the major part of the national budget. In the employment sector, the number of direct employment by public agencies is 240,000, outsourcing is 120,000, and investment business employment is 1,420,000. The number amounts to 7.12% of domestic total employment. So the public agencies are expected the social roles, too(Ministry of Strategy and Finance. Public Institutions Policy Bureau, 2013).

    The public agencies, as essential economic subjects which are supposed to provide essential services for people and to support the implementation of governmental policy, are required to play a positive role to support the fair social realization of government. The public agencies have public responsibility to carry out the public role with right and responsibility which are delegated by people. Besides, they are organic organizations which as social organization should exert the social responsibility, survive by interacting with environment, and develop continually. The public agencies should lead the CSR in advance, and thus the CSR need to be voluntarily expanded to major companies as well as small and medium-sized ones.

    While interests about and participations at CSR are spread, the level of sustainable management of public agencies can be evaluated as considerably good. As of May 2011, according to a survey with self-diagnostic checklists for ISO 26000 implementation level provided by Korean Standards Association, the satisfaction rate of total public agencies amounts to 82.88% (Ra, Young Jae, 2012). Yet, the actual recognition and assessment of people can be evaluated as low.

    The public agencies need to harmonize the social responsibility and economic responsibility which are demanded by interested parties as optimally as possible, and need to have various strategies to actualize them toward management process. By verifying the fact that the social responsibility activities of the public agencies improve the social achievements of the public agencies, they should be led to make positive efforts in the CSR activities. That is, if the social responsibility activities improve the social achievements such as customer satisfaction or reputation of public agency, the achievement could lead to financial and social achievements and could contribute the competitive advantage of the public agencies (Heo, In Goo, 2009: 2-3). Thus, the public agencies could have catalysis with which they can conduct strategically the social responsibility activities for the sake of a long-term competitive advantage, and could reach to the win-win relationship between managerial result and social responsibility.

    This study focuses on the fact that the public agency conducts the social responsibility activities strategically in order to fulfill the goal of ensuring competitiveness based on the instrumental viewpoint of interested parties.

    This study reviews theories and models of the social responsibility of public agency, and analyzes, by applying the structural equation model, how the social responsibility activities of public agency affect the customer satisfaction and the reputation of agency, and how they finally affect the competitiveness of agency. Then, this study suggests promotion strategies or the social responsibility activities of public agency. If the influence which the CSR exerts on the competitiveness of public agency is analyzed, it could be find out why public agency should voluntarily conduct the socially responsible activity.

    In order to promote the effect of the social responsibility activities in the local community, the social responsibility activities and programs of public agencies, companies, and local governments need to be horizontally linked well for the sake of a synergistic effect. But, in reality, these programs are not organically linked properly due to partition phenomena among agencies one another, consequently the synergistic effect are not generated. What is worse, have been pointed out the cases that their beneficiaries are overlapping or they are just profligate. In order that the social responsibility activities of public agencies and companies develop in the local society so as to realize the local community, the networking needs to be efficiently operated among the agencies which promote various social responsibility activities. Particularly, when the community service activities maintain the organic cooperation with other agencies in one network, then it could be successful.

    This study, while recognizing this problem, suggests how the social responsibility activities should function in the network of local society, and what the implication of specific policy for promoting the CSR activities is.

    As the results, this study is expected to let public agencies recognize the importance of the social responsibility activities, to let the social responsibility activities including community services be embodied in their management process, and to let various social responsibility activities of various public agencies and companies be organically linked so as to demonstrate synergistic effects. It is expected that public agencies in the local district, through this process, could grow up to agencies which are equipped with the competitiveness satisfying the global standard, and which are really loved by customers and public people, and finally to let the local community and the warm local society be realized.

    In a general sense, public institution is defined as ‘an institution which is established with a goal of public interest similar to that of administrative institution, is operated with contributions or subsidies from government, or with income generated by the government entrusted business, and which produces and supplies public goods or services by being directly or indirectly dependent on nation tax’ (Lee, Sang Cheol, 2012). In a narrow sense, public institution is defined as an institution which is established and operated by investment, share or financial aid of government, and which is designated by the Strategy and Economy Minister correspondingly to requirements of ‘The Law on Management of Public Bodies’

    This study targets the Korea Racing Authority(KRA), which belongs to Public Enterprise Group II of the Public Institution Evaluation Subject of Ministry of Strategy and Finance. The KRA set it up as the company mission to be a corporation contributing to society which leads horse business and leisure business, returns to society more than \1,600 billion of added value gained by administrating horse racing every year, and is practicing the social contribution as one of the best public companies in Korea. In spite that some people associate a negative image of gamble with the KRA which leads the horseracing industry, the KRA, with surveillance personnel of the race and equipment of the global standard, is executing fair and transparent racing. Besides, not only it is providing high quality racing service by investing and innovating its racing infrastructure, but also it is developing strategically horse business out of racing business. The executives and staff members of the KRA need to not be discouraged by the negative image of some people but conduct positively the social responsibility as a public institution. Thus, they need to empower the KRA to transform into a competitive public institution, and to grow up to the public enterprise loved by nation people. Being equipped with this attitude, not only the KRA but also every public institution should be devoted to its original mission, and fulfill the CSR, and reform itself to come up to expectations of people. This is the ultimate expectation and goal of this study.

    1)The CSV can be similar to the CSR in the sense that a company, as a member of the local community to which it belongs to, put emphasis on the social responsibility of a company. The CSR regards the social contribution of a company as a beneficial activity which is not related to profit creation. In other words, it is considered as cost. Therefore, in many cases, a company conducts various social activities in its good times, and stops those activities in its bad times by making excuse as lack of budget. But, the CSV recognizes the social contribution as investment for corporate long-term development and improvement of competitiveness.

    Ⅱ. Reviewing theoretical backgrounds and precedent studies

       1. Concept and trend of social responsibility

    Historically, companies’ efforts for sustainable development have progressed along such courses as financial management, environmental management, ethical management, and sustainable management. Particularly in 2000s, a worldwide trend of the sustainable management and the CSR is being formed beyond the environmental management. Recently, not only the forward-looking social responsibility of companies but also that of such interested parties as individual, civic group, labor union, NGO, interest group, and etc. is emphasized. Such international organizations as OECD or ICC (the International Chamber of Commerce) prefer the term CR (Corporate Responsibility) by reason that the term ‘social’ could limit the responsibility of company to the area of social problem. ISO uses the term SR (Social Responsibility) by reason that not only companies but also general organization, government, and etc. should be included in the range of social responsibility. This study follows the latter position.

    While Bowan(1953) conceptualized the social responsibility academically, the definition by Carroll (1991) is the most generally used, which contains economical, legal, ethical, and charitable responsibility. The Wikipedia(2011) defines it as a framework which suggests that “a company, while conducting its productive and marketing activities, pursues not only environmental management, ethical management, social contribution, and laborer, but also the benefit of total society including laborer and local community.”

    The arguments about social responsibility are divided into negative theory of economic dominance viewpoint and positive theory of socio-economic viewpoint. The former argues that the company’s performance to create profit while being devoted to economic activities is in its strict sense the performance to be socially responsible, and that if a company increases cost by doing other activities, as a result it could damage its customers. The latter, known as a Stakeholder Theory too, asserts that the social responsibility of a company can guarantee the long-term survival of profit of the company. The situation-based approach which includes the both positions is the same position as Corporate Social Investment Theory. That is, it is the dimension to be able to be devoted to demands of interested parties such as employees or local society, and at the same time to be able to maximize the profits of stakeholders.

    It is the USA where the discussion about social responsibility is the most active. The USA has a long history of charitable activities. It has been known that in the USA the contribution of companies to local society amounts to 10 times more than in the UK. The company’s tradition to emphasize charity and community participation has affected the performance pattern to execute the social responsibility of a company.

    European nations compared with the USA are highly interested in regulating devices for social responsibility of a company. In Europe, system and rules to regulate social responsibility of a company are rapidly strengthened with active participations of government, labor unions, and civic groups. The UK and France have endeavored to implement the standard for social responsibility of a company by installing exclusive departments for social responsibility. Even the EU is emphasizing the social responsibility. European system and approach put stress on the participation of interested parties.

    In Korea, going along the current trends, public enterprises are evaluated for level of ethical management every year, and the CSR index has been emphasized at management evaluation of public enterprise, since 2006. Thus, public agencies as well as companies should conduct not only economic responsibility but also environmental and social responsibilities so that they can grow up to sustainable institutions and achieve long-term competitive advantage.

       2. Reviewing precedent studies

    Precedent studies show that social responsibility activities elevate favor and credibility of a company on customer’s views, affect positively to promote the image of company and loyalty of customer, and influence the company reputation on customer’s perceptions so as to affects customer’s buying activities of company’s products directly or indirectly (David, Kline & Dau, 2005; More& Webb, 2005).

    Jones and Hiller (2005) stated that social responsibility activities of company is, in a broad sense, acts to pursue potential profit, and results in improvement of financial effect, reduction of operational cost, long-term survival, improvement of employee’s satisfaction and concentration, maintaining efficient relationship with government, improvement of risk management capacity, improvement of brand value and reputation, accurate perception of customer’s desire, and etc.

    Bae, Hyun Mi(2007), through a study on relationship between social responsibility activities of company and company image, explained that social responsibility activities positively affect credibility of company. Kim, Yi Whan (2005) analyzed relationship between the social responsibility activities and company reputation by targeting 5 business types and 10 companies. Jeong, Young Kwon (2007) investigated the social responsibility activities of companies in Korea, and Jin, Yong Joo (2008) researched influences of types and subjects of the social responsibility of corporate communication to company reputation and social solidarity. Heo, In Goo (2009) analyzed relationship between the CSR of Korean companies and their competitive advantage.

    Regarding the CSR of public agency, Oh, Han Dong (2010), targeting Kangwon Land, analyzed an influence of the social responsibility activities to company image and company reputation. It is a realistic condition that only a few studies have been conducted on current index of the CSR of public agencies.

    This study analyzed what kind of affect the influence factors of the CSR of public agency have on company competitiveness, and what kind of networking they have so that various activities of local society can demonstrate synergy effect. Thus this study is to be understood as a comprehensive study to present even prescription for them.

       3. Major Variables

    1) Social responsibility

    Social responsibility generally can be divided into three phases as follow. The first phase is the responsibility of observance of law and ethic. At the first phase, the law and standard should be observed properly in operating company, social conventions should be accepted, and the morality of executives and employees should be regarded as important. The second phase is the economic responsibility, which means to be responsible for creating profit, respecting interested parties, and sustaining company. The third phase is the responsibility of social contribution, which corresponds to contribution, voluntary service, and etc. It can be the responsibility for utilizing resource of company in the perspective of long-term investment, and for actualizing love for humanity.

    The social responsibility is the company responsibility where society and environment are affected by decision-making and activities through transparent and ethical activities of institution. And the social responsibility contributes sustainable development including social health and welfare, considers expectations of interested parties, is in accordance with law or international norm, is integrated with other institutions, and is actualized in the relationship among them (ISO, 2010: 3).

    This study divides the CSR into such subordinate concepts as economic responsibility, ethical management, social contribution, and environmental responsibility2).

    While there is a scholar who argues that regarding the order of priority of subordinate concepts of social responsibility, the order of priority is determined according to their importance (Carroll, 1991), Wood (1991) states that while a company should create economic profit in order to be acknowledged the social existence value, the profit should be created in a proper way, be it ethically or legally. Matten and Crane (2005) explains that while all the four responsibilities are proved as important in Europe too, this respective responsibility has a different implication in respective European nation, and is connected one another in a different way respectively. This study analyzes the subordinate responsibilities of social responsibility not with the order of priority specified, but in an equal dimension.

    (1) Economic Responsibility

    Economic responsibility is the responsibility for producing and selling goods or services which are socially demanded, and for creating profit at a level where investors are sufficiently rewarded. This is the responsibility which society asks public agencies for. That is, it is the responsibility for being devoted in the area of competitiveness, improvement of quality of goods and service, efficient management of operation cost, creation of optimal profit, job creation, and etc. of public agency. This is the most basic duty and responsibility of public agency.

    (2) Ethical management

    Ethical responsibility means the basic duty that public agency should observe ethical norms, and should act ethically beyond observing legal restrictions. It also includes the duty that public agency should do its work rightly, justly, and fairly, and should prevent or minimize the damage to interested parties. Ethical management is to regard the ethic in management and activity of public agency as the first priority, to put every standard of business activity on ethical standard, and to conduct business transparently, fairly, and reasonably (Kim, In Dong, et al 2011: 356-360).

    In the era of knowledge-based society, the practice of corporate ethic is basic to upgrade the international credibility. Besides, it is emphasized that the era has come when ethical management itself is the primary resource of company competitiveness (Ku, Bon Jang, 2009). On 28th December 1998, the special law, “Foreign Bribery Prevention Act in International Business Transaction of 1998” was legislated. Korea agreed and ratified OECD Anti-Bribery Convention. Accordingly Korea must observe this agreement. If Korea violates it, Korea should be punished correspondingly to it. Now, corporate ethical management is no longer option. It can be evaluated as mandatory subject for company survival (Park, Hyun Joon, 2004). Going along this current trend, public agencies have been evaluated in terms of level of ethical management yearly since 2003. And ethical management index is reflected in public institutions performance evaluation which is conducted yearly. Thus public agencies are increasingly required to play a leading role of ethical management.

    This study establishes fairness, transparency and soundness as subordinate index of ethical management. Fairness means the degree of operating business fairly and rightly. This is a planning phase where ethical management is actualized. And when code of ethics and conduct are legislated, it is considered in this phase whether its content and range are fairly reflected. Transparency means the degree of how transparently the practical contents of management are exposed. It is considered whether the process of actualization of ethical management is transparent or not in terms of level of maintenance of business process guide, communication among staff members, openness of management information, speediness of processing, and etc. In the dimension of soundness, it is considered how sound effects are generated when fair standard is actualized and business is conducted in a transparent way, and whether it makes beneficial influence on company and society. Generally when soundness is secured, job satisfaction and organization concentration of employee are increased so that quality and productivity are improved, industrial accidents are reduced, and bribery is decreased, and consequently ethical management is well actualized.

    (3) Social contribution

    Customers expect philanthropic activities, local culture business activities, consumer protection, environment protection as well as economic responsibility, from companies. Here is limitedly discussed not the social responsibility in a broad sense but that in a narrow sense, which is the philanthropic activity. Philanthropic responsibility includes the efforts which public agencies make in order to support art and education in the local community, to contribute financial and human resources to the local community, and to develop volunteer activities. It is the most important to find out what value the corresponding society of public agency requires. Here two-way approach is necessary.

    Ellibirt and Parket (1973) divided social responsibility into 15 types such as commitment to educational institution, contribution to cultural art, community development, and etc. Bowman and Haire (1975) divided it into environment, equal opportunity, individual item, products, and etc. Generally the social contribution activity can be defined as an activity that a company can achieve a reputation by accomplishing the social responsibility. It is an activity through which company can secure a good image from local people and various local organizations with interactions between company and local society, and can contribute to welfare of local society.

    This study includes activeness of social contribution activities, awareness of returning of part of the profits to society, level of contribution to development of local society, level of contribution to local community, and etc.

    (4) Environmental responsibility

    The UN enacted Global Compact to ask companies to voluntarily keep the ten principles in the areas of human rights, labor, the environment and anti-corruption. In 2009 the ISO established ISO26000 so that international organizations, financial institutions and companies can refer, and applies it as constraint regulation so that they must observe this standard at the time of various bidding or IPO.

    Environmental responsibility signifies the responsibility for such environmental factors as pollution control, global warning prevention, sustainable consumption and land utilization, conservation and restoration of ecosystem and natural environment, and etc.

    2) Customer satisfaction

    Customer satisfaction can be explained as comprehensive, subjective and evaluative response of customer toward acquire or consuming experience of certain products or services. Evaluative response includes not only feeling or emotion but also belief. The basis of evaluation can be various according to consumers, and be diverse according to comparison levels of self-expectation, product properties, benefits, and consumption results (Ku, Soon Yi, 1995). The factors of customer satisfaction include every software and hardware such as not only product’s specification or function or price but also employee’s attitude, shop environment, company image, and etc.

    At evaluating satisfaction level of public agencies, a concept of total satisfaction level as an accumulative concept to be able to execute a multifaceted evaluation of respective institution is utilized. After comprehensive contacts and assessment, it is evaluated on the basis of purchase and use experience of products and services provided by the public agencies.

    For the evaluation index of customer satisfaction, this study measured the satisfaction level of customer support, satisfaction level of service use, relative satisfaction level(I am satisfied with the services of the KRA compared with services of other public agencies.), and total satisfaction level.

    3) Reputation of public agency

    Reputation of organization is an evaluation of level of desirableness of organization. This desirableness is formed by external people or group, and is affected continually by them. Company reputation is a broader concept than company image which has been used before, and is the precedent variable which affects purchasing intention. It is the current trend that company image, which has been utilized as a measure index for communication effect of company, is being replaced with company reputation. Company image is a total concept of experiences and related knowledge information and belief, which various environment subjects surrounding a company have regarding a certain company. Company image includes value system of the environment subjects, and as well is a determinant factor of belief and attitude of the company, and increases a conviction of products and services of the institution.

    Reputation of public agency is a total judgment for activities and capacity of a company, is an evaluation of various internal and external public, has been established for a long time, and has been applied as an important tool to determine the products (services) of the institution. Formbrun set up six dimensions as follow: social responsibility, emotional attractions, product and service, working environment, financial outcome, and vision and leadership.

    This study establishes detailed index related to reputation separately as follow: products and services, vision and leadership, emotional attractions, and total reputation. The measure index related to products and services includes high quality, innovation, and etc., that of vision and leadership includes management leadership, clear vison for future, market forecasting, vision for new business (promoting horse industry), and etc., that of emotional attractions includes good feeling, credibility, professionalism, intimacy, and etc. which are related to image of public agencies.

    4) Competitiveness of Public agencies

    When customer assesses products or services of a company as more valuable than those of competing company, and will purchase the products or services at a higher price than its production cost, the company will have competitive advantage. And the larger competitive advantage a company acquires the higher profit the company can gain. Barney (1991) defined the competitive advantage as financial outcome of a company compared with industrial average financial outcome.

    In this study, competitiveness of public agency is a variable with which the public agency is evaluated in the possibility of transforming to the agency which is loved by people, while it can maintain the competitive advantage over other public agencies, grow in the long term, receive love and trust of customers, and maintain continually customer loyalty. For the detailed index related to competitiveness, the competitiveness is divided into financial outcome, credibility, customer loyalty and total competitiveness.

    For the measure index related to financial outcome, it was assessed whether the public agency shows financial outcome of competitive advantage over other public agencies, as well as growth prospect, financial steadiness, and etc.

    Credibility of public agency is related to recognition of interested parties in the areas of professionalism and credibility. And it can be the degree of belief that the public agency can provide services which satisfies the demand of customers. Berry (1993) stated that causal link of intention and loyalty of customers, and that of the relationship of seller and buyer is established by credibility. A study of Sirdeshmukh et al (2002) divided credibility of consumer into organizational capacity and operational favorableness. For the detailed index related to credibility of public agency, this study includes credibility of official announcement of institution, credibility of executives and staff members, and credibility of whole institution, which signifies the degree of belief of customers regarding professionalism and credibility of the institution.

    Customer loyalty means the degree of enthusiasm for continual visiting and using with satisfaction and attachment. The customers with loyalty have strong desire of rebuying. The degree of loyalty has a hierarchical structure of recognition phase– emotion phase – action phase. Oliver (1997) defines the customer loyalty as a promise or commitment that the customer doesn’t care about marketing activities or potential situation factors of other companies, and re-buy and re-support his or her favorable products and services continually and repeatedly. Generally, customer loyalty is explained as psychological solidarity with trader, or as tendency to sustain the trading. For the measure index related to customer loyalty, it was evaluated whether the customer would keep using services of the institution, whether the customer would keep telling about the agency favorably to others, and whether the customer would keep recommending to others the service of institution which I am using.

    Total competitiveness was evaluated by dividing it into absolute competitiveness and relative competitiveness.

    2)Carroll (1979) classified the social responsibility into economic, legal, ethical, and charitable responsibility.

    Ⅲ. Design of the study

       1. Analysis model

    The sustainable management system of KRA can be categorized into the realization of valuing human talent (ethical management, talent management), creation of healthy economic values (fostering the equestrian industry and healthy leisure culture), creation of customer values (customer satisfaction, healthy horse-racing), pursuit of local community development (co-growth and social contribution), environment-friendly management (response to climate change, management of environmental performance). Likewise, different public organizations have different categories for socially responsible management but the basic framework are similar.

    This study categorizes the structural equation model into independent variables, mediating variables and dependent variables. Independent variables consist of the economic responsibility of the public organization, social contribution and environmental responsibility. Mediating variables consist of customer satisfaction and reputation of the public organization. Dependent variables consist of the public organization’s competitiveness.

       2. Measurement tools

    Of the questionnaire items, socio-demographic characteristics were composed of gender, age, education, religion and monthly household income. The measurement of detailed variables such as economic responsibility, ethical management, social contribution, environmental responsibility, customer satisfaction, reputation of the public organization and the public organization’s competitiveness was done using the five point Likert scale. One point was given for “not at all”, 2 points for “not”, 3 points for “average”, 4 points for “yes”, and 5 points for “very much so.”

    The measured economic responsibility was categorized into the role of the Gyeongju project, role of ticket sale business, the leading role in healthy leisure culture, the role of horse-rearing, and the role of creating new economic value.

    Ethical management was classified into transparency, fairness and integrity. 1)Transparency refers to the degree of how work task criteria are streamlined, how transparent work processes are, and whether policies are disclosed sufficiently. 2)Fairness refers to the degree of how work is processed regardless of political ties and how special favors are prevented, 3) Integrity refers to the degree of how people avoid refrain from receiving financial favors, or other types of favors, giving favorable treatment without any just cause, abusing political ties, or efforts to prevent waste in budgets, efforts to prevent power abuse, and measures to prevent corruption and improve integrity.

    Social contribution was categorized into proactive attitude in approaching social contribution activities and contribution. 1)A proactive attitude in social contribution activities are measured via the degree of consensus on social contribution strategies, degree of efforts made by employees for strategic volunteer work and overall proactive attitudes towards social contribution activities. 2)Contribution to social activities was measured via the contribution to job creation, contribution to local communities and the effectiveness of social contributions.

    The measured environmental responsibility was categorized into efforts made to respond to global warming and climate change, efforts to preserve energy, efforts to build green businesses, contribution to restore the eco-system and preserve the natural environment, and the overall level of environment-friendly green business management.

    Customer satisfaction was measured after being categorized into satisfaction with customer support, satisfaction with the use of services, relative satisfaction and overall satisfaction.

    The reputation of public organizations was measured after categorizing into the quality level of services, business leadership, clear vision for the future, level of market forecast, degree of feeling good, degree of trust, degree of professionalism and overall reputation.

    The competitiveness of the public organization was categorized into performance, trust, customer loyalty and overall competitiveness. 1)Performance refers to the degree of competitive advantage created compared to other organizations, growth forecast and financial health. 2)Trust refers to the trust on publicly announced data, trust in employees and trust in the overall organization. 3)Customer loyalty refers to whether customers will continue to use the services, or whether they will talk favorably of or recommend the organization to others. 4)Overall competitiveness was measured in terms of relative competitiveness and absolute competitiveness.

       3. Data collection and analysis methods

    Employees or individuals (subjects of social contribution activities) who had experienced the social responsibility program of KRA even once, students and professors at universities who have knowledge of the activities of KRA, visitors to the horse-racing park and individuals who had experienced horse-riding were randomly selected as study subjects. A total of 300 subjects were interviewed either in person or through questionnaires posted by mail from June 1, 2013 to August 31, 2013. To avoid a self-report bias, the questionnaire was sophisticatedly drafted in consultation with experts. Of the 196 retrieved questionnaires, 191 copies that were valid were used for analysis.

    Basic technical statistical analysis was conducted using SPSS WIN 21.0. AMOS 22.0 was used for confirmatory factor analysis and structural model analysis. The validity of the study tools was verified using the validity coefficient of the measurement model (confirmatory factor analysis) and multiful coefficient of determination. The measurement model establishes how theoretical variables are measured through measurement variables and offers a process of verifying their characteristics (validity and confidence level) as a measurement tool in establishing a abstract or hypothetical concept. Using the standardization regression coefficient(β), the measured variables were reviewed to see how well they reflect theoretical concepts. Of the measured variables, variables that do not present a t value had their value fixed at 1 to use as a reference point. Considering the R squared (R2) and the factor load, the one with the highest explanatory power and highest factor load was used as the reference index. The fitness of the model was evaluated by looking at χ2, RMSEA, RMR, GFI, NFI, TLI, and CFI. If χ2 is greater than the degree of liberty, the fitness is considered low, whereas a small χ2 value indicates high fitness. If the significance level is higher than 0.05, the model is evaluated to be appropriate. RMSEA is a coefficient developed to complement the constraints of χ2 that rejects models with a large sample size. If the value is less than 0.05, it has excellent fitness, and a value between 0.05 and 0.10 indicates an acceptable level of fitness. If the RMR is smaller than 0.05, the fitness is excellent, while if GFI, NFI, TLI and CFI is greater than 0.90, the fitness is deemed excellent (Bae, Byung Ryul, 2005; Song, Ji Jun, 2010).

    Ⅳ. Current practice of socially responsible management and results of empirical analysis

       1. Current practice of socially responsible management at KRA

    1) Overview of the public organization

    (1) Current status

    Public corporations refer to organizations designated by the Ministry of Finance and Planning among public organizations with its own revenues accounting for more than half of its total revenue. More specifically, a market-oriented public corporation has an asset of more than 2 trillion won, and its own revenue accounting for more than 85% of its total revenue. Semi market-oriented public corporations are public corporations that do not fall into the afore-mentioned category. Semi governmental organization has more than 50 employees that have been designated by the Ministry of Finance and Planning out of all public organizations. Among them, fund management types manage their funds under the Act on National Finance or are organizations that have been commissioned to manage funds by the government. Commissioned execution types are semi governmental organizations that do not fall into the category of fund management types.

    As of November, 2014, there are 302 public organizations. More specifically, there are 30 public corporations (14 market-oriented public corporations, 16 semi market-oriented public corporations), 87 semi governmental organizations (17 fund management types, 70 commissioned execution types), and 185 public organizations.

    In terms of employees, market-oriented public corporations had 49,024, semi market-oriented public corporations had 49,411, fund management type semi governmental organizations had 19,174, commissioned execution type semi governmental organizations had 56,093, and other public organizations had 93,521, making the total number of employees 267,223.

    (2) Current status of KRA

    KRA was established September 29, 1949 as a semi market-oriented public corporation in order to contribute to the equestrian industry and husbandry and promote leisure activities of the public through the implementation of related policies and distribution. Through various services including democratizing horse-riding, fostering horse-riding practices and horse theme parks, the organization seeks to add vitality to the leisure activities of the public. Its profits are used to complement local and central government finances, promote equestrian industries and contribute to the nation’s economy.

    Headquarters are organized into business management headquarter, marketing headquarter, horse-racing headquarter, equestrian husbandry headquarter and co-development project headquarter. Three horse-racing parks, namely in Seoul, Busan Gyeongnam and Jeju are managed by the organization, as well as KRA Plaza and 2 rances nationwide to rear horses. There are 15 executives and 895 employees.

    2) Economic responsibility

    The revenue of the organization was 78,55.4 billion Won in 2012 which fell to 77,25.8 billion Won in 2013, marking a drop of 129.6 billion Won. Total assets changed from 2490 billion Won in 2012 to 2490.3 billion Won, marking a 300 million won increase.

    The horse-racing project aims to reach the goal of “becoming a leading popular sport through the development and operation of horse-racing products in Korea”. To meet this goal, improved infrastructure for horse-racing, improved system for horse-racing and internationalization of horse-racing have been the three main pillars promoted. Tangible results of the project include an increase in high quality home-grown horses, shortened records for second generation home-grown horses, a drop in the import of horses from the private sector and increased vibrancy in the production logistics for race horses. A quality control evaluation model was designed and is in implementation.

    The ticketing business aims at “increasing revenues and improving customer satisfaction” and centers around improved ticketing of horse rights, improved audience environment and improved customer services as the three main pillars. To promote healthy participation of customers in the equestrian culture through ticketing services, the unit ticket prices have been brought down.

    The project to make horse-racing a healthy culture seeks to meet the goal of “changing the perceived image of horse-racing.” To that end, the healthy aspects of horse-racing are reinforced, images of horse-racing are improved and social contribution activities are reinforced. To make the culture of horse-racing healthier, an improved system for transparent purchases and sales of tickets, and improved environment for such transactions and increased leisure areas within the horse-racing park have been promoted. Illegal projects related to horse-racing have been cracked down on. The use of My Card is also being promoted to eradicate the counterproductive functions of horse-racing.

    With the revision in the law on equestrian husbandry in late September, 2011, a systematic framework for a healthier horse-racing culture has been laid. Support for increased infrastructure of equestrian industries, the fostering of experts in equestrian industries, improvements in the horse-rearing and distribution systems, and programs to create more demand for horses through democratization of horse-riding are all measures to create more value.

    3) Ethical management

    Since it established a system for an organizational culture of integrity, improved welfare for rural areas and consideration to the socially marginalized, promotion of green management and energy preservation and environmental preservation as its strategy, KRA has further categorized its strategies into those for integrity-based management, sharing-based management and environment-friendly management.

    To refine its strategies for ethical management and have the legal framework in place, related regulations have been revised and employees’ code of conduct has also been revised (Ministry of Finance and Planning, 2014). A virtuous cycle has been created by having the implementation be handled by the Office of Planning and Adjustment and the Office of Audits, so that a more systematic monitoring for ethical management is made possible and its results are reflected onto internal evaluations. An improved report system that led to more reporting channels also show their commitment to resolve issues of integrity.

    4) Social contribution

    Through equestrian husbandry businesses, horse-riding businesses and horse-racing businesses, the organization seeks co-prosperity with over 5000 other entities. It also supports a fund for this purpose. It observes laws related to fair transactions, holds competitive bidding for the electronic procurement system and blocks fraudulent bidding to promote fairness and co-growth. Equal treatment is given to partner companies and procurement of items is commissioned to the National Office of Procurement to promote purchases from small and medium-sized corporations. Technological cooperation and a stable supply chain also help support partner companies.

    More than 1 trillion 500 billion Won raised through horse races is given back to society each year. 70% of the profits are invested in a special fund to promote development in the equestrian industry, husbandry and welfare in rural areas. A selected few from rural areas or among the socially marginalized classes are the targets for donation projects or various KRA Angels’ volunteer activities. Social issues such as addiction to online games, ADHD patients, and rehabilitation of the handicapped are themes that social contribution activities are focused on. Scholarships for students from rural areas, support for overseas studies for talented students and projects to promote welfare in rural areas are also being implemented.

    5) Environmental responsibility

    In order to meet the goal of energy preservation, a committee for energy preservation was established. An officer in charge of the initiative was selected for each team to lead the movement. Recycling everyday waste, usage of environment-friendly fertilizers by recycling and the future establishment of a social corporation related to such causes are examples of environment-friendly management practices. To prevent pollution, an advanced sewage treatment system, water re-use and minimized production of air-polluting substances are also being promoted.

       2. Analysis of the effect of socially responsible management on competitiveness

    1) Socio-demographic characteristics

    The general characteristics of the study subjects are as seen in

    .

    [

    ] Socio-demographic characteristics of the study subjects

    label

    There were more male at 132 people (69.1%) than female, and the average age of subjects was 46.8 years. In terms of education, high school graduate accounted for 93 people(48.7%), university graduate or more for 68 people(35.6%), middle school graduates for 21 people(11.0%). Monthly average income showed that those who had 2 million – 3 million Won and those with 3 million to 4 million Won counted 56 people(29.3%) each, while those with 4 million Won or more counted 30 people(15.7%), and those with a monthly income of less than 1 million Won counted 23 people(13.6%). In terms of religion, 54 had no religion(28.3%), 47 were Christians(24.6%), 41 were Catholics(21.5%), 40 were Buddhist(20.9%) and 9 people responded as ‘other’(4.7%).

    2) Verification of the hypothetical model

    (1) The normality of the sample and technical statistical data

    A verification of normality and a technical statistical analysis of the variables used in this study were as shown in

    . A verification of the normality for multiple variables shows that the skewness was less than 3 in absolute value and the kurtosis is less than 10 in absolute value, indicating that the normality is not violated by a great degree and thus the validity of the data was proven.

    [

    ] Technical statistical data for major variables

    label

    (2) Validity of the measurement tools

    A correlation analysis of the measured variables showed that all variables had a correlation coefficient of higher than 9.0 in absolute value, and thus have no issues of multicollinearity.

    [

    ] Correlation coefficient between variables

    label

    (3) Verification of the fitness of the hypothetical model

    As seen in

    , the five indices for fitness all meet the standard and therefore this model for the competitiveness of public organizations with economic responsibility, ethical management, social contribution and environmental responsibility as external variables, and with customer satisfaction and reputation of public organizations as media was proven to be fit.

    [

    ] Fitness of the model

    label

    (4) Analysis of the effect of the hypothetical model

    Ana analysis of the hypothetical model shows that of the 13 pathways, four were significant as seen in

    .

    [

    ] Pathway coefficient between variables of the study model

    label

    SMC(Squared Multiple Correlations) is a multiple correlation coefficient explaining the dependent variable using the independent variable. A verification of the hypothesis reflected on the study model shows that the reputation of the public organization was affected by social contribution, with an explanatory power of 95.3%. Social contribution also explained customer satisfaction with a power of 94.5%. for the competitiveness of public organizations, their reputation, ethical management and social contribution appeared to have significant correlations with an explanatory power of 98.6%.

    shows the results of analyzing the causation effects, direct effects and indirect effects focused on the internal variables of the hypothesis model. For the competitiveness of public organizations, social contribution had a direct effect (β=0.951). For customer satisfaction, too, social contribution had a direct effect(β=1.112) that was significant. For the competitiveness of public organizations, its reputation had a direct effect(β=0.537) and total effect(β=0.542) which were significant, while social contribution was significant in its direct effect(β=0.547), indirect effect(β=0.441) and total effect(β=0.989).

    [

    ] The pathway effect of factors related to the competitiveness of public organizations

    label

    V. Reinforcement of social responsibility public institution's management and improvement plan of ripple effects to regional community

       1. Improvement of understanding about public institution's social responsibility and reinforcement of verification

    1) Improvement of understanding about social responsibility management

    ISO 26000 which is globally checking social responsibility activities was enacted in November 2011 and based on this standard, the social responsibility management level of Public agency can be identified to be satisfactory in general but shows a little low levels in environmental performances, development in regional community and participation performance index(Ra, Young Jae, 2012: 26-27). At the end of 2010, Government added corporate philanthropic activity index in management evaluation of Public agency and started to check social responsibility management situations. Public agencies not only play an important role in national economy, but also affects people's life directly and indirectly by providing public goods and services and Public agency will play a leading role to secure the alleviation of inequality or contextual and procedural definition in the future which is required to make a fair society. Public agencies should have the perception that social responsibility management activities are the investment to increase the sustainability of company's establishment purpose and values and strategic tools beyond the perception which is recognized as additional cost burdens or management coping procedures.

    In order that public agencies' social responsibility management activity can be connected to company values, performance measurement index should be developed which measures and delivers Public agency's social responsibility management performance.

    In case of small size public agency, it cannot be denied that the publication purpose of their sustainable management report is to passively accept competent department's policies or to receive better evaluation in management evaluation, rather than to publicize with the communication purpose with interested parties through sustainable management. Because public agencies’ management evaluation can play an important role in controlling moral hazard, corruption and information inequality which are shown in agency theory, it is desirable to expand more weights on social responsibility role in management evaluation.

    2) Reinforcement of verification by third party

    It is desirable for third party to verify whether social responsibility activities are actually executed in public agencies appropriately and sustainable system are secured. Private companies or some institutions in public agencies that publicize the sustainable reports sometimes omit third party's verification, and even though they go through third party verification, the verification is sometimes executed with the form of consulting by the specific prestigious group or scholar who might have interests. In case of KRA, report issues were selected through interested party's participation and execution performances about core subjects were disclosed. They are collecting the opinions after disclosing various information and reports and executing the surveys targeting interested parties in each group and measuring the performances about important issues of the institution. Core interested parties are composed of executives and employees, government and customers, and strategic interested parties are composed of affiliated companies, related organizations, regional community and NGOs. Environmental interested parties are composed of media, information provider, temporary employees NPOs and socially disadvantaged people.

    Regarding third party verification method, third party verification could be also considered to be done by participating academies or certified citizen groups which have over 1.5 of academic journals citation index among the academies that publish the acknowledged journals by National Research Foundation of Korea.

    Detailed references which are related with social responsibility should be disclosed at Alio System which is an integrated site of Public agency, and regarding the truth of administrative information, relevant public agencies should take the responsibility.

    North Europe public agencies secure the transparency through public announcement of management results or yearly reports and also secure the performances in economic, environmental responsibility. Our country could consider a method as well to gradually expand sociality and environmental index among the sustainable management indexes which are publicness and public benefit indexes in public agencies’ management indexes.

       2. Substantiality of public agencies's social responsibility activities

    1) Expansion of execution program with high perception

    Development and execution of detailed programs among public agencies should upgrade public agencies's social responsibility activities by sharing excellent programs. Consistent efforts are required to discover the execution programs which have high perception by accepting the opinions from job related citizen group, academy and residents.

    In case of KRA, projects like the operation of horse riding healing center for adolescents, support of developmental disabilities, golden coach with love for agricultural and fishing areas and low income families, hope ladder and adolescent orchestra are highly evaluated as consumer customized type corporate philanthropic activities. (Ministry of Strategy and Finance, 2014). There is a big meaning to secure the stable base of corporate philanthropic activity by establishing the social welfare foundation, and active and meaningful corporate philanthropic activity is expected through this foundation in the future. They established 'good growth' project driving strategies and discovered 120 good growth subjects through department contests, and they are building and conducting the cooperation relationship with small and medium size companies and interested parties through good growth promoting council and good growth T/F. KRA is making efforts to remove their negative image to do speculative business and to recover their reliability. As a result, they acquired the performance like 'rural community companies certification', but they should consistently drive the efforts to prepare for new and creative plans beyond the existing approach methods.

    2) Job creation and consideration of socially disadvantaged people

    It has been a long time when the job issue of the youth was emphasized, but there is no clear solution yet. Even though some public agencies have moral hazard phenomenon, most public agencies are contributing to job creation, especially for the disadvantaged class.

    KRA is establishing the challenging objective to create 7,000 jobs by establishing and executing ‘good job creation strategy’, and they are seeking job creation which is related with the institution's vocational characteristics. They supported the establishment of social cooperative, '365 Singsing market' by driving job creation project as their main project by supporting the establishment of social company and through this project, they created considerable jobs.(Ministry of Strategy and Finance, 2014) This project is evaluated as an exemplary case of job creation through multilateral cooperation between private, government and public agencies by driving the projects with the cooperation with local government and private sectors. Additionally, it is judged to be desirable to expand employment opportunities of multicultural families by supporting a social company, 'Tong Corporation'. KRA is trying to create jobs for silver class and disadvantaged class at outside branch areas, but they should greatly strengthen the corporate philanthropic activity for outside branch areas. Considerable part of negative image of KRA comes from outside branch areas and the conflicts about the establishment of outside branch are increasing. Therefore, in order to solve this problem, more active policy change would be necessary to make outside branch area as a cultural base center rather than the passive methods to provide coffee or meal for the elderly and to support culture center and after school class.

    Social companies or cooperative type companies can achieve a certain level of performances at the initial support stage, but if the supports are interrupted, they could rapidly decayed and therefore, consistent interests are required in order that those companies could continuously and stably develop in the future.

    Currently, lots of public agencies have management know-how as good as private companies and they have capacity to consume the goods and services of their own business or produced by surrounding social companies. Therefore, if public agencies form various types of relations with social companies, social companies could be inherited management know-how and have the opportunity to pioneer the market as well.

    From the public agencies' stance, it is an opportunity to take the social responsibility which is corresponding with the establishment purpose and to achieve social trust as well. Regarding public agencies' supports for social companies, they have to consistently execute their role like management guidance and connection with local resources, and this could be developed as a partnership with NGO and public benefit related marketing. And, they have to contribute to regional vitalization through job creation and social services for socially disadvantaged class by developing and supporting social companies using business items which are related with public agencies characteristics.

       3. Reinforcement of public agencies' ethical management

    To seek public interest which is one of the public enterprise' characteristics is being executed based on ethical management. Ethical management was appointed as the management innovation subject of public enterprise since 2002, and ethical management related evaluation index is included in the management evaluation index from 2003. They made 「Public Enterprise Ethics demonstration Project Agreement」 with Anti-Corruption Commission(currently, Anti-Corruption and Civil Rights Commission) and executing the substantiative ethical management(Kim, In Dong et. al., 2011). KRA should have more focus on ethical management because they could have big damage in their image when corrupted accidents occur because people's bad understanding about horse race is not improved in spite of continuous efforts. In 2013 integrity evaluation by Anti-Corruption and Civil Rights Commission, their rating was increased to class 3 from class 4 of previous year, and they received 'Very excellent' rating in 2013 Anti-corruption competitiveness evaluation as well. Especially, even though they received class 4 in external integrity evaluation, their rating was revised upward to class 3. (Ministry of Strategy and Finance, 2014). Because their main business is horse race which is a speculative business, they need the efforts to improve the image of the institution and systematically supplement ethical management system in the level of healthy business promotion. Regarding the operation of inside containment system, there are insufficient clear protection measures about anonymity guarantee against the whistle blowing, and the backflow about the inspection measures should be strengthened because the disciplinary actions could be mitigated connecting with rewards.

    In order to more solidify ethical management, first, top management's leading role and continuous education programs should be fulfilled. Second, outsourced operation of inside corruption reporting system should be reviewed because of insufficient identity guarantee for whistle-blowers in current whistle blowing system. Third, based on existing infrastructure, ethical management should be connected with business management process by securing ethical management guidelines of each job unit and constructing ethical management evaluation system and operating the compensation system which is connected with ethical management and securing mid and long-term ethical management strategies.

       4. Vitalization of social responsibility management through social networking

    1) Network structuralization between regional community institution

    Regarding social contribution related programs which are executed by regional community, there are several contribution programs by various agencies like rural area contribution projects by KRA, social organization subsidy project by metropolitan cities and provinces and basic local government, private organization expense assistance project, music group support program supported by Korea Arts & Culture Education Agency, metropolitan cultural arts organization supporting projects, regional community social welfare programs by local university, social welfare type projects by local government and social contribution programs by other public agencies and major corporate as well as regional cooperation by power generation public enterprises.

    In order to actively revive social responsibility management activities of public agencies and companies, the network between the individual institutions is required, especially the networking in corporate philanthropic activities are required. When the networking is working well, synergy effect which contributes to regional community development could be obtained as well as social responsibility activities successfully settle in regional community.

    The case of horse riding healing center operated by KRA is a program that local government-public agencies-private operation(NGO) are jointly coping with social problems, which is called as 3rd generation company-driven advanced social contribution program, and it could be considered as an exemplary case using the characteristics of public agencies.

    Regarding the networking with the society, public agencies should consider the corporate philanthropic activity as a single process. In other words, when individual subjects in the society are engaged in charity activities, they should make the momentum to efficiently allocate the costs for charity and tow the execution by establishing the horizontally and loosely connected network.(Kwak, Hyun Gun, 2011) Therefore, from the viewpoints of public agencies, construction of partnership with them should be considered in the aspect that trust relationship establishment between individual subjects in the society is the most fundamental base in executing the social responsibility by public agencies. Social contribution program, ‘construct happy society with bright smile and healthy teeth making’ which is driven by Dangjin Thermal Power Plant which is one of the business places of Korea East·West Power Co., Ltd. connecting with Hanseo University, Department of Health every half is a good case that activation-type corporate philanthropic activity are executed targeting local residents by regional public agencies connecting with related department in local university.

    Regarding the relocation of public agencies headquarter to innovation city, the range of the local talented quota system needs to be expanded to hire the adolescents in the relocated area with priority when hiring the employees.

    The plan which was executed by Taean Thermal Power Plant of Korea Western Power Co., Ltd. to connect the employment with related companies after welding training targeting the adolescents near power plant is desirable from the aspect of collaboration with regional community.

    Public agencies can identify the subjects for social contribution activities and conditions of the region more correctly and execute the activities by making local governments, local universities and local citizen groups participate in the strategy establishment and execution procedures for corporate philanthropic activity as the interested parties and increase the efficiency of public agencies' project. Regional community's trust about public agencies could contribute to the improvement of public agencies. Local citizen groups can have the opportunity to study organization plans from public agencies like planning, general affairs, sales, human resources management and accounting and to increase the efficiency performance in the operations of citizen groups. To use the part of contributions by public agencies to reeducation program for local citizen group activists could be a solution. It is necessary to build up various meeting places from the sharing programs that the owners or executives of individual institution participate to the meeting of social contribution complete charge department staffs in public agencies.(Han, Jung Hwa, 2004)

    2) Collaboration with regional community according to public agencies' relocation to innovation city

    With the momentum of public agencies’ headquarter relocation to innovation city, the actual cooperation plans are required that public agencies' executives and employees could settle down early and local residents could realize the regional community happy community. Relocation of public agencies’ headquarter becomes a momentum to increase the actual collaboration based on the trust through local residents(Bae, Jung Hwan, 2013).

    Collaboration means that more than two autonomous organizations are closely engaged to achieve the common goal of individual goals. Therefore, collaboration should maintain equal mutual relationship between cooperation concerned people and accomplish mutual benefits and goal. Regional community can show the strong resistance against the issues which give direct threats against their peace and orders, but when they achieve positive performances through collaboration, the collaboration is more activated. Collaboration could bring various benefits like creation of social capital, interdependence of supplementary assets, provision of supplementary knowledge, provision of information benefits and creation of interdependent learning opportunities.(Sim, Sang Wan et. al., 2000). Collaboration brings benefits in the broad aspect of agglomeration, activity and interaction. Direct benefits are knowledge spillovers, reduction of transaction costs and share of infrastructure and from the aspect of activities, the benefits like economy of scale and specialization economy could be obtained. From the aspect of interaction, systematic interaction and implicit knowledge and trust's benefit could be obtained. Areas and methods of collaboration should be diversified as well as financial aspects.

    The momentum of headquarter relocation could be an opportunity to form a community for collaboration and cooperative development of local residents along with the improvement of education and living conditions which are suitable for economic environment changes of regional community. Especially for the improvement of regional education environment, local government, regional education support office, schools in the region, public lifetime learning institution, local companies and universities should construct collaboration networking.

    The role is expected as the subjects of innovation cluster which is deploying knowledge creation and technological innovation by establishing the industry-academic-research cooperation and related networks as well as local economy vitalization.

    Formation of social relationship is demanded like preferential purchase of regional agricultural products, preferential delivery of local companies, volunteer works and support for regional community groups, preferential utilization of regional institution at friendship and employee training. Like the case of Togomi village in Hwacheon-gun, the village is executing the roles of provision of village products, provision of social contribution opportunities, improvement of psychological stability of public agencies executives and employees and the school is executing the roles of provision of village industry related practice opportunities, development and sharing of creative ideas, reinforcement of the sense of fellowship between regional schools and society.

    Participation in regional lifetime learning program is also required by donating the talents of public agencies executives and employees. Local government should makes the plans like exemption of local taxes or free use of tourist attractions in the region and public agencies need incentive plans to reflect the performance assessment. Relevant local government should expand local food movement which expands the base to provide safe and clean regional agricultural products through the systematization of local residents. Local government should make preferential purchase system with public agencies and provide regional agricultural products in the state stable food providing base is secured. According to the preferential purchase system, producers should provide reliable agricultural products with stable prices through contract cultivation. With the sisterhood relationship among public agencies and local government farms, regional exchange network should be formed which could voluntarily exchange various information which are required by both parties. Local commercial area vitalization project should be jointly driven mainly by traditional market. Programs are required to improve creative infrastructure like health and medical service and cultural art as well as to enhance living community type living conditions.

    VI. Conclusion

    Analysis results of this study show social contribution and ethical management especially affect the competitiveness of public agencies. Especially, social contribution affects the reputation of public agencies and customer satisfaction, and reputation of public agencies and customer satisfaction mutually affect each other, and the reputation of public agencies affects the competitiveness.

    As the improvement plans for public agencies' social responsibility management reinforcement and improvement plan for the riffle effects to regional community, following plans were suggested; first, improvement of understanding about public agencies's social responsibility and reinforcement in verification, second, substantiality of public agencies's social responsibility activities (expansion of execution program with high perception, job creation and consideration of socially disadvantaged people), third, public agencies's ethical management reinforcement, fourth, vitalization of social responsibility management through social networking (structuralization of network between regional community institution, collaboration with regional community according to public agencies's relocation to innovation city).

    As the results, this study is expected to let public agencies recognize the importance of the social responsibility activities, to let the social responsibility activities including community services be embodied in their management process, and to let various social responsibility activities of various public agencies and companies be organically linked so as to demonstrate synergetic effects. It is expected that public agencies in the local district, through this process, could grow up to agencies which are equipped with the competitiveness satisfying the global standard, and which are really loved by customers and public people, and finally to let the local community and the warm local society be realized.

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    • [<Figure 1>] Analysis model
      Analysis model
    • [<Table 1>] Socio-demographic characteristics of the study subjects
      Socio-demographic characteristics of the study subjects
    • [<Table 2>] Technical statistical data for major variables
      Technical statistical data for major variables
    • [<Table 3>] Correlation coefficient between variables
      Correlation coefficient between variables
    • [<Table 4>] Fitness of the model
      Fitness of the model
    • [<Table 5>] Pathway coefficient between variables of the study model
      Pathway coefficient between variables of the study model
    • [<Figure 2>] Results of the study model
      Results of the study model
    • [<Table 6>] The pathway effect of factors related to the competitiveness of public organizations
      The pathway effect of factors related to the competitiveness of public organizations