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.

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.

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.

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 28^th 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.

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.

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.

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).

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.

1) Socio-demographic characteristics

The general characteristics of the study subjects are as seen in

.

] Socio-demographic characteristics of the study subjects

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

(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

(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

(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

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

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

   2. Substantiality of public agencies's social responsibility activities

   3. Reinforcement of public agencies' ethical management

   4. Vitalization of social responsibility management through social networking

VI. Conclusion