Managing relational conflict in Korean social enterprises: The role of participatory HRM practices, diversity climate, and perceived social impact

• Author: Matt Dallas,Hyun Chin,Long Zhang,Jeong Won Lee
• Date: 01 January 2019
• Published date: 01 January 2019
• DOI: http://doi.org/10.1111/beer.12204

Business Ethic s: A Eur Rev. 2019;28:19–3 5. wileyonlinelibrary.com/journal/beer  

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© 2018 John Wiley & So ns Ltd

1 | INTRODUCTION

As societal c hallenges beco me more complex , social enterp rise

has emerged as a pro mising vehicle for s olving these c omplicated

issues in a susta inable way that cr eates value for so ciety (Murphy

& Coombes, 20 09; Santos, 2012; Yang & Wu, 2016). So cial enter‐

prises are org anizations that mainly p ursue social mission s while also

seeking econo mic gains (Battilana & Dor ado, 2010; Pache & Santos,

2013); they apply innovative approaches to solve social problems

(Austin, Stevenson, & Wei‐Skillern, 2006). Increasingly recognized as

an importa nt business ethi cs topic, soci al enterprise ha s garnered

significant gl obal attention and flou rished over the last few deca des

(Dacin, Dacin, & Tracey, 2011; Ohana , Meyer, & Swaton, 2012). In

South Korea, th e context of this res earch, the num ber of officia lly

recorded socia l enterprises have increased f rom 55 in 2007, to over

1,800 in 2017 (Korea n Social Enterpr ise Promotion A gency, 2017).

Despite this rapid growth, these organizations face many challenges.

Notably, the chall enge of resource constr aints, arising from li abilities

of newness and sma llness, limit s the range of avail able manageria l

and HR options, e ngendering a foc us on non‐financi al assets when

motivating employees (Borzaga & Solari, 2001).

Another nota ble challenge arising f rom the “hybrid” nature of s o‐

cial enterpris e (Ebrahim et al., 2014) invol ves organizati onal gover‐

nance, which play s an important rol e in expressing the ac countability

of the organizat ion, namely, for what and to whom the o rganization

is accountable (Mulgan, 2000). However, social enterprises’ com‐

bination of social welfare (charity) and economic gains (business),

draws on values, norms, and practices from traditionally antithetical

Received:1Novem ber2017 

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  Revised:2June2 018 

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  Accepted:22Aug ust2018

DOI: 10 .1111/bee r.12204

ORIGINAL ARTICLE

Managing relational conflict in Korean social enterprises: The

role of participatory HRM practices, diversity climate, and

perceived social impact

Jeong Won Lee1 | Long Zhang2 | Matt Dallas3 | Hyun Chin4

1School of Busi ness, Yonsei Universit y,

Seoul, Korea

2Business Sch ool, Hunan Univer sity,

Changsha, China

3School of Mana gement, Universi ty of

New South Wales B usiness School , UNSW

Sydney, NSW, Austral ia

4Human Resource & Organizational

Development Department, Samsung

Economic Research Institute, Seoul, Korea

Correspondence

Long Zhang, Business School, Hunan

University, Changsha, China, 410082.

Email: lyon.long.zhang@gmail.com

Funding information

This researc h was supported by t he

Fundamenta l Research Funds for th e

Central Universities in China, Foundation for

Innovative Res earch Groups of the N ational

Natural Scie nce Foundation of Chi na

(Project No. 712 21001, 71521061), and

Major Progra m of National Natura l Science

Foundation of C hina (Project No. 71790593)

Abstract

Social enterprise s are hybrid organizations that p rimarily pursue social missio ns while

also seeking econo mic gains. Drawing on wo rkplace diversit y and conflict the ories,

this article add resses recent call s for further res earch to explore how em ployees

within social enterp rises experience internal conflic ts arising from the organizatio nal

pursuit of dual, comp eting missions (i.e., social and economic), and how s ocial enter‐

prises manage, and pot entially overcome, these challenges. In t he context of Korean

social enterprise, we co nducted a quantit ative study that built on an initial explor a‐

tive qualitative st udy. Our research examin ed whether perceive d participator y

human resource management practices and diversity climate increase employees’ af‐

fective commitme nt by reducing their relat ional conflict. We fur ther explore d a

boundary cond ition, perceived social impact, whi ch strengthened this mediation re ‐

lationship. Our result s offer significant insight s into social enterprise, busine ss ethics,

and broader managem ent literature. Implications fo r future research and prac tice are

also discussed.

KEYWORDS

affective co mmitment, particip atory HRM practice s, perceived social impac t, relational

conflict, social enterprise

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     LEE et al.

institutionalized forms of organization, thus problematizing the role

of governance in this co ntext. Unde rmining the clar ity afford ed by

historic inst itutional divides of for‐profi t and not‐for‐profit organiza‐

tions (Ebrahim et a l., 2014), this complexity is a root cau se of emer‐

gent dual‐goal tensi ons for social enterprises . Thus, identifying how

to handle the tra de‐offs bet ween these co mpeting goals is cr itical

(Doherty, Hau gh, & Lyon, 2014). Although pr evious studie s have

partially co nfirmed this issue (e.g., VanSand t, Sud, & Marmé, 2009),

our understanding of how employees within social enterprises expe‐

rience internal c onflicts rem ains limited (Mas on & Dohert y, 2016).

This limited know ledge has led sch olars to call for r esearch to ex‐

plore organizational efforts for managing and overcoming these as‐

sociated intern al conflicts (e.g., Bat tilana & Lee, 2014; Doher ty et al.,

2014). While previous st udies of these is sues have focused l argely

on conceptual or t heoretical considerations ( Battilana & Le e, 2014;

Mason & Doher ty, 2016), the aim of our study is to address t his gap

with empirical research.

This study foc uses on social ente rprises’ inter nal conflict , spe‐

cifically ex ploring relational confl ict, which refers to the d ispute and

conflict in interpersonal relationships among members of social en‐

terprises, an d how this can be managed. We propo se that organiza‐

tional diversi ty lies at the core of such relati onal conflict. To achieve

both competing social and economic missions simultaneously, a di‐

verse range of exp ertise is needed in social e nterprises (Battilana &

Lee, 2014). However, increasing wo rkplace diver sity likely lea ds to

relational confl ict without suitabl e managerial effort s (e.g., Battilana

& Dorado, 2010). From thi s diversity pe rspective , we investigate

how social enterp rise organiz ational effor ts manage th e resulting

potential relational conflict .

Korea was selec ted as the empiri cal context in wh ich to con‐

duct this inqu iry. Despite its s hort histor y, as mentioned ab ove,

Korea’s social enterp rise sector ha s grown rapidly, sugge sting a

need for caref ul consideratio n of intra‐orga nizational issu es, such

as relational conf licts. In addition, th is growth of social enterpris e is

actively led by t he Korean government, emph asizing the role of em‐

ployers’ organizational efforts (Korean Social Enterprise Promotion

Agency, 2017). Thus, we b elieve Korea to be an id eal context for

studying soc ial enterprises’ inter nal conflicts and man agerial effort s.

Given the dear th of research on social enter prise in the Korean

context, a sens itizing qualit ative explora tory study s erved as our

starting p oint. This enabled a clea rer understanding of t he context,

while providing i nsights into employees’ expe riences of internal re‐

lational conflic t and a view of the organizational ef forts employed

to manage them. In corporating t hese insight s with diversit y and

conflict management theories, we develop hypotheses for our sub‐

sequent quanti tative study. At this second stage , we consider how

two organizational efforts (participatory HRM practices and diver‐

sity climate) add ress relational conflict iss ues, and the concomitant

effect on emp loyees’ work att itudes and af fective commi tment.

Further, as a bounda ry condition i n the process of man aging rela‐

tional conflict, we explore the role of employees’ perceptions about

whether their actions lead to benefits for others (i.e., perceived so‐

cial impact).

Our research co ntributes to soc ial enterprise , business ethi cs,

and broader management literature. First, this study advances the

social enterprise literature, exploring and highlighting the internal

conflict arisi ng from hybridit y, while investigat ing ways it can be

managed. This re sponds to recent c alls for investi gation into the

hybrid organiz ation, and into hybridity man agement in social enter‐

prise (e.g., Bat tilana & Lee, 2014; Doherty et al ., 2014). Second, the

study has further implications for social enterprise management of

human resource s, a neglected issue in so cial enterprise and bus iness

ethics litera ture (Borzag a & Solari, 20 01; Ohana & Meyer, 2010).

Drawing on empirical evidence, this study’s findings identify the

role of organizational efforts and perceived social impact in reduc‐

ing relational co nflict and prom oting affec tive commitmen t. Third,

this study of soc ial enterprise , as a nascent hybrid o rganizationa l

type, contributes to business ethics literature. Specifically, while di‐

versity and con flict management literatu re is appropriate for such a

context with du al competing miss ions, this study’s insights are a lso

pertinent fo r those more traditiona l organizational firms t hat are in‐

creasingly adopting social and ethical practices, such as Corporate

Social Respons ibility (CSR ). Lastly, by illus trating the ante cedents,

outcomes, and b oundary conditions of rel ational conflicts from em ‐

ployee‐level per spectives, this stu dy improves our underst anding of

the micro‐dynamics that undergird broader institutional change as

well as the managem ent of competing logic s, issues that are comm on

to both social ente rprises and for‐prof it organizatio ns, yet largely

overlooked (Smit h, Gonin, & Bes harov, 2013). We present findi ngs

from our initial e xplorator y study of Korean so cial enterpris es and

their employees. We identify clues regarding the potential for orga‐

nizational ef forts to reduce relational co nflict. We then move on to

our main study.

2 | EXPLORATORY STUDY: QUALITATIVE

APPROACH

This section r eports the results of our q ualitative inq uiry, based on

three data sou rces: existing l iterature, 485 p ages of archival da ta,

and eight inter views (see Tables 1 and 2). A s Table 2 shows, three

types of inter viewees—CEOs, employees, an d public officials—from

Korean social ente rprises and promot ion agencies part icipated in the

interviews (n = 8; e ach lasted about 1 hr). Int erviews were purpo sely

conducted at va rious places (i. e., inside or out side the workpl ace)

and times (i.e., d uring or after wo rking hours) to re duce the possi‐

bility that dis tinct insight s might be gaine d depending on wo rking

TABLE 1 Archival data information

Archival dat a Pages

Social Enterprise Promotion Act (20 07/2012) 24

Korean Labor Institute (2011) 204

Korean Ministry of Employment and Labor (2013) 250

Korean Social Ent erprise Promotion A gency (2017) 7