Role of Non-profit Sector in the Local
Administrative Reform:
Comparative Study between Japan and Korea*

Yuko Kanekoi

Junki Kimii

Ichiro Tsukamotoiii

Juae Kimiv

No. 2014-L01
2014. 12*This work was supported by the Japan Society for the Promotion of Science (JSPS)
Grant (2007-2010 Japan-Korea Joint Research Project)

and the National Research

Foundation of Korea (NRF) Grant (NRF-2008-000-000000) .

i Faculty of Literature and Social Sciences, Yamagata University, e-mail: ykaneko@human.
kj.yamagata-u.ac.jp
ii School of Business Administration, Meiji University
iii Graduate School of Public Administration, Seoul National University, e-mail: jkkim@snu.
ac.kr
iv Graduate School of Public Administration, Seoul National University

Contents
1. Introduction: Objectives of Research
2. Theoretical Framework
2.1. From New Public Management to New Governance Perspectives
2.2. Contracting-out of the Delivery of Public Services
2.3. Citizen participation and responsiveness of public service delivery
2.4. Social capital theory
3. Methodology and Research Design
3.1. Pilot surveys
3.2. Making a Hypothesis and drawing up full scale survey plans
3.3. Conduct of full scale surveys and tabulation of the survey questionnaires
4. Hypothesis to be verified in the research
4.1. Cases in Japan
4.2. Cases in Korea
4.3. Hypothesis of this research
5. Private non-profit organization: Brief outline of the system and activities in society
5.1. Japan
5.2. Korea
6. Administrative reform in local governments; history, progress, current situation
focusing on contracting-out
6.1. Japan
6.2. Korea
7. Private non-profit organization in contracting-out: Relationship between the local
governments and private non-profit contractors
7.1. Japan
7.2. Korea
8. Local self-governing environments: Role of local self-governing body in public
administration
8.1. Japan
8.2. Korea
9. Outline of the survey conducted in Japan and Korea
9.1. Surveys in Japan
9.2. Surveys in Korea
9.3. Questionnaires and question items
110. Comparison of the survey results
10.1. Local government surveys
10.2. Non-profit contractor surveys
10.3. Financial situation of the non-profit contractor
11. Relationship between the LSGBs, non-profit contractors and municipality
governments: Survey data from the Japanese LSGB questionnaire
12. Relationship between the non-profit contractors, users’ associations andmunicipality governments: Survey data from the Korean questionnaire
13. Role of the local self-governing bodies in securing better public services
14. Future Challenges: what we can learn from the experiences of Japan and Korea?
14.1. Summary and conclusion
14.2. Future challenges in Japan
14.3. Future challenges in Korea
Appendix 1. Population of the respondent municipalities in Japan
Appendix 2. Questions in the Questionnaire
References21. Introduction: Objectives of Research
From the 1980s, major developed countries faced the reform of government and public
sector because of declining economy and accumulated financial deficits, and have been
moving toward smaller government. In this undertaking, it is expected that the role ofnon-profit sector such as non-profit organizations and non-government organizations
will be expanded. In our research, we focus on public administration especially on public
service delivery systems. In this context, municipality governments are core elements inthis research.
Japan and Korea are both promoting decentralization and devolving the government
responsibility and function from central government to local governments. On the other
hand, government is forced to become smaller due to the difficult government financial
conditions. To make government smaller, privatization including out-sourcing orcontracting-out of public services are essentially needed. The experiences of such
undertakings have accumulated in the European and American countries based on theChristian tradition. However, such experiences may not be fundamentally useful under
the different cultural tradition such as the Confucianism. The people’s perception
toward government and the idea and integrity of government officials are quite
different under the different cultural environments. Both Japan and Korea have long
tradition of the Confucianism and have adopted state-lead development strategies, andthe people in the local communities tend to be rather dependent on the central
government.
Both countries have such commonalities that theorizing the conditions on which
non-profit sector can be qualified as reliable actor in delivering public services will
provide significant insight for Japan and Korea in fostering non-profit sector forenhancing the public welfare under a small government.
Moreover, we will re-examine the new governance theory as well as social capital theory
and explore how the theory can be applicable to Japan and Korea. In Japan there exists
local self-governing body called “Ji-Chi-Kai”or “Cho-Nai-Kai,” which is a voluntarycommunity-based organization performing necessary functions for everyday life in thecommunity. To compare with local self-governing body in Japan, we examine several
community-based organizations, such as “Citizen Autonomy Committee,” “Saemaeul
Movement Associations,” and “Tong” and “Ban” system including “Ban Sang Hoi”, which
are working for the delivery of everyday life public services.
In this research, we will explore comparatively the collaboration between the non-profit
3contractor of public facility and local self-governing body.
As background information, the social and economic conditions of both countries arebriefly described based on the statistics.
Table 1-1. Population and life expectancy
DataseriesTotal population Population
growth rates

Total fertility
rates

Ratio of population
aged 65 and over tothe total population

Ratio of inactive
elderly population
aged 65 and over tothe total labour force

Life expectancy
at birth: men

Thousands

Annual growthin percentage

Number of children
born to women aged
15 to 49

Percentage

Percentage

Number of years Number of years

2009

2006

2009

2005

Unit

2006

Life expectancy
at birth: women

Year

2009

2006

Japan

127,395

-0.14

1.32

22.8

38.3

79.0

85.8

Korea

48,747

0.29

1.13

10.7

19.1

75.7

82.4

Population and other demographic data are shown in the table 1-1. Japan has it
population of 127,395 while Korean population is about 40% of Japan’s. Looking at the
total fertility rates, Japan’s is 1.32, while Korea’s is 1.13 far below the Japanese figure.
Japanese ratio of the elderly is more than two times higher than Korean one. However,by taking account of the very low total fertility rate in Korea, the ratio of the elderly is
expected to increase rapidly in the future. Life expectancy at birth for both men andwomen in Korea is slightly lower than that figure in Japan.
Table 1-2. GDP and GDP per capita
Data

Gross domestic productGDP per capita

Unit

Billion US dollars, current prices and PPPs

US dollars, current prices and PPPs

Year

2007

2007

seriesJapan

4,295.9

33,626

Korea

1,201.8

24,801

Looking at the whole economy based on the data shown in the table 1-2, Japan’s GDP
totaled 4,295.9 billion US dollars, while Korean GDP was 1,201.8billion US dollars.
Japanese economy is 3.6 times bigger than Korean one. On the other hand, Korean GDP
per capita is 74% of the Japanese one. This means that the living standard in Korea
stands comparison with that in Japan.
4

Table 1-3. Economic structures
Data
seriesValue added in Value added in Value added inindustry,
construction
agriculture,hunting, forestry including energy
and fishingUnit

As percentage of total
value added

As percentage of total
value added

As percentage of total
value added

Year

2006

2006

2006

Value added in in Value added intransport, trade, banks,
insurance, real
hotels andestate and otherrestaurants
business
services
As percentage of total As
percentage of total

Value added ingovernment,
health, educationand other
personal
servicesAs
percentage of total

value added

value added

value added

2006

2006

2006

Japan

1.4

23.0

6.1

19.5

26.7

23.3

Korea

3.3

30.6

9.0

16.9

21.2

19.0

Different situations are shown in the economic structure data in the table 1-3. Looking
at the value added by industry, Korea is much oriented to the primary and secondary
industries than Japan. On the other hand, Japanese economy is moving toward thetertiary industry such as transport, banks, real estate, health and education.
Table 1-4. Prices and Employment
Dataseries

CPI: all items

Employment
rates: total

Year 2000 = 100

Share of persons of
As a percentage ofworking age (15 to 64 total civilian
years) in employment employment

Unit

Year

2007

2007

Self-employment Unemployment
rates: total
rates: total
As a percentage ofcivilian labour force

2007

2007

Japan

98.1

70.7

13.4

3.9

Korea

123.5

63.9

31.8

3.2

Some price and employment data are shown in the table 1-4. Japanese consumer pricelevel is declining while CPI is going up in Korea. Look at the employment data, thepercentage of employed persons to the total work forces in Japan is higher than that in
Korea. On the other hand, the percentage of self-employed persons in Korea is higher
than that in Japan. Unemployment rates in both countries are low compared with thoseof other developed countries.

5

Table 1-5. Government deficit, expenditure and revenue
Data
series
Unit
Year

Government net
General government
borrowing/net lending gross financial
liabilities

Public expenditure on Public social
healthexpenditure

Law, order and defense Total tax revenue
expenditure

As a percentage ofGDP

As a percentage ofGDP

As a percentage of
GDP

2007

As a percentage of
GDP

2007

As a percentage of
GDP

2006

2005

As a percentage of
GDP

2006

2006

Japan

-2.4

170.6

6.5

18.6

2.3

27.9

Korea

4.5

28.9

3.5

6.9

4.2

26.8

Looking at the government financial situations shown in the table 1-5, Japan issuffering from the huge deficits accumulated in the last decade and currently, Japanese
government has to borrow money to carry out government programs and projects. On
the other hand, Korea has much healthier financial conditions.
As for the spending structure, the percentages of public expenditure on health andpublic social expenditure to the total GDP are much higher in Japan than in Korea.
This means Japan allocates more tax money to health and social welfare areas than
Korea. On the other hand, the percentage of law, order and defense expenditure to thetotal GDP is higher in Korea than in Japan.
Despite its serious financial condition, Japan’s total tax revenue as a percentage of GDP
is slightly higher than that of Korea.

Data source: OECD. Stat Extracts, http://stats.oecd.org/index.aspx, Retreived on 1 May
2010.

2. Theoretical Framework
2.1. From New Public Management to New Governance Perspectives
Several articles pointed that the term 'governance' is popular but quite imprecise.
Rhodes (1997) suggested that governance has at least six uses, referring to the minimal
state, corporate governance, the new public management, good governance,socio-cybernetic systems, and self-organizing networks. He stipulated that governancerefers to “self-organizing, interorganizational networks” and argue these networks
complement markets and hierarchies as governing structures for authoritatively
allocating resources and exercising control and co-ordination. He defended this6

definition, arguing that it throws new light on changes in government, most notably
hollowing out the state, the new public management, and intergovernmental
management. He also argued that networks were already a pervasive feature of service
delivery in Britain, that such networks were characterized by trust and mutualadjustment and undermined management reforms rooted in competition, and that they
were a challenge to governability because they became autonomous and resist central
guidance.
The new governance points to four weaknesses in NPM as managerialism which extols
the virtues of private management practice (Rhodes, 1997). First, managerialism adopts
an intra-organizational focus. It concentrates on the '3Es' and value for money, on
hierarchical control and the clear distribution of authority and responsibility. Althoughappropriate for managing line bureaucracies, this approach pays no attention to
managing interorganizational links, to negotiating shared purposes where there is nohierarchy of control. Second, managerialism is obsessed with objectives, resurrecting
management-by-objectives for the 1980s and 1990s. Third, NPM focuses on results. In
an interorganizational network, no one actor is responsible for an outcome. There may
be no agreement on either the desired outcome or how to measure it, and the centre has
no means of enforcing its preferences. NPM may suit line bureaucracies but it isinappropriate for managing interorganizational networks and, more important suchnetworks undermine NPM with its intra-organizational focus on objectives and results.
Finally, there is a contradiction between competition and steering at the heart of NPM.
The problem is there is a low level of interdependence between the several stakeholders
and the resulting network is unstable and lacks the trust necessary to develop anegotiated equilibrium. The language of markets and competition of NPM serves only tocompound the problem of steering.
Wright (1983) argues that intergovernmental management has three distinctive
features such as problem solving, intergovernmental games and networking. It is about
coping with several jurisdictions to solve particular problems and building networks ofcommunication to produce such useful results. Agranoff (1990) referred thatintergovernmental management is about separate organizations developing joint
actions and finding 'feasible courses of joint management activity'. Klijn (1995) argues
that networks do not respond to managers as system controllers. The effective manager
plays a facilitative role, that is, does not seek to achieve their own objectives. They canpursue two broad strategies, that is, game management or identifying the conditions
which will sustain joint action, and network structuring which involves changing therules of the game. Alternatively, changes in the distribution of resources within the7network can be used to encourage some kinds of behavior, to introduce new actors to the
network or to undermine other actors. Rhodes (1986) uses the notion of a policy network
to explore the relationship between central and local government and describes both therules of the game and strategies used by central and local government in theintergovernmental network. The strategies for managing the relationship include
incorporation, consultation, bargaining, avoidance, incentives, persuasion, andprofessionalization. The game-like quality of network management is not specific tofederal systems.
Several significant differences exist between governance and NPM (Peters, 1998: 231-3).
First, governance always has been a central element of a democratic polity, whereas
NPM is more ideologically driven. While new forms of governance such as networks,
partnerships, public-private joint ventures, the inclusion of the voluntary sector inservice delivery, ultimately maintain some degree of political control over the public
service since it is seen as an extension of the public interest, NPM seeks to transformthe public bureaucracy to a set of organizations whose only difference from private,
for-profit organizations is the nature of the product that is delivered. Second,
governance is about process, whereas NPM is primarily about outcomes. Understanding
governance is largely a matter of observing and interpreting the process through which
it evolves and what is the relative clout of the actors involved therein. On the contrary,
NPM says very little about the process, which is focused almost exclusively on
developing infra organizational management techniques that ensure customer
satisfaction and efficiency. Third, NPM is an intraorganizational program ofadministrative reform whereas governance is interorganizational in perspective(Rhodes, 1997). The emerging forms of governance should be conceived of as alternativemodels of the pursuit of collective interests (Peters, 1996). Thus, governance isessentially a political theory, whereas NPM is an organizational theory. Fourth,
governance is about maintaining public-sector resources under some degree of politicalcontrol and developing strategies to sustain the government's capacity to act, whereas
NPM is essentially about transforming the public sector. Governance refers tosomething that deliberately transcends the borders of government and where
governmental structures coordinate and give direction to collaborative, public-private
efforts (Kooiman, 1993; Rhodes, 1997). The perspective of the NPM strategy is more
introverted and aims at altering state-society relationships only insofar as public-sector
management models might replace traditional models of organizational management in
the public administration and in the exchange between service providers andpublic-sector customers.
8

2.2. Contracting-out of the Delivery of Public Services
Contracting for services has become the most pervasive form of privatization, and has
already gained a significant degree of legitimacy in the system of governance all over
the world including Korea and Japan. Despite growing popularity, its rationale, purpose,and consequences remain a matter of heated debate. Advocates claims that contracting
can increase efficiency, improve quality, enhance responsiveness, and lead to higher
levels of client satisfaction (Ferris and Graddy, 1991; Stein, 1990). Critics argue that
contracting does not necessarily improve organizational efficiency or service quality,that it hampers governments’ institutional integrity, core competence, accountability,
and that it has been stretched beyond its appropriate boundaries (O'Toole and Meier,2004; Terry, 2006; Goodsell, 2007). Empirical results regarding contracting performanceare mixed (Boyne, 1998; Lavery, 1999). Most scholars only agree that, so far, contractingout has only worked in certain service areas and under certain conditions (Hodge, 2000;
Romzek and Johnston, 2002).
Previous research suggested, as the determinants of contracting performance, fromexternal factors such as competition, service characteristics, institutions, to internal
factors such as government’s public management capacity. From the standpoint thatexternal factors such as competition, service, legal and organizational institutions canbe managed by government capacity eventually, much of the recent contracting studies
focus on the importance of public management capacity (Kelman, 2002; Kettl, 1993;
Milward, 1996; Brown and Potoski, 2003a, 2003c; Hefetz and Warner, 2004; ICMA, 1989,
1992; Lavery, 1999; Marlin, 1984; Prager, 1994; Rehfuss, 1989; Savas, 2000; Seidenstat,
1999; Wisemann, 1981). But empirical results analyzing the effect of publicmanagement capacity on contracting performance are mixed. Lamothe and Lamothe(2008) verified the positive effect of government’s public management capacity on
contracting performance in their model tests. On the contrary, Fernandez (2009) haveempirically examined that the relationship between public management capacity andcontracting performance appears to be more complex than previously theoretical
hypothesis, involving interactions with moderating variables such as vendors type, andcontract duration. This research, regarding public management capacity as monitoring
contractor behavior and performance, points that monitoring may not improve
contracting performance, and in some instances, the costs of monitoring may offset oreven outweigh any benefits derived from it. Some experts have also noted thatmonitoring expenses can be considerable and that these expenses should be factored
into the total cost of purchasing services before determining the efficiency of this9alternative (Rehfuss, 1989; Seidenstat, 1999). Moreover, the effectiveness of monitoring
may depend on certain characteristics of the contractor or the service being outsourced.
Much literature pointed out several conditions or factors as the accounting factors ofcontracting performance. First, contracting performance can be affected by competition(Borcherding, 1977; Savas, 1983; Schlesinger, Dorward and Pulice, 1986; Prager andSwati, 1996; Pack, 1989; DeHoog, 1990). Researches based on the public choiceperspectives argue that competition can minimize inefficiency of monopoly, and lead to
improved contracting performance. Past literature define competition as a market
containing a range of provider alternatives from which government can decide who isbest positioned to deliver the contract services with the highest quality, lowest cost, andgreatest expertise (Van Slyke, 2003). However, the relationship between competitionand contracting outcomes is complex and is likely to involve trade-offs between various
dimensions of performance. Although competition should result in lower costs whencontracting for services, it might also have negative effects on quality of service andservice continuity (Kamerman and Kahn, 1989). Second, contracting performance canbe affected by service characteristics. Williamson (1981) suggested that two broad typesof service characteristics that impel transaction costs are asset specificity and service
measurability. Asset-specific, and difficult-to-measure services make governments
vulnerable to unscrupulous vendors who, as principal–agent theory suggests, may
exploit their information advantage by lowering service quality and quantity (Brown,
Potoski and Van Slyke, 2006). Third, contracting performance can be affected by legal
and organizational institutions. These define the “rules of the game” (North, 1991).
Yang et al. (2009), from an institutional perspective, explains that the importance oflegal and organizational institutions is resulted from governance inseparability, aconcept similar to path dependence (Argyres and Liebskind, 1999).
Much of the recent studies focus on the importance of public management capacity
because external factors such as competition, service, and institution can be managed
eventually by government capacity (Kelman, 2002; Kettl, 1993; Milward, 1996; Brown
and Potoski, 2003a, 2003c; Hefetz and Warner, 2004; Lavery, 1999; Marlin, 1984; Prager,
1994). Brown, Potoski and Van Slyke (2006) mention that building contract
management capacity includes acquiring and nurturing physical infrastructure,
financial resources, and more important, human capital. However, scholarly attention
to the importance of contract management capacity is only a relatively recent
phenomenon and, thus, there is no consensus on exactly what managerial components
are critical for successful contracting. Nonetheless, substantial efforts have been madein terms of trying to identify the core components of management capacity.
10

Brown and Potoski (2003a; 2003c) recognize three specific aspects that are related to agovernment’s ability to effectively manage vendors. They are (a) feasibility assessment
capacity to properly determine whether to make or buy, (b) implementation capacity toeffectively execute and manage contracts, and (c) evaluation capacity to accurately andthoroughly evaluate contract performance to ensure accountability. Lamothe andLamothe (2008), based on Ingraham, Joyce, and Donahue’s (2003) study, consider threemanagerial components. They are (a) leadership setting priorities and coordinating
activities, (b) the degree of integration and coordination among contracting units, and(c) the experience and expertise of the contracting staff. Yang et al. (2009), expanding
Brown and Potoski (2003a)’s research, suggest four aspects that are related to agovernment’s ability to effectively manage vendors. They are (a) agenda setting capacity
to appropriately determine whether to make or buy, (b) formulation capacity toeffectively set a fair bidding process, identify the best-fit contractor, and reach an
excellent contract, (c) implementation capacity concerned with the actual production of
goods or the delivery of services, and (d) evaluation capacity to evaluate contract
performance to ensure accountability.
Although much literature emphasizes the importance of public management capacity
for improving contracting performance, empirical results examining the effect of publicmanagement capacity on contracting performance are mixed. Lamothe and Lamothe(2009) have verified the positive effect of government’s public management capacity on
contracting performance in their model tests. On the contrary to this, Fernandez (2009)
have empirically examined that the relationship between public management capacity
and contracting performance appears to be more complex than previously theoretical
hypothesis, involving interactions with moderating variables such as vendor type, andcontract duration.
2.3. Citizen participation and responsiveness of public service delivery
Volunteerism can mean different things to different studies. The U.S. Bureau of Labor
Statistics considers volunteers to be “persons who performed unpaid volunteer
activities…through or for an organization…” (U.S. Bureau of Labor Statistics, 2008).
The United Nations General Assembly Resolution adopted on 5 December 2001 defines
volunteering as: "a wide range of activities, including traditional forms of mutual aid
and self-help, formal service delivery and other forms of civic participation, undertakenof free will, for the general public good and where monetary reward is not the principal
motivating factor" (UN General Assembly, 2001). The United Nations’ Handbook on
Nonprofit Institutions in the System of National Accounts defines volunteering as “work11without monetary pay or legal obligation provided for persons living outside thevolunteer’s own household.” Penner (2002) defined volunteerism as long-term, planned,
prosocial behaviors that benefit strangers and occur within an organizational setting.
Based on this definition, he suggests that volunteerism has four salient attributes:
longevity, planfulness, nonobligatory helping, and an organizational context. First,
volunteering is usually a relatively long-term behavior. A recent national survey ofvolunteerism in the United States (Independent Sector, 1999) found that almost 50
percent of the people who volunteer do a regular rather than a one-time basis. Anotherrecent survey of volunteers found that more than 90 percent of them wanted to engage
in long-term volunteer activities (Volunteer Match, personal communication, September
15, 2001). And longitudinal studies of volunteers have found that once people begin towork regularly as a volunteer, a large percentage of them continue this activity forseveral years (Omoto and Snyder, 1995; Penner and Finkelstein, 1998; Penner andFritzsche, 1993). Second, volunteering is typically a thoughtful and planned action. But
data from national surveys of volunteers would seem to contradict this statement. In its
national survey the Independent Sector (1999) found that about 90 percent of the people
asked to volunteer agree to do so. However, it seems unlikely that requests to become avolunteer are directed at a random group of people or that people impulsively agree tobecome a volunteer at the moment they are asked to volunteer. Further, the work of
Davis et al. (1999) suggests that before people actually agree to volunteer, there is somethoughtful consideration of both the costs and benefits of engaging in this action. Third,
because the recipients of a volunteer’s beneficence are either strangers or an
organization that serves these individuals, the volunteer is not motivated by a sense of
personal obligation to a particular person (Omoto and Snyder, 1995). They characterize
this kind of prosocial behavior as “nonobligated helping.” Finally, volunteerism is far
more likely than other kinds of helping to take place within an organizational setting.
There are certainly individuals who, on their own, engage in sustained, nonobligatedhelping of virtual strangers (Colby and Damon, 1992). However, most volunteers workas part of an organization (Independent Sector, 1999). Thus, organizational variables
are far more important in volunteerism than in one-to-one, interpersonal kinds ofhelping.
Various literatures have focused on the motives for volunteering from social science
psychology to organizational behavior (Clay and Snyder, 1999; Unger, 1991) Fisher andAckerman’s (1998) findings suggested reasons such as empathy-based altruism to the
avoidance of stress and sadness. Finkelstein, Penner, and Brannick (2005) focused onthese motives and suggested that volunteering satisfies individual inner needs by
12

expressing

values,acquiringnewexperiences,

using

newly

acquiredskills,strengthening society or gaining career advancement. Scholars have also argued about
the best methods to value volunteer time, how and when such is useful (Anderson and
Zimmerer, 2003; Brown, 1999; Freeman, 1997; Handy and Srinivasan, 2004; Herzog
and Morgan 1992; Jackson, 1996; Kushner, 2004, Neysmith and Reitsma-Street, 2000).
Weschler and Mushkatel (1987) define volunteerism as citizen participation in public
service delivery. They suggest three types of volunteer participation; coproduction,
co-provision, co-financing. Kim, and Lee (1999), focused on citizen participation,
examine the determinants of volunteering program performance. The results indicatethat management system of volunteering program such as recruitment andarrangement activeness, and vendors characteristics such as nonprofit vendors,
supplement by vendors are positively related to volunteering program performance.
2.4. Social capital theory
The concept of social capital has gained increasing popularity among many circles ofsocial scientists since being introduced by Pierre Bourdieu and James Coleman in the
1980s. Robert Putnam’s work on Italy (Putnam,1993) and his provocative claim thatsocial capital is somehow in decline in the United States (Putnam,1995) stimulated aflurry of research and writing.
Coleman defines social capital as “a variety of entities having two characteristics incommon: They all consist of some aspect of a social structure, and they facilitate certain
actions of individuals who are within the structure……Unlike other forms of capital,social capital inheres in the structure of relations between persons and among persons.
It is lodged neither in individuals nor in physical implements of production” (Coleman,1990).
Robert Putnam expanded this notion by linking ideas of social capital to the importanceof civic associations and voluntary organizations for political participation and effective
governance (Putnam, 1993, 1995, 2000). For Putnam, social capital is defined as“connections among individuals - social networks and the norms of reciprocity andtrustworthiness that arise from them” (Putnam, 2000).
Norris (Norris, 2002) sees that three core claims lie at the heart of Putnam’s theory onsocial capital. The first is that horizontal networks embodied in civic society, and thenorms and values related to these ties, have important consequences. Second, Putnam
argues that social capital has significant political consequences. Lastly, Putnam
presents the evidence that civic society in general, and social capital in particular, havesuffered substantial erosion in the postwar years in America.
13

Foley and Edwards (Foley and Edwards, 1999) reviewed recent empirical researches
exploiting social capital concept and observed that the majority of these analyses, social
capital is treated as an independent variable affecting such outcomes as civic
engagement, national-level economic growth, volunteering, mortality rates, fertility,
local economic development, neighborhood stability, government-community relations
and organizational effectiveness.
Putnam (Putnam 2000) emphasizes the positive impact of individual social capital on
the performance of political institutions, the development of effective and democratic
governance, and important policy outcomes in areas such as education, health, crime,
welfare, and economic growth.
According to Putnam (Putnam, 2002), the idea at the center of the theory of social
capital is; social networks matter. Growing branch of literature on social capital refers
to its external or public effects.
As for the Japanese society, Pekkanen (Pekkanen, 2003) observes that Japan has manyof the small, neighborhood watch-type groups and the Japanese state has structured
incentives to nurture social capital-type civil society groups and to discourage
pluralistic, lobbying-type civil society groups. Here, the state has strong influence tocivil society organizations. Such small neighborhood-based groups have maintained
mutual collaborative relationship with the governments and some literature claims theboundary between the civil society organization and the government is not clear
because the civil society organization plays assisting roles in public administration (Ito,
1980, Takechi, 1996) and also observes that the relationship between the civil society
organization and the government is one-sided with the government intention overriding(Takechi, 1996).
From the viewpoint of civil society organization, there is much criticism about thestrong influence from the government and the roles of neighborhood-based social capitaltype groups as subcontractors or field agents of the government (Matsushita, 1961,
Akimoto, 1971, 1990, Matsuno, 2004). Inoguchi (Inoguchi, 2002) emphasizes
incorporated civil society organization in Japan while Tsujinaka et.al (Tsujinaka et.al,2009) describes the roles played by neighborhood-based associations in managing safe
and convenient community life through the analyses of nation-wide survey data. In
concluding, Tsujinaka et.al (Tsujinaka et.al, 2009) identifies future challenges
concerning the study on neighborhood-based associations and suggests that theactivities by neighborhood-based associations (social capital-type groups) may affect theoutcomes of the policy measures of municipality governments as well as theperformance of municipality governments.
14

3.Methodology and Research Design
Main methodology of the research is the survey of actual conditions and activities
according to the following order.
①

To conduct pilot surveys for making a hypothesis,②

To carry out full scale surveys to collect data for verifying the hypothesis,③

To analyze the survey data to verify the hypothesis, and④

Finally to draw the implications from the relationship between municipality
governments,

non-profit

contractors

and

local

self-governing

contracting-out.

3.1. Pilot surveys
First step is to carry out pilot surveys in specified cities as follows.
Table 3-1. Municipalities in the pilot surveys

Name of the city

Population

Japanese side708,194

As of 1 June 2010

Kawasaki-city

1,417,944

As of 1 May 2010

Hamamatsu-city

804,032

2005 Population census

Ena-city

55,761

2005 Population census

Matsumoto-city

227,627

2005 Population census

Tamana-city

45,341

2005 Population census

Miyazaki-city

398,971

As of 1 June 2010

Kobe-city

1,525,393

2005 Population census

Hadano-city

170,242

As of 1 June 2010

412,065

As of 31 December 2008

Suwan city in Gyeonggi-do

1,098,706

As of 1 June 2010

Daejeon city

1,487,985

As of 1 May 2010

368,371

2007 Population census

Gyengsangbuk-do

274,295

As of 31 December 2008

Gumi city in Gyengsangbuk-do

396,419

As of 31 December 2009

Nerima-ku in Tokyo

Korean side
Seocho-gu in Seoul city

Saha-gu in Busan city
Gyeongju city in15

bodiesinThere were eight cities (two in Japan and six in Korea) where the pilot surveys were
jointly conducted by the Japanese and Korean teams. Among these cities in Japan,
there were five cities that have introduced the local self-governing district system. The
system is a relatively new one for realizing more enhanced community-based public
administration. In the district covering about 10,000 residents, the local consultation
board is to be established for paying serious consideration of views and opinions of local
residents concerning community’s public administration. In Korea, six municipalities
have chosen to study the social welfare service delivery system and local residents'
self-governing bodies.
In the pilot surveys, we conducted interviews with municipality officials, non-profit
contractors and local residents and also held meetings with them. We could collectvarious practices and experiences of municipality officials, non-profit contractors andlocal residents in contracting-out of public facilities.
Out of pilot survey data, we could identify the prominent example of collaboration
between the contractor and local self-governing body and also find that the public
facility for the handicapped conducted advanced practices in collaboration with the local
self-governing body, especially in Japan. In the process of pilot survey, however, we also
ascertain that various self-governing organizations in Korea are not the same comparedto the self-governing body in Japan. Therefore, we try to identify which self-governingorganizations in Korea can be analogous to “Ji-Chi-Kai” or “Cho-Nai-Kai” in Japan.

3.2. Making a Hypothesis and drawing up full scale survey plans
Based on the data and information collected in the pilot surveys, a hypothesis was madeconcerning the non-profit contractor and local resident. Full scale survey plansincluding sampling, field survey method and questionnaires were drawn based on thepilot survey data for verifying the hypothesis. Three kinds of questionnaires were setup; municipality government questionnaire, non-profit contractor questionnaire andlocal self-governing body questionnaire.

3.3. Conduct of full scale surveys and tabulation of the survey questionnaires
Two survey methods were taken on the Japanese side; internet survey and interview
survey. On the other hand, mail survey and interview method was taken on the Korean
side.
16

Only interview surveys were conducted for non-profit contractors and local
self-governing bodies in Japan, so the sample size became rather smaller compared with
the Korean one.
Table 3-2.Sample size of full scale survey

Japan

Korea

Municipality government questionnaire

115

80

Non-profit contractor questionnaire

21

57

Local self-governing body questionnaire

21

66

Total

157

203

Research meetings were held in Japan and Korea to analyze and examine the survey
data and to verify the hypothesis. Final report was prepared by the Japanese andKorean teams.

4. Hypothesis to be verified in the research
4.1. Cases in Japan
In the first year of the research project (fiscal 2008), some pilot surveys were carried out
in Japan, namely Ena city, Matsumoto city, Miyazaki city, Tamana city, Kobe city and
Hadano city. We could find some cases of cooperative relationship between private
non-profit contractors and local self-governing bodies (Ji-Chi-Kai or Cho-Nai-Kai ).
4.1.1. Case of Machi Dukuri Yamaoka in Ena city
Ena city, Gifu prefecture is located at the central Japan near Nagoya, with population
55,321, household 19,176 as of May 1, 2010.
The Yamaoka area is the southern part of Ena city. The population scarcely inhabits
there. The main economic activities are agriculture, clay mining and agar
manufacturing. Currently these economic activities are declining so that there are acuteneeds to develop the area by the residents themselves. The local self-governing body isvery active in making the area livelier. It established a specified nonprofit corporation,
Machi Dukuri Yamaoka, in 2003 as an apparatus for the area development. All
residents in the Yamaoka area are the members of the corporation.
17

Ena city government has been promoting the contracting-out but no private business iseager to take any contracts in the scarcely inhabited area. Under such circumstances,
Machi Dukuri Yamaoka took the contract to manage three public facilities, namely the
day service center for the elderly, the health promotion center and the Iwakura park.
Machi Dukuri Yamaoka also carries out several area development programs funded by
the Ena city governments.
4.1.2. Case of Kita-Suma Child Care Center in Suma-ku
Suma-ku, Kobe city, Hyogo prefecture is comprised of the southern urban district andthe northern district of which center is the Suma Newtown with a history of more than
40 years from the start of the construction work with population 167,802, household
71,658 as of May 1, 2010.
Kita-Suma (Northern Suma) Child Care Center, a school and social welfare corporation,runs 5 social welfare facilities (kindergarten, day nursery, nursing home, day carecenter for the handicapped, home care support center) and manages 3 contracted-out
public facilities (after-school nursery for children, children’s play hall, community
inclusive support center).
The Kita-Suma Housing Complex was developed by a cooperative and a worker’s bankin 1967. A local self-governing body was organized in 1968. After intensive discussion
between the cooperative, the worker’s bank and the local self-governing body, akindergarten and a day nursery were established to provide pre-school education andcare for children living in the Kita-Suma Housing Complex in 1969. The Kita-Suma
Child Care Center, originally established by a cooperative, became a school corporation
to run the kindergarten in 1978 and was also approved as a social welfare corporation to
run the day nursery in 1979. The center’s board of directors is comprised of theexecutives of the local self-governing body, the representatives of the parents andemployees and the representatives from the worker’s bank and the cooperative. And thecenter runs its operations based on the actual needs from the residents. In the 1990s,
the elder resident occupied substantial ratio and how to care the elderly became serious
issue. Accordingly, the Kita-Suma Child Care Center started a nursing home, a day carecenter for the handicapped and a home care support center. It runs these facilities bytaking fully account of the needs of the residents and with cooperation of the residents.
Kobe city government recognized the experiences of the center in managing the social
welfare facilities and contracted out to manage its public facilities, namely theafter-school nursery for children, the children’s play hall and the community inclusive
support center to the center. In these contracted-out public facilities, convenient and18high quality services are provided in cooperation with the local self-governing body. In
the Kita-Suma Housing Complex, most of the household heads used to be the employeesof major businesses in the Hanshin area and their age and life style and working
environment were very similar so that they are still in close association with one
another. The local self-governing body is very active to deal with various problems in the
Kita-Suma Housing Complex.
4.1.3. Case of Kanagawa Kyodo Kai in Hadano city
Hadano city, Kanagawa prefecture is located at the central Kanagawa prefecture, near
the Tokyo metropolitan area with population 170,220, household 70,083 as of May 1,
2010.
The Hadano Seikaen was established by Kanagawa prefecture government in 1961. It
was closed in 1985 but re-opened in 1990 as a workplace and day service center for thementally handicapped at the same time the management of the facility was contracted
out to the social welfare corporation, Kanagawa Kyodo Kai. The facility is to admit
mentally handicapped persons for job training as well as training in daily life skills.
After the completion of the training, the trainees are to move to the living quarters
located near the facility and to live a rather independent life with support from the
Kanagawa Kyodo Kai. The objective of the facility is to make mentally handicapped
persons live without difficulties among the ordinary people in the local community. So
the cooperation between the facility and the local self-governing body is indispensable toachieve the objective. There are many occasions of cooperation and interchange between
the facility and the local self-governing body. The head of the facility emphasized theimportance of the interchange and cooperation in achieving the objective of the facility.
The local self-governing body is willing to cooperate with the facility such as dispatching
volunteers and co-organizing seasonal festivals at the facility.
4.2. Cases in Korea
In the first and second year of the research project (fiscal 2008, 2009), some pilot
surveys were also carried out in Korea, such as Seocho-gu and Bangbae 1 dong in Seoul
city, Suwan city in Gyeonggi-do, Daejeon city, Saha-gu in Busan city, Hwango-dong in
Gyeongju city. Unlike the cases in Japan, we have difficulties in finding whichorganizations in Korea are analogous to Ji-Chi-Kai or Cho-Nai-Kai. Despite there aremany discrepancies in the local self-governing historical context, current status
between Korea and Japan, we could find relatively similar but quite different cases ofcooperative relationship between private non-profit contractors and local self-governing
19

organizations such as clients’ or users’ voluntary organizations of the facilities, citizen
autonomy committee, Tong and Ban organizations, and Saemaeul Movement
organizations.
4.2.1. Case of the Yangjae Social Welfare Center in Seocho-gu
Seocho-gu is located in the southern urban district of Seoul Metropolitan City, withpopulation 406,875, and household 152,245 as of December 31, 2009. Seocho-gu iscomposed of 18 dong, 501 tong, 3,498 ban as the citizen organizations, and also 5
bureaus, 1 inspection service, 27 divisions, 18 dong, 1 office, 1 assembly asadministrative organizations.
The Gwanglim church which is a social welfare corporation runs 2 social welfare
facilities within Seocho-gu. It runs Seocho Child Care Center, and Yangjae Social
Welfare Center which are contracted-out facilities. In the Yangjae Social Welfare Center,small voluntary organizations, such as voluntary group for elderly or disabled,
composed of the facility users were participating in the process of service delivery. The
members of the organizations focus on the importance of the interchange andcooperation in achieving the objective of the facility. They are willing to cooperate withthe facility such as volunteer activities and co-organizing seasonal festivals, program or
campaign at the facility.
4.2.2. Case of the Tong, Ban System, and Ban Sang Hoi in Hwango-dong
Hwango-dong is located in the central district of Gyeongju City, with population 5246 asof December 31, 2008. Hwango-dong in Gyeongju City are classified into the rural areas
relatively in Korea. We posit that Bansanghoi and Tong, Ban system are more actively
run in Korea,so we choose Hwango-dong in Gyeongju City as a relatively rural area in
Korea. There is the Tong and Ban system, one Ban consists of 20 to 60 households andone Tong consists of 5 to 10 Bans. This system was a state-lead self-governing system
mainly for anti-North Korea purpose. Once a month, Ban Sang Hoi was to be held withrepresentatives from all member households participating. Nowadays, Ban Sang Hoi
remains just perfunctorily in Korea generally, but in rural areas like Hwango-dong itruns relatively actively and have the local residents participate in public service
delivery system.
4.2.3. Case of Saemaul Movement organizations in Gumi city
Gumi city is located in the western part of Korea's North Gyeongsang Province(Do),which has a population of 390,000 and has the biggest inland industrial complex in20

Korea, covering 3.2% of North Gyeongsang Province (slightly larger than Seoul). The
city includes 6 myeon (townships), including Seonsan-eup and Goa-eup, and 19 dong(administrative districts).
Saemaul Undong is considered one of the most successful community development
movements of Korea in the 1970s (Lee, 2009). Saemaul Undong (New Community
Movement), a movement founded in 1970 under former President Park, JeongHee,
began to lose its popularity as it came under the control of the civilian-lead Korea
Saemaul Undong Center. With the incidence of several corruption scandals in the 1990s
Saemaul Undong had virtually become a forgotten experience of the past. However,with the dawn of the new century in 2000 Saemaul Undong has been revitalized in the
Gyeongbuk province, such as Gumi city, Cheongdo gun, and Pohang city, and also in
foreign countries such as Mongolia, Vietnam, and Congo. Saemaul Undong, which
played an important role in making both economic growth and modernization of rural
areas was inaugurated in 1970 by former president Park, JeongHee. Central
government led the movement during early stage of Saemaul Undong. Due to Saemaul
Undong, rural household income sharply increased. Rural household income was only
67% of urban household income in 1970, but this ratio increased up to 104%. After
1980s Central Saemaul Undong Organization took a leading role in promoting saemaul
undong with legal and organizational support. Government support slowly diminishedin the 1980s while Saemaul leaders have been active since the 1980s. Currently,
Saemaul Undong operates with the Korea Saemaul Undong Center as its headquarters
and 17 si-do associations, 234 si-gun-gu chapters, 75,155 Saemaul leaders, and 78,014
Saemaul women's association members.
4.3. Hypothesis of this research
We could observe from the above mentioned examples that non-profit organizations as
contractors of social service facilities can deliver such services as responsive to theusers’ needs with collaboration with local self-governing bodies in Japan. To comparewith local self-governing body in Japan, we focus on several community-basedorganizations, such as “Citizen Autonomy Committee,” “Saemaeul Movement
Associations,” and “Tong” and “Ban” system including “Ban Sang Hoi”, which are
working for the delivery of everyday life public services as well as the facility users’
voluntary organizations in Korea.
Based on these observations, the following hypotheses have been set up.

21

Where the people’s self-governing bodies or self-governing organizations are active andstrong, social service delivery by the non-profit contractors becomes more responsive
and flexible to the citizens’ needs.
Hypothesis 1:
A local resident inclusion as members in the non-profit contractor can contribute tomore responsive service delivery by the contractor.
Hypothesis 2:
The local resident participation in the governance mechanism of the contractor such as
an advisory committee can contribute to more responsive service delivery by thecontractor.
Hypothesis 3:
Open meetings between the local residents and the contractor, which are held by thecontractor, can contribute to more responsive service delivery by the contractor.
Hypothesis 4:
The local residents’ involvement as volunteers in the activities conducted in thecontracted facility can contribute to more responsive service delivery by the contractor.

In this research project, we conducted field surveys for municipal governments,
non-profit contractors and local self-governing bodies in the case of Japan and facility
users’ associations in the case of Korea to collect necessary data for verifying thesehypotheses.
Selection process of samples is as followed.
x

Designation of municipality governments by taking account of the feasibility of field
operation.

x

Selection of a contracted-out public facility per municipality (It is preferable toselect social welfare facilities such as a facility for the elderly or for thehandicapped.)x

A local self-governing body residing in the same area as the contracted-out facility
or a facility users’ association became the sample.

In the field surveys, an expected case is as follows.
22

A non-profit organization enters into a contract with the municipality government for
management of a social welfare facility. The contractor carries out its original activities
based on the mission stipulated in its statute in conjunction with managing the facility.
A local self-governing body or a local self-governing organization is active in thecommunity. The contractor often holds meetings with the local self-governing body. The
people staying in the facility are usually regarded as the members of the local
self-governing body. The local self-governing body or a local self-governing organization
dispatches volunteers to provide helping hands to the activities conducted in the facility.
Having the interchange with the local residents, the contractor can deliver more
responsive services to the customers’ needs together with the customer satisfaction
surveys and the periodical meetings with the municipality government officials.

5. Private non-profit organization: Brief outline of the system and activities in society
5.1. Japan
Nonprofit sector in Japan has moved toward new stage since the late 1990s. It ischaracterized by the radical increase of new type of nonprofit organizations. The
emergence of the new nonprofit movement has been influenced particularly by thegrowing public interests in voluntary activities after the Hanshin-Awaji Earthquake of1995 and the enactment of “the Law to Promote Specified Nonprofit Activities”(the NPO
Law) of 1998. The NPO law created a new category of incorporated organizations fornonprofit and voluntary activities and enabled civic groups to acquire a legal
personality known as “the Specified Nonprofit Corporation”(NPO hōjin) (Pekkanen,
2003). NPO hōjin is much easier to incorporate than traditional nonprofit corporations
because there is less government regulations. According to the statistics of the Cabinet
Office, over 40,000 nonprofits with the legal status of NPO hōjin are in operation in thewhole country in the end of June 2010. This figure shows the rapid growth of new typeof nonprofits in the last 8 years since the enactment of NPO Law.
Needless to say, Japan has a long history of nonprofit and community organizations.
During the early Meiji Era, traditional nonprofit corporations known as “public interest
corporations” were institutionalized with the enactment of the Civil Law of 1897. Public
interest corporations known as “koueki hōjin” are furthermore, categorized into two
types, “shadan hōjin” (incorporated association) and “zaidan hōjin”(incorporated

23

foundation) . In most recent years, public interest corporations have faced radical
changes occurred by public administration reforms with the aim of clearly
distinguishing between two different corporations, that is, those working for publicbenefit or not. Up to the end of year of 2008, existing public interest corporations werelegallyrequiredtochoosetwodifferent

legal

forms,

publicinterest

association/foundation with tax advantage or general association/ foundation with no orless tax advantage.
Subsequently other types of nonprofit corporations such as “shakai fukushi hōjin”(social welfare corporation), “gakkō hōjin”(the private school corporation), “shūkyō
hōjin” (religious corporation) and others are institutionalized prescribed by different
laws. The total number of these traditional nonprofit organizations is currently
estimated to be over 200,000. After incorporation they are required, however, to follow
strong regulations be supervised by relevant authorities who also have discretionary
powers. Thus, civic and grass roots groups are reluctant to be incorporated in these
traditional legal forms. Such reluctance and the demand for more civic oriented
nonprofit form led to the enactment of the NPO Law.
Table 5-1

Main types of non-profit organizations in Japan

Type of organization
Public interest institution
General incorporated
association/foundation
Public interest incorporated
association/foundation

Legal base

Tax treatment
activities are taxed. Reduced tax rate isapplied. p ,ypgCivil CodeAct on General Incorporated
Association and Foundations

activities are taxed. Ordinary tax rate isapplied.
Tax-exempt, only profit making
Act on Authorization of Public Interest
Incorporated Associations and Public Interest activities are taxed. Reduced tax rate isIncorporated Foundation
applied. pypgactivities are taxed. Reduced tax rate isapplied.
Tax-exempt, only profit making
Social welfare corporation
Social Welfare Act
activities are taxed. Reduced tax rate isTax-exempt, only profit making
activities are taxed. Reduced tax rate is
Religious corporation
Religious Corporation Act
activities are taxed. Ordinary tax rate isSpecified nonprofit corporation (NPOSpecified Nonprofit Corporation Act applied.
activities are taxed. Reduced tax rate isapplied.
Authorized local self-governing body Local Autonomy Act

Private school corporation

Act on Private Schools

No. oforganization

23,856 As of 1 Dec. 2009
As of 16 Sept.

85 2010
As of 16 Sept.

425 2010
7,806 As of 1 Apr. 2003
As of 31 Mar.

18,910 2009
As of 31 Dec.

182,709 2007
As of 31 July

36,601 2010
As of 1 Nov.

22,050 2002

Data source: Government website retrieved on 16 September 2010.
5.2. Korea

Although there are numerous types of NGOs that are currently operating in Korea,
scholars are in disagreement as to how they should classify these organizations. Not
only do the terms denoting 'nonprofit' vary from those that are broad in meaning, like'mingan beyoungri danche (private NPOs),' to those that are more narrowly defined, like24

'simin woondong danche (civic movement organization)' or 'Kwanbein danche(QUANGOs),' but are often used interchangeably without reference to their stipulated
definition. At this juncture, attempt is to be made to characterize the various types of
non-governmental organizations, with the focus on their main areas of activity and thelegal foundations under which they operate as the linchpin (Kim, Junki, 1999; 2000).
First, the term 'NPO' or 'beyoungri danche' in Korean is an inclusive term referring tosemi-public and private organizations whose main activities are in the non-profit areas.
Korean NPOs include all entities that are not profit-motivated and are subject to what
Hansmann (1985) calls 'non-distributional constraint.' NPOs include all incorporated
and non-incorporated entities as well as semi-public and privately funded organizations.
According to Kim and Hwang (2000), this means that 'most cultural and artorganizations, foundations, nursing homes, research institutions, religious organizations,professional associations and interest groups' fall under the NPO category. Here,educational institutions and advocacy groups are to be added into the category. Because
the term only emphasizes an organization's operational goal with respect to the motives
independent of profit maximization, publicly financed but privately-run organizations
are included in the term.
Since

the

term

nonprofit

encompasses

varioustypes

oforganizations,

government-nonprofit relationship varies from adversarial (advocacy CSOs) one tocooperative (social service NPOs) one depending on nonprofit's functional area and theextent of state funding made available to nonprofits. For instance, educational
institutions, cultural and arts organizations, and most social welfare agencies tend tomaintain a cooperative relationship with the state since they tend to rely on state funding,while religious and professional organizations as well as most advocacy organizations
keep an arm's length distance from the state.
Second, the term 'private NPOs' should be seen as the subset of NPOs and to be referingto the organizations that are privately-operated and funded. Although the term 'NPO' in
most nations refers to privately run organizations, official statistical data in Korea often
fail to distinguish between them and semipublic organizations. Private NPOs is a termthat is also distinguished from those that are publicly financed and ran (QUANGOS).
Further, those joint venture projects between the state and NPOs are excluded from thiscategory. As they operate in diverse fields, their relationship with the state is also
diverse. According to Kim and Hwang (2000), the term 'beyoungri mingan danche'
carries a legal definition. The term is translated as nonprofit civil organizations (NCOs)
25

which is defined by the 'Law on Promotion of Nonprofit Civil Organizations' enacted in
2000. NCOs are defined as privately-run organizations with the following
characteristics: (1) working in public interest issues, especially that of creating a more'democratic society'; (2) not distributing the residual earnings; (3) being neither political
nor religious; (4) having the membership of at least 100 individuals with at least a year's
work in 'public interest seeking' activities; and (5) being registered with relevant
ministries or local governments. This implies that NCOs do not include scholarly or
professional associations, mutuals, social clubs, nor trade unions. Because the term isdefined for the purpose of implementing the Law, they do not have to be incorporated ordefined as an NPO by the tax authorities. The Law also sets out the extent ofgovernment support in terms of subsidies, special postage rate and other public support.
It also stipulates certain conditions under which those organizations should receive
funding from the state.
Third, incorporated NPOs (INPOs) refer to registered organizations that are set up
underArticle 32 of the Civil Law, the Private School Act Article 10, the Medical Act,
the Social Welfare Activity Act, or any other relevant establishment acts that seek tosupport NPOs in their pursuit of various social and economic objectives. Those NPOs
(Beyoungri Burpin in Korean) that wish to enjoy tax-free privileges must register with
their supervising ministries, supplying them with information regarding their operation,
instituted accounting, and internal management structure in accordance with therequirements. Article 32 of the Civil Law proscribes the legal basis for the formation ofNPOs by stipulating that "associations or corporations in the field of science, religion,
charity, arts, social interaction or otherwise not engaged in profit activities may beestablished subject to permission from a relevant supervising ministry (Article 32, Civil
Law)."
Those incorporated NPOs that wish to enjoy tax privileges conferred to NPOs must be
established under the relevant acts and must be recognized by the National Tax Office.
The term INPO is used in the context of complying with relevant tax laws, including
institutions like private schools, universities, and large hospitals. Also included in thiscategory are cultural and recreational organizations, research and survey institutions,religious organizations, professional and scholarly associations, and social service
providers formed as foundations or associations. In addition, those unregistered NPOs
which come under the National Basic Tax Act (Article 13) may also be recognized as an
INPO. Table 5-2 shows that the number of INPOs have increased steadily during the26

1990s at the rate of 3 to 4 percent per annum. Since INPOs consist of diverse groups
and organizations, it is difficult to isolate the precise cause of the growth. However, itappears that the growth of NPOs was 'induced' by the state through registration andadministration process. That the state has various policy 'tools' that can influence
theoperation of these organizations and that they are created for specific purposes under
the watchful eye of the state leave INPOs with no choice but to maintain a cooperative
relationship with the state.
Table 5-2. Incorporated NPOs (1996-2003)
Year
1996
1997
1998
1999
2000
2001
2002
2003
Number 11,959 12,575 12,817 13,295 13,532 12,791 12,274 13,132
Source: National Tax Office (1999, 2003).
Fourth, the term public interest corporation (PICs) is either defined by the 'Act On
Establishment and Operation of Gongik Burpin' or by the Article 12 of the Act on
Inheritance and Transfer Tax. The former only includes legally established foundations
and associations in scholarly, philanthropic and academic funding (scholarship andacademic projects) activity areas and they are subject to close governmental monitoring.
The latter is a broader term used in the context of an organization's tax status and is the
sub-set of the NPOs. It includes 'public interest seeking organizations that were createdby obtaining permission from relevant ministries.' The Law also lists the types of pubic
interest corporations according to the following criteria: (1) religious organizations andprivate schools created by either Education Act or Private School Act; (2) social welfare
service organizations created by the Social Welfare Service Act; (3) hospitals created by
the Medical Act or Mental Welfare Act; (4) organizations created by the Act On
Establishment and Operation of Gonik Burpin; (5) cultural and arts organizations; (6)organizations involved in public health and environmental protection; (7) community
centers or any similar public use facilities; and (8) any other organizations which aredesignated as gongik burpin by the Prime Minister. These corporations receive special
tax status with respect to inheritance and transfer taxes, corporation taxes, estate taxes,
and certain excise taxes. Because they receive special tax treatments, they are requiredby the tax authorities to submit various reports concerning their activities includingbalance sheets and annual business plans. More than INPOs, PICs tend to maintainclose relationship with the state. This is because their role is largely complementary to
government activities and because of the funding support by the state.
27

Table 5-3 illustrates the growing trend of PICs in Korea. It indicates that PICs grew at a
rate ranging between 1 to 5 percent per annum with the exception of 1998 when thenumber declined for the first time. It is interesting to note that organizations whose
activities include scholarly, philanthropic, social welfare, and health issues grew at afaster rate than schools and religious organizations. The increased number of scholarly
and philanthropic organizations reflect a growing awareness among industrialists to findways to redistribute their wealth to the society. Also increased diversity in the academic
subjects also led to an increase in the number of research institutes and professionalorganizations. The reason for the growing number of social welfare and healthnonprofits is obvious: increased interests in the society for the rights of the poor andhandicapped as well as the preferential tax treatment made available to these types oforganizations.
Table 5-3. The Growth of Public Interest Corporations in Korea(1996-2004)
Year
1996 1997 1998 1999 2000 2001 2002 2003 2004
Number of
4,624 5,269 5,221 5,486 5,773 11,063 10,987 11,177 17,812
PICs
Schools
1,079 1,101 1,081 1,197 1,310 1,727 1,531 1,512 1,685
Scholarly and
1,114 1,157 1,204 1,392 1,413 1,826 1,862 1,896 2,333
Philanthropy
Social808 907 872 1,307 1,242 1,972 1,962 1,970 2,129
WelfareHealth237 261 276 289 274
382
380
377
457
Religious

215

195

189

424

543 3,810 3,890 3,881 8,561

Misc.
233 291 290 877
Source: National Tax Office (1999).

991 1,346 1,362 1,541 2,647

Fifth, in contrast to CMOs (simin woondong danche: civil movement organizations),
there are numerous QUANGOS (quasi-autonomous NGOs) that maintain a close andhighly cooperative relationship with the state. During the 1970s and 1980s, numerous
QUANGOs were set up to undertake tasks delegated by the government, including theSamaul Movements, Korea Freedom Association, and Bareuga-salgi Movements.
Because QUANGOs were heavily reliant upon state funding, the state often tookcommand of their operations. These were convenient policy tools for a state that lacked
grass-root organizations and aided the state in terms of creating favorable socio-politicalenvironments under which they could implement policies. For instance, theseorganizations played a key role in establishing social orders and etiquette before the28

1988 Seoul Olympics while Samaul Movement organizations were instrumental inadvancing modernization in rural areas through cooperative projects and collective
farming in conjunction with the government's plans. Because these organizations were
set up by the previous military regimes, they tend to exhibit right-wing tendencies.
Over the years, QUANGOs received most of the funding given to NGOs andmaintained an intimate relation with the government. Of the 7.5 billion Won of generalfunding provided to NGOs in 1999 on merit-based competition offered by the Ministryof Governmental Administration and Home Affairs (MOGAHA), 41 percent went tothose organizations which thought to have characteristics of QUANGOS (Kim 1999b).
In addition, QUANGOs received money from the Ministry of Culture and Tourism aswell as the Ministry of Agriculture. Before the merit based subsidy program wasinstituted in 1999, Samaul Woondong Organization received direct subsidies from thegovernment, which constituted up to 80 percent of its budget.

6. Administrative reform in local governments; history, progress, current situation
focusing on contracting-out
6.1. Japan
Overview
In the late 1990s, it became apparent that the local governments faced the urgent needto conduct administrative reforms in order to eliminate financial deficits accumulated
during the late 1980s to the mid 1990s. In July 1997, the Decentralization Promotion
Committee, an advisory body to the Prime Minister, submitted its second
recommendation, in which it suggested that a new administrative reform guideline
should be established so as to secure the smooth implementation of administrativereform programs of the local governments. Upon this recommendation, the former
Ministry of Home Affairs prepared the guideline for promoting administrative reform of
the local governments in November 1997. Since then, several cabinet decisions forpromoting administrative reform in the local governments has been instituted including
the Decentralization Promotion Plan in 1999, the Basic Principles for Administrative
Reform in 2000, the Basic Policy on Structural Reform in 2001, the Regulatory Reform
Action Plan in 2003 and the Policy on Administrative Reform in 2004. Taking account of
the 2004 Policy on Administrative Reform, the Ministry of Internal Affairs and29

Communications prepared the new guideline in 2005 for accelerating reform
undertakings in the local governments and advised the local government to revise thecurrent reform programs and to make intensive reform plans covering next five years.
Administrative reform programs of the local governments
The Japanese constitution adopts the principle of local autonomy and every local
government is an autonomous entity from the central government and is responsible forpublic tasks in its geographical jurisdiction. When the central government would like topromote administrative reform in the local governments, it can only prepare a guideline
and show it to the local governments to follow. As the central government has somepower of allocating tax funds to the local governments, the local governments usuallyfollow the guidance of the central government. As for the administrative reform, thelocal governments prepare their own administrative reform programs based on theguideline of the central government. Upon the 2005 guideline of the Ministry of Internal
Affairs and Communications, every local government made five-year-term intensive
reform plans. In the intensive reform plans, main subjects often included are thereduction of personnel, control of pay level, contracting-out of public facilities/programs
and abolishment or reduction of current programs.
Contracting-out of public programs/facilities is widely implemented by the local
governments. Office cleaning, night watch operation, reception services, garbage
collection and management of public facilities such as facilities for the elderly and day
nurseries are often contracted out to the private sector.
Designated manager system
The designated manager system for managing public facilities was introduced in 2004
after the revision of the Local Autonomy Law. Management of such public facilities ascommunity centers, day nurseries, facilities for the elderly and music concert halls canbe contracted out to the private sector organizations together with all permission
authorities. Local governments often build facilities for improving public welfare in
their geographical jurisdictions. Before the revision of the law, local government often
outsourced the maintenance of such facilities to non-profit institutions with publicfunding. After the law revision, whole management of such public facilities is to becontracted-out or to be carried out by the local governments themselves. Local
governments are confronted with financial problems so that they often introduce thedesignated manager system in the public facilities for economizing and reducing public
expenditures as well as improving the quality of services. According to the survey of the30

Ministry of Internal Affairs and Communications, 70,022 public facilities have been
contracted-out in the designated manager system as of April 2009. 58.7% of public
facilities in the prefecture governments have been contracted out.
In contracting-out of social welfare facilities such as facilities for the handicapped andday nurseries, non-profit organizations are often selected as contractors. According to
the above-mentioned survey, more than ninety percent of social welfare facilities havebeen contracted out to non-profit organizations. Non-profit organizations included are
public interest institutions, social welfare corporations, Red Cross, local self-governing
bodies and specified non-profit corporations (so-called NPO in Japanese).
6.2. Korea
In Korea, we can regard the reform movement of participation Government as thecurrent administrative reform. President Rho's participation Government has started
with his political intention that he would enhance people's participation in his
government. Participation Government stressed balanced development including
decentralization reform and performance oriented administration system and so on
according to the President Rho's political faith. It is spoken that participation
Government's reform strategy start after the Presidential Transition Committee
represented 10 governmental tasks. And participation Government has established“Government Innovation and Decentralization Committee (hereinafter referred to as
Committee)” in April, 2003 to implement government innovation and decentralization.
Innovation reform different from former governments' have been made by Committee
after committee pronounced the Road Map for administrative reform. Committee
mapped out specific vision, goal and innovation procedure specifically. Committee
decided 'together with citizen, efficient government' as government innovation goal andrepresented 10 agendas and 30 sub tasks in order to perform innovation goal. In sum,participation government maintained efficiency and trust of government andresponsiveness toward citizen using 'operation system', 'government function andre-adjustment', 'constant evaluation system' and so on.
Participation government specially stressed bureaucracy participation and incentive
system in innovation procedure, and focused on enhancing innovation capacity andtransition process of culture. This strategy means that participation government
preferred that culture oriented administrative reform besides voluntary andparticipatory innovation system. Learning organization theory has been introduced topromote active participation for the process of public opinion. In the mean time, themajor ingredients of the decentralization reform road map were reflected in the 'the31decentralization special Act (hereinafter referred to as the special act)' in December,2003. The legislation of the special act was considered as a turning point in the early
period of participation government because several significant principles was included
to the special act which were reflecting decentralization reform and major tasks madeby government. There were seven directions of the decentralization reform and 20
specific reform tasks in the decentralization road map produced by participation
government. Services contracting-out from the local governments to private sectors areincluded in these objectives. The seven reform directions are reallocation ofadministrative powers and functions between the central government and local
governments, drastic reallocation of national finance, strengthening of the governing
capacity of local governments, revitalizing of local councils and improving of the local
election institution, promoting of local governments' accountability, revitalizing of civilsociety, and building of cooperative intergovernmental relationships between thecentral government and local governments.

7. Private non-profit organization in contracting-out: Relationship between the local
governments and private non-profit contractors
In this chapter, we focus on these issues shown below.
①

How the local governments identify the role of private non-profit contractors inproviding public services?

②

Do the local governments see private non-profit contractors as mere contractors todeliver public services cheaper than those directly provided by the local
governments themselves?

7.1. Japan
Focusing on changing needs of governments, most local governments have been keen tocontract out their services to local non-profit organizations, especially NPO hōjin type of
nonprofits under the current local government reforms. Most local governments havesought for collaborations, which are occasionally called “partnership”, with local
nonprofits for solving local issues and improving local public services. Nikkei Shinbun(Nikkei Inc.), a major news paper in Japan conducted the postal survey on 97 local
authorities which includes 47 prefectures, 32 municipalities in which prefectural
governments are located, and 18 ordinance-designated cities whose population is overaround one million in March 2008. According to the fact finding from the survey, the32total number of partnership programs amounted to 5,842 in 2008. The number
increased by around 7 percent compared to the figure in 2007.
In reality, most partnerships in public service provision are conducted in the form ofcontractual relationships. According to the national postal survey on nonprofit
organizations (n=951, of which 373 replied) conducted by the Cabinet Office in 2004,
over 80 percent of partnership programs with local governments were based in thecontracts. Examining the national postal survey on 894 local authorities conducted bygovernmental research institute (Keizai Sangyo Kenkyujo, 2007) in 2006, 51 per cent oflocal authorities have contacted out their services to nonprofit organizations and 45.8
per cent of local authorities have not. 100 per cent of prefectural governments (n=28)
and large cities’ municipal governments(n-32) have contracted out to nonprofit
organizations.
Furthermore, most local governments have outsourced management functions of the
public facilities owned by them, such as museums, public halls, sports centers andvolunteering support centers, to private nonprofits and businesses after the revision of“the Local Government Law” of 2003. Before the revision, management function of thesepublic facilities cannot be delegated to private enterprises and nonprofit organizations
except local governments or private corporations founded with shares fromgovernments. In terms of management of all local public facilities, local governments
are legally forced to leave these management functions to other corporations called as“Designated Managers” or to keep their hands directly after the enactment of therevised law. Local councils are required to stipulate the basic principle and designatingprocedure of the system in the ordinance. According to more recent government
statistics (Ministry of Internal Affairs and Communications) of 2006, the designatedmanager systems were introduced in 61,565 government facilities in Japan. In terms ofallocation among different private and public corporations, just 11.0 per cent of total
facilities were contacted out to private companies, 36.2 per cent to traditional nonprofit
corporation with tight government control, 50.0 percent to government or governmental
institutions, just 1.7 per cent to NPO hōjin and 5.6 percent to other corporations. The
progress of the new contracting system seems to be little and irrelevant to such new
type of nonprofit organizations. However, in the specific areas, in particular nonprofit
intermediary organizations, being designated manager is associated with their survival.
Under this new contracting system based on the revised law, the private contractors canreceive more discretional power in the management over the facilities although bothgovernment and contactor sides share the responsibilities for efficient, effective andaccountable operation of facilities. For instance, the private contractors can receive fee
33

of services as their own income if they have formal agreements with local governments.
In addition, the terms of these contracts tend to be relatively longer than traditional
contracts in which one year.-term contacts are general. For example, the contractor can
exchange 5 year-term contract with local government. It seems to be helpful to financial
stability. In some cases the term can be over 10 years.
To be sure, this new system can be regarded as a financial retrenchment scheme. In
addition, the “ownership” and ultimate control remains in the hands of the local
government. Many nonprofit organizations are keen to be engaged in managing
government facilities for their survival. The activities of nonprofit contractors seem tobecome part of government policy and be generally constrained by their regulations. In
extreme cases, the capacity of nonprofit contractor might be constrained by institutional
isomorphic pressures (DiMaggio and Powell,1991).
7.2. Korea
A major change has occurred in the way public services are implemented in Korea.
Instead of relying on in-house service provisions, the state is increasingly contractingout tasks to private vendors as well as public enterprises and government-affiliatedorganizations. According to Kim et al. (1999), the government designated over 209
services for contracting out in a 3-year period beginning 1997, an increase of 62% fromthe previous government, which had contracted out 129 services between 1993 and 1997.
In addition, government statistics show that the proportion of budget allocated to
private actors and local governments has increased from 5.8% in 1993 to 8.36% in 1999,
implying that more tasks were either decentralized to local governments and/or
contracted out to private agencies. By looking at the ministerial breakdown of thesubsidy level, we noticed that the proportion of social welfare subsidies has gone up
from 31% in 1994 to 37.35% in 1999, implying that more social welfare programs arebeing provided indirectly by nonprofit organizations. In monetary terms, the statebudget on social welfare increased from 3.29 trillion won in 1997 to 4.78 trillion won in
2000, a 45.3% increase. Considering that only 3 out of 878 social welfare facilities wererun by the state in 1999, this implies a substantial increase in the role of private
nonprofit agencies.
Although private actors have a stronger incentive to improve the quality or work at
lower cost than government workers (Hart, Shleifer and Vishny, 1997), the private
contractor’s incentive to engage in cost reduction is typically too strong because heignores the adverse impact of non-contractible quality. This implies that contracting out
or privatization is preferred in cases “where quality-reducing cost reduction activities34

can be controlled, when quality innovations are important, and patronage and powerful
unions are a severe problem inside the government (Hart et al., 1997).” This means thatin cases involving either complex or political issues, government monitoring of private
contractors will be a prerequisite for successful contract outs. Plans to contract out
services were mainly decided in a top-down fashion with little monitoring in place whileline-managers were unfairly being held responsible for the program’s effectiveness (Kimet al., 1999).

8. Local self-governing environments: Role of local self-governing body in public
administration
8.1. Japan
In this section, outline of local self-governing body such as “Cho-Nai-Kai,” its history,organizational structure, members, functions and relationship with the local
governments are described as follows.
In Japan, there exists a local self-governing body, called “Ji-Chi-Kai” or “Cho-Nai-Kai”,
as a grass-root informal organization. This body is usually translated as “neighborhood
association” in English. According to Pekkanen, 2006, neighborhood associations arevoluntary groups whose membership is drawn from a small, geographically delimited,and exclusive residential area (a neighborhood) and whose activities are multiple andare centered on that same area. According to Torigoe, 1994, such local self-governing
bodies have five characteristics; membership is for household, covering a small
geographical area (a neighborhood) and only one organization per one neighborhood,assuming all households are to have membership, conducting all service activities
necessary for everyday community life and lastly playing a role of the field agent ofgovernment. This body is not a government organization nor established by the law but
is rather grass-rooted. In both urban and rural areas there are “Ji-Chi-Kai” having
similar characteristics as well as different and unique characteristics depending on thecommunities. Here, we would like to use “local self-governing body” (LSGB) to describe“Ji-Chi-Kai” or “Cho-Nai-Kai” in English.
Some sociology scholars claim that the history of the LSGB dated back to the Nara eraor the Tokugawa era. At the Tokugawa era, there was Go-nin-gumi (a unit comprising
five households) system to watch out one another, to have joint responsibilities and to35

ensure reciprocal help.
After the Meiji Restoration, the LSGB, which were positioned out of the government
system, took substantial responsibilities for community development such as building
roads and disaster prevention. In 1940, the government made the LSGB as a lowest
unit of the government; transforming a private voluntary organization into a
compulsory organization in the government. In 1943, the LSGB came under the controlof the Taisei-Yokusan-Kai (a society organized by the government for the promotion ofassistance toward the Pacific war to collaborate with the government).
After the war, the GHQ of the Allied Forces banned the LSGBs in 1947. However, after
Japan recovered the independency in 1952, the LSGBs came to appear in thecommunities as informal grass-rooted bodies.
Nowadays, the LSBGs commonly exist in the Japan’s community and they arevoluntary and non-profit organizations with or without legal person status. The LSGBs
having meeting facilities or other properties can get the legal person status based on the
Local Autonomy Law.
The LSGBs conduct various community-based activities; cleaning roads, gutters, rivers
and streams, management and maintenance of household garbage collection sites,
maintenance of roads and street lights, organizing local festivals, crime and fire
prevention, disseminating information from local governments, cooperation with theelementary and junior-high schools, supporting the elderly and so on.
The organization and administration of the LSGB are illustrated as follows.
According to the LSGB charter of a certain town in Shizuoka city, the purpose of the
LSGB as stated therein is “to promote the mutual friendship of the residents within theorganization and joint welfare, as well as to smoothen the contacts and collaboration
with the city administration and its related agencies.”(original in Japanese translatedby the author). The annex of the LSGB charter stipulates that the LSGB is divided into
sections (bu) and further into sub-sections (kumi, a smallest unit consisting of 10-15
households). Each bu and kumi chooses among the members, a chief who contacts
members within the units. All the section chiefs become the members of the board of
directors of the LSGB. Each member, upon entry to the LSGB with the entry fee of 500
yen, pays annual fees (monthly fee is 400 yen per household) of 4,800 yen; each kumi
chief collects the fees and often collected the Red Cross annual donation of 500 yen
which is tax deductable. The kumi circulates the kairanban (a notice board which
includes pamphlets and monthly journal issued by the city administration which is also36available from the HP of the city or any city administration buildings.).
Currently the rate of participation in the LSGBs in urban areas is declining in Japan.
On the other hand, participation rate is still high in the local cities. All the households
are in fact involved in the LSGBs especially in the rural area, where there are few otheractive civil society organizations and even if there are non-profit organizations, suchorganizations are usually created by making use of the framework of the LSGBs.
In the absence of other active civil society organizations in Japan, it turned out to be not
only convenient and natural, but rather imperative for the local government to utilize
the LSGBs in which most of the citizens as residents of the area customarily become themembers for historical reasons.
In the pilot surveys, we could recognize very active LSGBs, which conducted various
community development activities and social services to the residents.

8.2. Korea
To

compare

with

local

self-governing

body

in

Japan,

weexamineseveralcommunity-based organizations, such as “Citizen Autonomy Committee,” “Saemaeul
Movement Associations,” or “Tong” and “Ban” system including “Ban Sang Hoi”, which
are working for the delivery of everyday life public services, as well as the facility users'
voluntary organizations in Korea. First, there is the Tong and Ban system in Korea,
which are analogous to the Japanese “Cho-nai-kai”. One Ban consists of 20 to 60
households and one Tong consists of 5 to 10 Bans. This system is a state-leadself-governing system mainly for anti-North Korea purpose. Once a month, Ban Sang
Hoi was to be held with representatives from all member households participating.
Nowadays, Ban Sang Hoi remains just perfunctorily in Korea generally, but in rural
areas like Hwango-dong it runs relatively actively and has the local residents
participate in public service delivery system.
Second, Saemaul Undong is considered one of the most successful community
development movements of Korea in the 1970s (Lee, 2009). As a New Community
Movement, a movement founded in 1970 under former President Park, JeongHee,
began to lose its popularity as it came under the control of the civilian-lead Korea
Saemaul Undong Center. With the incidence of several corruption scandals in the 1990s
Saemaul Undong had virtually become a forgotten experience of the past. However,37

with the dawn of the new century in 2000 Saemaul Undong has been revitalized in the
Gyeongbuk province, such as Gumi si, Cheong do gun, and Pohang si, and also in
foreign countries such as Mongolia, Vietnam, and Congo.
Saemaul Undong, which played an important role in making both economic growth andmodernization of rural area was inaugurated in 1970 by former president Park,
JeongHee. Central government lead the movement during early stage of Saemaul
Undong. Due to Saemaul Undong, rural hosehold income sharply increased. rural
household income was only 67% of urban household income in 1970, but this ratio
increased up to 104%. After 1980s Central Saemaul Undong Organization took aleading role in promoting saemaul undong with legal and organizational support.
Government support slowly diminished in the 1980s while Saemaul leaders have been
active since the 1980s. Currently, Saemaul Undong operates with the Korea Saemaul
Undong Center as its headquarters and 17 si-do associations, 234 si-gun-gu chapters,
75,155 Saemaul leaders, and 78,014 Saemaul women's association members.
Figure 8-1. Saemaeul Undong Center Organization

9. Outline of the survey conducted in Japan and Korea
So as to collect data to verify the above-mentioned hypothesis, the Japanese team and38

the Korean team conducted field surveys respectively in Japan and Korea based on thesame questionnaires in 2009. Three kinds of surveys were set up; local government
surveys, non-profit contractor surveys and local self-governing body surveys in the caseof Japan and facility users’ association surveys in the case of Korea. Firstly sample
municipality governments were selected and then a public facility contracted out to a
non-profit organization was picked up. A local self-governing body residing near the
public facility or a facility users’ association was made a sample.
As mentioned above, there exist the LSGBs called “Ji-Chi-Kai” or “Cho-Nai-Kai” inJapan. LSGB is not a government organization nor established by the law but is rather
grass-rooted. In both urban and rural areas there are LSGBs having similar
characteristics as well as different and unique characteristics depending on thecommunities.
On the other hand, in Korea there is the Ban Sang Hoi system quite similar to theJapanese “Ji-Chi-Kai” system. The system was established by President Park
Chung-hee for anti-North Korea purpose, but nowadays the system does not work wellin Seoul and other metropolitan areas. So in the Korean surveys, local self-governing
body surveys were replaced by the survey of users’ associations of contracted-out
facilities.

9.1. Surveys in Japan
Municipalities are classified into four categories as follows by taking account of theobjectives of the survey.
Objectives of the survey are to provide enough data for comparison between the ruralarea and the urban area, for evaluating the effects of local autonomy district system andfor observing how leading cities (seat cities of the prefecture governments) cope with thecontracted-out practices.
①

Municipality in Yamagata prefecture (rural area)②

Municipality in Kanagawa prefecture (urban area near the Tokyo metropolitan
area)

③

Municipality that has introduced the local autonomy district system (most ofthem have experienced the merger of municipalities. So they are located inrural area. )④Seat city of the prefecture government39

e-mail addresses of these municipality governments were collected at the website.
Based on the information collected at the website, municipalities are divided into twogroups, namely municipalities for interview survey and municipalities for e-mail survey
by taking account of the availability of contracted-out public social welfare facilities andsurvey efficiency. Total number of municipality in the universe and other relevant
information is shown in the table 9-1 below. Total response rate was 77.2%.
Table9-1. Universe of the survey and the response rate
Kind of municipality

Number ofmunicipality that
responded thesurveyTotal number ofmunicipality in theuniverse

Response rate
Interview survey

e-mail survey

Municipality in Yamagata prefecture

32

32

9

23

100.0%

Municipality in Kanagawa prefecture

28

23

7

16

82.1%

Municipality introducing the local autonomy district
system excluding seat city

28

21

3

18

75.0%

Seat city of the prefectural government excluding
Yamagata-shi and Yokohama-shi

33

25

1

24

75.8%

Other city

28

14

1

13

50.0%

Total

149

115

21

94

77.2%

Note:
1.

Total number of municipality includes the municipality whose e-mail address could be found at thewebsite. For example, in Yamagata prefecture, there are 35 municipalities but only e-mail addresses of
32 municipalities could be found. Also among 47 seat cities of the prefectural governments, 33 e-mailaddresses could be found.

2.

“Other city” includes Nerima-ku of Tokyo and Dazaihu-shi of Hukuoka prefecture and municipalities in
Miyagi prefecture. These municipalities are included because they were studied in the pilot surveys.

The population of top ten big cities as well as bottom ten municipalities is shown in thetable 9-2. The complete list of population in the respondent municipalities is attached as
the Appendix 1.
Table 9-2. Population of top ten big cities and bottom ten municipalities

40

Prefecture
1 Kanagawa
2 Kobe3 Kanagawa
4 Fukuoka
5 Hiroshima
6 Chiba
7 Shizuoka
8 Niigata
9 Kanagawa
10 Tokyo
106 Yamagata
107 Yamagata
108 Kanagawa
109 Yamagata
110 Yamagata
111 Yamagata
112 Yamagata
113 Yamagata
114 Yamagata
115 Yamagata

Municipality
Population Source
Yokohama city
3679488 Estimated population as of 1 May 2010
Kobe city
1525393 2005 Population Census
Kawasaki city
1417944 Estimated population as of 1 May 2010
Fukuoka city
1401279 2005 Population Census
Hiroshima city
1154391 do.,
Chiba city
924319 do.,Hamamatsu city
804032 do.,
Niigata city
785134 do.,Sagamihara city
713885 Estimated population as of 1 May 2010
Nerima ward
707844 do.,Oguni town
9742 2005 Population Census
Oishida town
8824 do.,Manazuru town
8232 Estimated population as of 1 May 2010
Mikawa town
8003 2005 Population Census
Kaneyama town
6949 do.,Nishikawa town
6917 do.,Funagata town
6671 do.,Tozawa village
5915 do.,
Sakekawa village
5447 do.,Okura village
4226 do.,

9.2. Surveys in Korea
In comparison to the Japanese side, municipalities are classified into two categories asfollows by taking account of the objectives of the survey. Objectives of the survey are toprovide enough data for comparison between the rural area and the urban area, forevaluating the effects of local autonomy district system and for observing how leading
cities cope with the contracted-out practices.
① Municipalities in the Seoul Metropolis (urban areas)② Municipalities in Gyeonggi-do (composite areas including urban areas near theSeoul metropolis in some districts, and rural areas in other districts)
Table 9-3. Total number of the responding samples, and the response rate
Kind of municipality

Municipality in

Total number of

Total number ofmunicipality thatmunicipality thatsurveyed

responded

Response rate

75

47

63%

96

33

34%

Seoul Metropolis
Municipality in
Gyeonggi-do

41

Total

228

80

47%

Note:
1. The Seoul Metropolitan governments consist of 25 self-governing Gu and the Gyeonggi-do
governments consist of 27 Si, and 4 Gun. We selected three representative samples for each Gu
in Seoul, and also selected three representative samples for each Si, and Gun in Gyeonggi-do
according to the final lists.
2. We designed the survey allotting 4 questionnaires of all three types each municipality. We
mailed to municipality with each 4 questionnaires of the all three types, that is total 12questionnaires.

The Korean team, unlike the Japanese side, conducted mail surveys to all themunicipalities and some follow-up telephone interviews during 2009 and early 2010.
The mail address lists of these municipality governments were collected at the website
firstly and completed with the help of the public managers of the Health and Welfare
Bureau, the Woman and Family Policy Affairs, the Administration bureau in Seoul
Metropolitan government and the Welfare and Woman’s Policy Bureau, theSelf-governing Bureau in Gyeonggi-do.
Based on the information collected the final list, the questionnaire was mailed to eachagency, addressed to the key agency manager, depending on who would be mostknowledgeable about the questionnaire. The survey was accompanied by a cover letterfrom us as well as a letter of support signed by the head of the Woman and Family
Policy Affairs in Seoul Metropolitan and the Welfare and Woman’s Policy Bureau in
Gyeonggi-do. Total number of respondents in the universe and municipalities in thesurveys responded is shown in the table 9-3 and 9-4. Total number of agencies that
selected as a survey sample is 75 in the Seoul Metropolis, and 96 in Gyeonggi province.
These samples were chosen by the recommendation of public managers working in the
Woman and Family Policy Affairs, the Health and Welfare Bureau in Seoul
Metropolitan and the Welfare and Woman’s Policy Bureau in Gyeonggi-do. Total
number of municipality officials that responded the survey is 47 in the Seoul Metropolis,
and 33 in Gyeonggi province. Total response rate of the local government respondents
was 47%.
Table 9-4. Municipalities in the surveys responded
Number Name of City-Do
1 Seoul-siName of Gu-Si-Gun
Dobong-gu

42

Population

Source367,998

2005 Statistics Korea

2 Seoul-si

Dongdaemun-gu

371,0242005 Statistics Korea

3 Seoul-si

Gangnam-gu

508,108

2005 Statistics Korea

4 Seoul-si

Gangseo-gu

537,7012005 Statistics Korea

5 Seoul-si

Gwangjin-gu

364,4072005 Statistics Korea

6 Seoul-si

Jongno-gu

154,043

2005 Statistics Korea

7 Seoul-si

Jung-gu

126,679

2005 Statistics Korea

8 Seoul-si

Jungnang-gu

412,380

2005 Statistics Korea

9 Seoul-si

Seocho-gu

370,850

2005 Statistics Korea

10 Seoul-si

Seodaemun-gu

340,327

2005 Statistics Korea

11 Seoul-si

Seongbuk-gu

440,254

2005 Statistics Korea

12 Seoul-si

Seongdong-gu

324,986

2005 Statistics Korea

13 Seoul-si

Songpa-gu

577,362

2005 Statistics Korea

14 Seoul-si

Yeongdeungpo-gu

392,5072005 Statistics Korea

15 Geonggi-do

Ansan-si

669,839

2005 Statistics Korea

16 Geonggi-do

Anyang-si

609,886

2005 Statistics Korea

17 Geonggi-do

Gwangmeong-si

319,452

2005 Statistics Korea

18 Geonggi-do

Hanam-si

121,646

2005 Statistics Korea

19 Geonggi-do

Suwan-si

1,039,233

2005 Statistics Korea

20 Geonggi-do

Uiwang-si

143,568

2005 Statistics Korea

21 Geonggi-do

Yeoju-gun

98,441

2005 Statistics Korea

22 Geonggi-do

Yongin-si

686,8422005 Statistics Korea

9.3. Questionnaires and question items
In the Japanese case, separate questionnaires were arranged for e-mail survey andinterview survey.
e-mail survey: Short form questionnaire for municipality governments

Interview survey : Long form questionnaire for municipality governments
Long form questionnaire for non-profit contractors of public facilities
Long form questionnaire for local self-governing bodies residing near
the public facilities
In conducting e-mail surveys, the short form questionnaire was sent via the internet as
an attached file to the municipality government. The responsible unit in themunicipality government sent back the completed questionnaire to the survey e-mailaddress.
On the other hand, interview surveys were conducted by one of the researchers.
Relevant officials of the municipality governments, representatives of the non-profit
contractors and heads of the local self-governing bodies were interviewed based on the43

questionnaires. Some municipality officials sent their completed questionnaires via theinternet after the interviews.
In the Korean case, long form questionnaires were used both for mail surveys andinterview surveys.
Short form questionnaire for municipality governments is the simplified version of thelong form questionnaire so that the outline of question items for long form are shown
here (As for the detailed question items, see Appendix 2).
A. Questionnaire for municipality governments①

Items on the contracting-out and contractor②

Items on the relationship between the contractor and the local residents③

Items on local-self governing environments

B. Questionnaire for non-profit contractors of public facilities①

Items on the contracts②

Items on the relationship between the contractor and the local residents

C. Questionnaire for local self-governing body located near the public facilities①

Main features of local self-governing body②

Items on the relationship between the local-self governing body and themunicipality government③

Items on the relationship between the local self-governing body and the contractor

10. Comparison of the survey results
In the comparison between the Japanese survey data and the Korean ones, local
self-governing body questionnaires are to be excluded because different kinds oforganizations were surveyed in Japan and Korea as mentioned above. Here, the local
government survey data and non-profit contractor survey data are analyzed bycomparing the Japanese ones with the Korean ones.
10.1. Local government surveys
Questionnaire of the local government surveys is divided into three parts; the first part44

concerning contracting-out and contractors, the second part concerning the relationshipbetween the non-profit contractor and the local residents and the last part concerning
local self-governing environments. The comparison of the survey data is conducted
separately according to this division.
10.1.1. Local government’s views concerning contracting-out and contractors
10.1.1.1. Background and reasons of contracting-out
Table 10-1. Background and reasons of contracting-out①②③

Reduction of
government
spending andpublic servants

Improvement of
the quality of
public services

Development of
Expansion of the Request or orderfrom the central
the local economy people's
government
participation in
the public service
delivery

④

⑤

⑥

⑦

⑧

To expand public To use external
To improve
civic expertise
responsiveness of service delivery
service delivery⑨⑩

To reduce adminburden of public
servants/agency

OthersJapan Total

100%

60.0%

27.0%

0.9%

3.5%

0.9%

5.2%

0.9%

4.3%

0.0%

0.0%

Korea Total

100%

12.8%

29.6%

6.4%

3.8%

5.1%

1.3%

6.4%

26.9%

7.7%

0.0%

Japan Total
Secondbiggest reason Korea Total

100%

28.7%

33.0%

9.6%

3.5%

0.9%

2.6%

7.8%

5.2%

7.8%

0.9%

100%

11.4%

22.8%

2.5%

11.4%

12.7%

5.1%

5.1%

21.5%

6.3%

1.2%

Biggestreason60% of the sample Japanese municipality governments selected “reduction of
government spending and public servants” as the biggest reason of contracting-out
while only 12.8% of the sample Korean municipality governments selected this item.
The most chosen item by the Korean municipality governments was “improvement of
the quality of public services” (29.6%) and then “to use external civic expertise” (26.9%).
As for the second biggest reason of contracting-out, the most chosen item by theJapanese municipality governments was “improvement of the quality of public services”(33.0%) followed by “reduction of government spending and public servants” (28.7%).
The most chosen item by the Korean municipality governments was “improvement of
the quality of public services” (22.8%) followed by “to use external civic expertise”(21.5%).

10.1.1.2. The main reason of contractor decision
Table 10-2. Main reason of contractor decision

45

①

②

The proposed
contract amounts
were low.

The expertise and Deep involvement Politicalexperiences ofof community
connection
managing theactivities.
same kind offacilities.

③

④

⑤

⑥

Contractor's
reputation

Size of contractors Demand of the(financial/manpow local citizens
er)

⑦

⑧
OthersJapan Total

100%

2.7%

57.3%

23.6%

0.0%

0.9%

1.8%

3.6%

11.8%

Korea Total

100%

1.6%

65.7%

20.3%

0.0%

1.6%

4.7%

4.7%

1.4%

The highest percentage of the Japanese municipality governments responded “theexpertise and experiences of managing the same kind of facilities” was the reason of
deciding the contractor. 23.6% responded “deep involvement of community activities”
was the reason. The Korean municipality governments responded in the same way as
the Japanese counterparts.

10.1.1.3. Quality of facility management
Table 10-3. How the municipality government evaluates the quality of facility
management after the contracting-out①②③

SevereModerate
No change
deteriorattion Deterioration④⑤

Improved

Much
improved

Japan Total

100%

0.0%

0.0%

35.8%

62.4%

1.8%

Korea Total

100%

3.4%

8.5%

23.7%

61.0%

3.4%

No Japanese municipality governments responded the quality of facility management
was deteriorated while more than 10% responded the quality was deteriorated in thecase of the Korean municipality governments. On the other hand, nearly 65% of both
municipality governments responded the quality was improved.
10.1.1.4.Ratings of the user survey
Table 10-4. Ratings of the user survey
①

②

③

④

⑤

Very lowratingBad rating.

Averagerating.

Good rating.

Vvery goodratingJapan Total

100%

0.0%

0.0%

14.7%

76.5%

8.8%

Korea Total

100%

0.0%

13.3%

30.0%

53.4%

3.3%

In the Japanese survey, only 34 municipality governments out of 115 responded. 85.3%
of respondents chose “good or very good rating” in the user survey. On the other hand,all sample governments responded in the Korean survey and 56.7% of respondents
46

chose “good or very good rating” and 13.3% chose “bad rating.” 30.0% of the Korean
respondents chose “average rating” while 14.7% of the Japanese respondents chose“average rating.”

10.1.1.5. Kinds of facility contracted-out to private non-profit organizations
Table 10-5. Kinds of public facility contracted-out to private non-profit organizations

Japan Total
Korea Total①②

Facility forthe elderly

Facility for
Other social Sportingthewelfarefacility
handicapped facility suchas a nursery

③

④

⑤

⑥

Other facility No facility
contracted-out
to private nonprofit
organizations

Percentage of
response in 115

72.2%

48.7%

67.8%

51.3%

76.5%

5.2%

Percentage of
response in 60

48.3%

45.0%

78.3%

45.0%

18.3%

0.0%

In the Japanese survey, response rate was high for “facilities for the elderly” and “otherfacility.” On the other hand, response rate was high for “other social welfare facility
such as a nursery” in the Korean survey. Except for the response rate for “other social
welfare facility such as a nursery,” the Japanese response rate was higher than the
Korean one.

10.1.1.6. Methods for supervising the contractor
Table 10-6. Methods for supervising the contractor①②③

PhysicalManagement Citizen
inspection of reportsatisfaction
the facility
surveyJapan Total
Korea Total

Percentage of
response in 115
Percentage of
response in 78④⑤

Montoringthe civil
appealRegular
Othersmeeting with
contractor

⑥

41.7%

87.0%

24.3%

40.9%

33.9%

9.6%

78.2%

85.7%

58.4%

48.1%

71.4%

67.9%

It seemed that the Korean municipality governments made use of more various
methods of supervising than the Japanese ones.

10.1.1.7. Conditions of appropriate management by the NPO

47

Table 10-7. Conditions that the private non-profit organization can manage the public
facility appropriately①②③

Personnel:
Personnel:
Personnel:
number of the capability and number ofstaffexpertise of active
the staff
volunteers
Japan Total
Korea Total

Percentage of
response in 230
Percentage of
response in 160

④

⑤

⑥

⑦

Financialstrength

Cooperation
with thecommunity
associations

Use of grassroots
volunteers

Increase of Others
job
opportunities

➇

16.1%

33.9%

0.4%

27.8%

8.7%

0.0%

1.7%

2.2%

8.8%

33.1%

7.5%

20.6%

10.6%

8.1%

1.9%

1.9%

In this item, respondents were asked to select two conditions that the private non-profit
organization can manage the public facility appropriately. The Japanese respondents
regarded “personnel: capability and expertise of the staff” and “financial strength” as
two important conditions. The responses by the Korean municipality governments havethe same tendency.

10.1.2. Local government’s views concerning the relationship between the non-profit
contractor and the local residents: local government surveys
In this part, local government’s views were collected concerning the following
hypothetical question.
The level of involvement of local residents determines the quality of service(responsive service at the contracted-out public facility).
The level of involvement is given as follows.
①

Local residents as the members of the contractor non-profit organization②

Local residents in the governance mechanism of the contractor non-profit
organization③

Local residents participating open meetings of the contractor non-profit
organization④

Local residents as volunteers in the contracted-out facility

10.1.2.1. Role of local residents as the members of the contractor
Table 10-8. Local residents contribute to more responsive service as members of thecontractor

48

①

②

③

Strongly
disagreeDisagree

Neither agree Agreenor disagree④⑤
Strongly
agreeJapan Total

100%

0.0%

0.0%

34.7%

59.2%

6.1%

Korea Total

100%

9.7%

4.8%

14.5%

67.8%

3.2%

In this question, respondents (municipality government officials) are asked whether
they agree with local residents being the member of the non-profit contractor
contributes to more responsive service delivery by the contractor. 65.3% of Japanese
respondents and 71.0% of Korean respondents agreed with the assumption. No
Japanese respondents disagreed with the assumption but 14.5% of Korean respondents
disagreed with the assumption.
10.1.2.2. Local residents in the governance mechanism of the contractor
Table10-9. Local residents contribute to more responsive service in the governance mechanism of
the contractor.
①②③

Strongly
disagreeDisagree

Neither agree Agreenor disagree④⑤
Strongly
agreeJapan Total

100%

0.0%

0.0%

36.0%

60.7%

3.4%

Korea Total

100%

3.0%

15.2%

18.2%

62.1%

1.5%

In this question, respondents are asked whether they agree with local residents’participation in the governance mechanism of the contractor contributes to more
responsive service delivery by the contractor. 64.1% of Japanese respondents and 63.6%
of Korean respondents agreed with the assumption.
No Japanese respondents disagreed with the assumption but 18.2% of Korean
respondents disagreed with the assumption.

10.1.2.3. Meetings between the local residents and the contractor
Table 10-10. Open meetings between the local residents and the contractor contributes
to more responsive service delivery.
①②③

Strongly
disagreeDisagree

Neither agree Agreenor disagree④⑤
Strongly
agreeJapan Total

100%

0.0%

0.0%

16.0%

76.6%

7.4%

Korea Total

100%

8.9%

13.3%

11.1%

66.7%

0.0%

In this question, respondents are asked whether they agree with open meetings49between the local residents and the contractor contributes to more responsive service
delivery by the contractor. 84.0% of Japanese respondents and 66.7% of Korean
respondents agreed with the assumption.
No Japanese respondents disagreed with the assumption but 22.2% of Korean
respondents disagreed with the assumption.

10.1.2.4. Local residents as volunteers in the contracted-out facility
Table10-11. Local residents being the volunteers at the contracted-out facility
contributes to more responsive service delivery.
①②③

Strongly
disagreeDisagree

Neither agree Agreenor disagree④⑤
Strongly
agreeJapan Total

100%

0.0%

0.0%

29.6%

64.3%

6.1%

Korea Total

100%

4.5%

0.0%

25.4%

53.7%

16.4%

In this question, respondents are asked whether they agree with local residents being
the volunteers at the contracted-out facility contributes to more responsive service
delivery by the contractor. 70.4% of Japanese respondents and 70.1% of Korean
respondents agreed with the assumption.
No Japanese respondents disagreed with the assumption but 4.5% of Korean
respondents strongly disagreed with the assumption.

10.1.3. Local government’s views concerning local self-governing bodies: local
government survey
In our hypothesis mentioned in Section 5 above, the strength and activities of local
self-governing bodies are the key element to determine the quality of services deliveredby the contracted-out public facility. In the local government survey, views and attitudes
of municipality government officials toward local self-governing bodies were collected.
10.1.3.1.Types of local self-governing body
Table10-12. Types of local self-governing body

50

①

②

Community-based Mission-basedorganizationsorganizations③④

An organization
established by thegovernment andthe citizens are
obliged to join.

OthersJapan Total

Percentage of
response in 115

97.4%

27.0%

4.3%

3.5%

Korea Total

Percentage of
response in 57

47.4%

14.0%

0.0%

1.8%

97.4% of Japanese respondents chose “community-based organizations” while 47.4% of
Korean respondents chose this item. 27.0% of Japanese respondents and 14.0% of
Korean respondents chose “mission-based organizations.”

10.1.3.2. Level of citizen participation in solving community-related problems
Table10-13. Strength of citizen participation in solving community-related problems①
very weak

②

③

weak

neither strong
strongnor weak④⑤
very strong

Japan Total

100%

0.9%

3.5%

41.6%

46.9%

7.1%

Korea Total

100%

0.0%

5.3%

54.4%

33.3%

7.0%

54.0% of Japanese respondents felt citizens’ participation was strong but 41.6% felt
neither strong nor weak.
40.3% of Korean respondents felt citizens’ participation was strong but 54.4% felt
neither strong nor weak.

10.1.3.3. Types of relationship between the local self-governing bodies and themunicipality government
Table10-14. Types of relationship between the self-governing bodies and thegovernment

Japan Total
Korea Total

Percentage of
response in 115
Percentage of
response in 62

①

②

③

④

⑤

⑥

Information
sharing

Informalcooperation

Subsidy (but nocontracting out)

Contracting out

Full cooperation(Organizing
committee)

Others

71.3%

30.4%

78.3%

54.8%

26.1%

11.3%

58.1%

24.2%

30.6%

29.0%

22.6%

4.8%

More than 70% of Japanese respondents selected “information sharing” (71.3%) and“subsidy” (78.3%). The most selected item by the Korean respondents was “information
51

sharing” (58.1%). In all, the relationship between the local self-governing bodies and thegovernment seemed stronger in Japan than in Korea.

10.1.3.4. Local self-governing bodies have been active past a few years
Table10-15. Local self-governing bodies have been active past a few years.
①②③Strongly
disagreeDisagree

Neither agree Agreenor disagree④⑤
Strongly
agreeJapan Total

100%

0.9%

0.9%

38.1%

53.1%

7.1%

Korea Total

100%

0.0%

15.9%

54.0%

28.6%

1.5%

In this question, respondents are asked whether they agree with the assumption that
local self-governing bodies have been active past a few years.
60.2% of Japanese respondents agreed with the assumption while 30.1% of Korean
respondents agreed with it. 15.9% of Korean respondents disagreed but only 1.8% ofJapanese respondents disagreed.

10.1.3.5. Local self-governing bodies carry out their own activities to solve
community-related problems
Table10-16. Local self-governing bodies carry out their own activities to solve
community-related problems①②③

Strongly
disagreeDisagree

Neither agree Agreenor disagree④⑤
Strongly
agreeJapan Total

100%

0.0%

2.7%

20.4%

63.7%

13.3%

Korea Total

100%

4.7%

20.4%

35.9%

35.9%

3.1%

In this question, respondents are asked whether they agree with the assumption that
local self-governing bodies carry out their own activities to solve community-related
problems.
77.0% of Japanese respondents agreed with the assumption while 39.0% of Korean
respondents agreed with it. 25.1% of Korean respondents disagreed but only 2.7% ofJapanese respondents disagreed.

10.2. Non-profit contractor surveys
52

Questionnaire of the non-profit contractor surveys is divided into two parts; one partconcerning contracting-out, the other part concerning the relationship between the
non-profit contractor and the local residents. The comparison of the survey results is
conducted separately according to this division.
10.2.1. Non-profit contractor’s view concerning contracting-out
10.2.1.1. Type of organization
Table10-17. Type of organization
Public interest Social welfare
insitution
corporation

Japan Total

Number of sample
Distribution

Korea Total

Number of sample
Distribution

SpecifiedNonprofit
Corporation

Local selfgoverning
body

Others

21

1

10

5

3

2

100%

4.8%

47.6%

23.8%

14.3%

9.5%

54

15

36

1

0

2

100%

27.8%

66.7%

1.9%

0.0%

3.7%

The first question is to survey the type of organization. In the Japanese case, public
interest institutions are established based on the civil code with the permission of thesupervising minister to carry out various public interest activities. Social welfare
corporations are established based on the Social Welfare Law with the approval fromthe government to carry out social welfare activities. Specified non-profit corporations
are established based on the NPO Law to carry out specified non-profit activities withmere certification of the government. Local self-governing bodies are mostly not legal
persons, community-based informal organizations.
In this study, we focus on social services so that the ratio of social welfare corporation
was high.
In the Japanese case, specified non-profit corporations and local self-governing bodies
occupied substantial ratio. On the other hand, public interest institutions and social
welfare corporations occupied 94.5% in the Korean case.
It seems that rather smaller and community-level organizations are active in Japan
whereas more established organizations play a central role in Korea.

10.2.1.2. Room for improving the management of the facility
Table10-18. Room for improving the management of the facility by making use of theoriginal ideas and methods
53Strongly
disagreeJapan Total

Number of sample
Distribution

Korea Total

Number of sample
Distribution

Disagree

Neither agree
nor disagree

Agree

Strongly
agree

21

0

2

4

10

5

100%

0.0%

9.5%

19.0%

47.6%

23.8%

57

0

0

1

35

21

100%

0.0%

0.0%

1.8%

61.4%

36.8%

Respondents were asked whether there was room for improving the management of the
facility by making use of the original ideas and methods. 98.2% of Korean respondents
agreed. On the other hand, 71.4% of Japanese respondents agreed and 9.5% disagreed.
Japanese respondents were more skeptical in making use of original ideas and methods
than Korean counterpart.
It appeared that Korean respondents were very eager to make use of their original ideas
and methods because the organizations were well established and large and had many
experts on the specific fields.
10.2.1.3. Expertise of the contractor
Table10-19. Expertise of the contractor is made use of in managing the facility.
Strongly
disagreeJapan Total

Number of sample
Distribution

Korea Total

Number of sample
Distribution

Disagree

Neither agree
nor disagree

Agree

Strongly
agree

21

0

2

2

14

3

100%

0.0%

9.5%

9.5%

66.7%

14.3%

57

0

0

4

27

26

100%

0.0%

0.0%

7.0%

47.4%

45.6%

Respondents were asked whether the expertise of the contractor was made use of inmanaging the facility.
81.0% of Japanese respondents and 93.0% of Korean respondents agreed. 9.5% ofJapanese respondents disagreed. In the Japanese case, local self-governing bodies were
included and they did not have any expertise as an organization so that two
respondents disagreed to this question.

10.2.1.4. Contractor’s mission-related activities
Table10-20. Contractors carry out their mission-related activities together with facility
management.

54

Strongly
disagreeJapan Total

Number of sample
Distribution

Korea Total

Neither agree
nor disagree

Agree

Strongly
agree

21

3

4

2

11

1

100%

14.3%

19.0%

9.5%

52.4%

4.8%

57

0

0

3

33

21

100%

0.0%

0.0%

5.3%

57.9%

36.8%

Number of sample
Distribution

DisagreeRespondents were asked whether contractors carried out activities stipulated in theirstatutes in relation to the facility management.
94.7% of Korean respondents agreed while 33.3% of Japanese respondents disagreed
and only 57.2% agreed. This is due to the fact that in the Japanese samples, local
self-governing bodies, which are community-based organizations without any strong
mission, and specified non-profit corporations, which are small and often suffer from theshortage of staff, were included.
10.2.1.5. Mission-related activities contribute to more responsive service delivery
Table10-21. Mission-related activities contribute to more responsive service delivery
Strongly
disagreeJapan Total

Number of sample
Distribution

Korea Total

Number of sample
Distribution

Disagree

Neither agree
nor disagree

Agree

Strongly
agree

14

0

1

3

10

0

100%

0.0%

7.1%

21.4%

71.4%

0.0%

55

0

0

10

37

8

100%

0.0%

0.0%

18.2%

67.3%

14.5%

Respondents were asked whether mission-related activities in relation to the facility
management contribute to more responsive service delivery at the facility. 71.4% ofJapanese respondents and 81.8% of Korean respondents agreed. Mission-related
activities can be carried out only when the contract is given to non-profit organizations.
This favorable effect is regarded as one of the merits for the municipality governments
to select non-profit contractors.
10.2.1.6. Conduct of users’ survey
Table10-22. Conduct of users’ survey
Yes
Japan Total

Number of sample
Distribution

Korea Total

Number of sample
Distribution

No

21

12

9

100%

57.1%

42.9%

57

53

4

100%

93.0%

7.0%

57.1% of Japanese respondent contractors conducted users’ surveys while 93.7% of
Korean respondent contractors carried out users’ surveys. In the Japanese case,especially at the facilities for the handicapped, the contractors did not carry out users’55

surveys because they assumed the handicapped users did not completely understandthe questions in the survey and could not express their own views.

10.2.1.7. Ratings of the users’ survey
Table10-23. Ratings of the users’ survey
Very low rating Low rating

Japan Total

Number of sample
Distribution

Korea Total

Number of sample
Distribution

Average rating High rating

Very highrating

12

0

0

2

8

2

100%

0.0%

0.0%

16.7%

66.7%

16.7%

53

0

0

3

44

6

100%

0.0%

0.0%

5.7%

83.0%

11.3%

83.4% of Japanese respondents and 94.3% of Korean respondents answered the ratingsof the users’ surveys were high ones.

10.2.1.8. Contract contributes to strengthening the organizational foundations
Table10-24. Contract contributes to strengthening the organizational foundations
Strongly
disagreeJapan Total

Number of sample
Distribution

Korea Total

Number of sample
Distribution

Disagree

Neither agree
nor disagree

Agree

Strongly
agree

21

0

1

6

11

3

100%

0.0%

4.8%

28.6%

52.4%

14.3%

57

2

3

14

34

4

100%

3.5%

5.3%

24.6%

59.6%

7.0%

Respondents were asked whether this contract contributed to strengthening theorganizational foundations of their organizations.
66.7% of Japanese respondents and 66.6% of Korean respondents agreed. 4.8% ofJapanese respondents and 8.8% of Korean respondents disagreed.
More than 20% of respondents did not express their attitudes. The contract of managing
public facilities often contributed to strengthening the foundation of non-profit
contractors while about a quarter of them did not recognize the affirmative effects on
the organizational foundations. This situation is understandable by taking account of
the fact that some of the non-profit contractors were solely established to be thecontractors of the public facilities. In such a case, the response was neither agree nor
disagree.

56

10.2.1.9. Necessary revenues for the stable management of the organization
Table10-25. Necessary revenues for the stable management of the organization
Subsidies and/or Membershipgrant-in-aid from fees
the government

Japan Total

Number of
response
Percentage of
response in 21

Korea Total

Number of
response
Percentage of
response in 57

Profits from the Others
business
activities

14

3

9

1

66.7%

14.3%

42.9%

4.8%

56

14

36

42

98.2%

24.6%

63.2%

73.7%

Respondents were asked to select necessary revenue items for the stable managementof the organization with permitting multiple choices.
The most selected revenue was “subsidies and/or grant-in-aid from the government” inboth Japanese (66.7%) and Korean (98.2%) responses. The second choice was “profits
from the business activities” (Japanese response 42.9%, Korean response 63.2%).
In both Japan and Korea, member fees and donations were minor contributors in theincome of non-profit sector. On the other hand, the government was the most reliable
contributor in both countries. Non-profit contractors were very concerned with thebusiness profits they were making and this tendency was stronger in Korea than inJapan.
10.2.1.10. Revenues to be increased for the stable management of the organization
Table10-26. Revenues to be increased for the stable management of the organization
Subsidies and/or Membershipgrant-in-aid from fees
the government

Japan Total

Number of
response
Percentage of
response in 21

Korea Total

Number of
response
Percentage of
response in 57

Profits from the Others
business
activities

12

2

8

1

57.1%

9.5%

38.1%

4.8%

51

1

21

39

89.5%

1.8%

36.8%

68.4%

Respondents were asked to select revenue items to be increased for the stable57

management of the organization with permitting multiple choices.
The most selected revenue was “subsidies and/or grant-in-aid from the government” inboth Japanese (57.1%) and Korean (89.5%) responses. The second choice was “profits
from the business activities” (Japanese response 38.1%, Korean response 36.8%). As for“membership fees”, only 9.5% of Japanese respondents and 1.8% of Korean respondents
selected as revenue items to be increased.
These figures show that in both countries non-profit contractors expected thegovernment to increase the funding while they emphasized the importance of businessprofits but did not have illusions about the membership fees to be increased.
10.2.1.11. Types of partnership with the government
Table10-27. Types of partnership with the government
Information
sharing

Japan Total

Number of
response
Percentage of
response in 21

Korea Total

Informalcooperation

Fullcooperation(Organizing
committee)

Others

19

5

7

21

4

1

90.5%

23.8%

33.3%

100.0%

19.0%

4.8%

37

26

52

47

4

21

64.9%

45.6%

91.2%

82.5%

7.0%

36.8%

Number of
response
Percentage of
response in 57

Subsidy (but Contracting
no contracting out
out)

Respondents were asked to select types of partnership with the municipality
government with permitting multiple choices. In the Japanese survey, all respondent
organizations were the contractors of public facilities. 19 out of 21 respondents selected“information sharing” with municipality governments in the Japanese survey. In the
Korean survey, most respondents chose “subsidy” and “contracting-out.” 64.9% of the
Korean respondents selected “information sharing.” In the Korean case, not all the
non-profit organizations became the contractors, some of them got subsidies from thegovernment to manage the facilities.
It seems that the financial connections between the municipality governments and thenon-profit contractors were very close in Korea, on the other hand such connections
were getting weaker and non-financial connections were becoming closer in Japan.
10.2.2. Non-profit contractor’s views concerning the relationship between the non-profit
contractor and the local residents
10.2.2.1. Local residents as the members of the contractor
58

In the Japanese survey, 70% of respondents replied there were local resident member inthe contractor organization. On the other hand, 47.2% of the Korean respondents
replied there were local resident members in the contractor organization.
Table10-28. Local residents are members of the contractor organization
Strongly
disagreeJapan Total

Number ofsampleKorea Total

Disagree

Neither agree Agreenor disagree

Strongly
agree

20

6

0

0

9

5

Distribution
Number ofsample

100%

30.0%

0.0%

0.0%

45.0%

25.0%

53

8

4

16

23

2

Distribution

100%

15.1%

7.5%

30.2%

43.4%

3.8%

Additional question was whether such inclusion of local residents as members of thecontractor organization contributed to more responsive service delivery by thecontractor.
Table10-29. Local residents as members of the contractor contributes to more
responsive service
Strongly
disagreeJapan Total

Number ofsampleKorea Total

Disagree

Neither agree Agreenor disagree

Strongly
agree

15

0

0

1

9

5

Distribution
Number ofsample

100%

0.0%

0.0%

6.7%

60.0%

33.3%

42

0

0

1

38

3

Distribution

100%

0.0%

0.0%

2.4%

90.5%

7.1%

In the Japanese survey, 14 out of 15 respondents replied such inclusion contributed tomore responsive service delivery. 41 out of 42 Korean respondents replied the same.
Both Japanese and Korean contractors agree with the hypothesis of inclusion of local
residents as organizational members contributing to more responsive service delivery
even if there is quite a difference between the Korean responses and the Japanese ones
concerning the percentage of contractors including local residents as theirorganizational members.
10.2.2.2. Local residents in the governance mechanism of the contractor
10 out of 20 Japanese respondents replied there were local residents in the governance59mechanism of the contractor. 19 out of 56 Korean respondents replied the same.
Governance mechanism means a council or an advisory body of a non-profit
organization.
Table10-30. Local residents in the governance mechanism of the contractor
Strongly
disagreeJapan Total

Number ofsampleKorea Total

Disagree

Neither agree Agreenor disagree

Strongly
agree

20

5

1

4

7

3

Distribution
Number ofsample

100%

25.0%

5.0%

20.0%

35.0%

15.0%

56

7

16

14

13

6

Distribution

100%

12.5%

28.6%

25.0%

23.2%

10.7%

Additional question was whether such inclusion of local residents in the governancemechanism of the contractor contributed to more responsive service delivery by thecontractor.
Table10-31. Local residents in the governance mechanism of the contractor contributes
to more responsive service
Strongly
disagreeJapan Total

Number ofsampleKorea Total

Disagree

Neither agree Agreenor disagree

Strongly
agree

15

0

1

4

8

2

Distribution
Number ofsample

100%

0.0%

6.7%

26.7%

53.3%

13.3%

44

0

2

4

30

8

Distribution

100%

0.0%

4.5%

9.1%

68.2%

18.2%

In the Japanese survey, 10 out of 15 respondents replied such inclusion contributed tomore responsive service delivery. 38 out of 44 Korean respondents replied the same.
In the Korean case, less than 50 percent of respondents include local residents in thegovernance mechanism of the contractors. On the other hand, nearly 90 percent ofrespondents recognize the importance of such inclusion in providing responsive services.
In the Japanese case, half of the respondents include local residents in their governancemechanism while 66.3% of respondents agree with the hypothesis. It can be said the
Korean respondents hope the local residents play important roles in providing better
services on the other hand the Japanese respondents select the answers by taking
account of the experiences of inclusion of local residents.

60

10.2.2.3. Meetings between the local residents and the contractor
In the Japanese survey, 81.0% of respondents replied they held open meetings between
local residents and the contractor. On the other hand, 35.8% of the Korean respondents
replied they held such meetings.
Table10-32. Open meetings between the local residents and the contractor
Yes

Japan Total

Number ofsampleKorea Total

No

21

17

4

Distribution
Number ofsample

100%

81.0%

19.0%

53

19

34

Distribution

100%

35.8%

64.2%

Additional question was whether such meetings contributed to more responsive service
delivery by the contractor.
Table10-33. Open meetings between local residents and the contractor contributes more
responsive service.
Strongly
disagreeJapan Total

Number ofsampleKorea Total

Disagree

Neither agree Agreenor disagree

Strongly
agree

17

0

0

3

12

2

Distribution
Number ofsample

100%

0.0%

0.0%

17.6%

70.6%

11.8%

23

0

1

1

18

3

Distribution

100%

0.0%

4.3%

4.3%

78.3%

13.0%

In the Japanese survey, 14 out of 17 respondents replied such meetings contributed tomore responsive service delivery. 21 out of 23 Korean respondents replied the same.
In this question, the trend of the Korean and Japanese responses is the same as that ofinclusion of local residents in the governance mechanism of contractors. The Korean
contractors expect more than the current practices while the Japanese contractors
recognize the importance based on their undertakings.
10.2.2.4. Local residents as volunteers in the contracted-out facility
In the Japanese survey, 15 out of 21 respondents replied there were local resident
volunteers in the facility. On the other hand, 11 out of 55 Korean respondents replied
there were local resident volunteers in the facility.
61

Table10-34. Local residents as volunteers in the contracted-out facility
Strongly
disagreeJapan Total

Number ofsampleKorea Total

Disagree

Neither agree Agreenor disagree

Strongly
agree

21

4

1

1

13

2

Distribution
Number ofsample

100%

19.0%

4.8%

4.8%

61.9%

9.5%

55

2

14

28

5

6

Distribution

100%

3.6%

25.5%

50.9%

9.1%

10.9%

Additional question was whether local resident volunteers contributed to more
responsive service delivery by the contractor.
Table10-35. Local resident volunteers contribute to more responsive service delivery
Strongly
disagreeJapan Total

Number ofsampleKorea Total

Disagree

Neither agree Agreenor disagree

Strongly
agree

16

0

0

1

13

2

Distribution
Number ofsample

100%

0.0%

0.0%

6.3%

81.3%

12.5%

54

0

0

0

28

26

Distribution

100%

0.0%

0.0%

0.0%

51.9%

48.1%

In the Japanese survey, 15 out of 16 respondents replied local resident volunteers
contributed to more responsive service delivery. All Korean respondents replied thesame.
In this question, the response tendency is the same as the previous questions. As for the
relationship between the non-profit contractor and the local residents, the Korean
contractors have not yet fully get the local residents involved in providing services withhigh expectation that such involvement enabling more responsive service delivery. The
Japanese contractors have enough experiences in involving the local residents inmanaging public facilities and their answers are based on the real practices.

10.3. Financial situation of the non-profit contractor
10.3.1. Japanese caseIn the Japanese survey, financial data and information were only collected from 15
non-profit contractors out of 21 contractors that responded the interview surveys. They
are classified into four groups in the context of organization type; four specified
non-profit corporations, nine social welfare corporations, one LSGB and one
62incorporated education institution. As the social welfare corporations and theincorporated education institution carried out various projects and programs, it was
rather difficult to collect the financial data of whole corporations during the interviews.
So, these corporations and institution only provided the financial data concerning thecontracted-out facilities. The specified non-profit corporations are small in scale so thatthey provided financial data for whole organizations.
Here, some explanation should be made concerning “approved business.” Before an
establishment starts to provide specific social services such as nursery services for theelderly and employment support services for the handicapped, it is to get approval fromthe local governments based on the relevant laws and regulations. In providing these
services, the establishments are paid by the government (in the case of the Long-TermCare Insurance System, the government pays ninety percent of total charges) as well as
the service users (in the case of the Long-Term Care Insurance System, the users pay
ten percent of total charges) to cover the costs of the services. This kind of business iscalled “approved business.” “Approved business” is supervised and controlled by thegovernment and its profitability is regulated by the government.

Table 10-36.

Income of the non-profit contractors: specified non-profit corporations(Japanese data) Income of fiscal 2008
Income from
Government
the approved
contractingbusinesses
out

Other
commercial
incomeMember fee

Government
subsidy

Facility for the handicapped

0.0%

9.7%

7.3%

74.6%

8.4%

0.0%

0.1%

100%

Facility for the handicapped

0.2%

0.6%

0.0%

96.9%

0.0%

0.1%

2.2%

100%

Facility for the elderly

0.0%

6.3%

92.9%

0.0%

0.5%

0.0%

0.3%

100%

Other social welfare facility

0.2%

0.0%

99.6%

0.0%

0.2%

0.0%

0.0%

100%

Kind of facility

Donation

Others

Total

Looking at the percentage distribution of income by kind of income in the case of
specified non-profit corporations, we can identify income from the government
contracting-out or income from the approved businesses occupied substantial share.
Three out of four corporations got more than ninety percent of their income from thegovernment contracts or the approved businesses.

Table 10-37. Income of the non-profit contractors: social welfare corporations (Japanesedata) Income of fiscal 2008
63

Kind of facility

Member fee

Government
subsidy

Income from
Government the approved
contracting- businessest

Othercommercial
incomeDonation

Others

Total

Facility for the handicapped

Contracted-out facility only

0.0%

17.7%

0.0%

81.7%

0.0%

0.0%

0.6%

100%

Facility for the elderly

Whole corporation

0.0%

0.3%

0.0%

95.3%

0.1%

1.1%

3.2%

100%

Facility for the elderly

Contracted-out facility only

0.0%

0.0%

0.0%

98.4%

1.6%

0.0%

0.0%

100%

Facility for the elderly

Contracted-out facility only

0.0%

0.0%

90.2%

0.0%

9.7%

0.0%

0.1%

100%

Facility for the elderly

Contracted-out facility only

4.2%

5.5%

5.4%

68.4%

1.5%

0.1%

14.9%

100%

Other social welfare facility

Contracted-out facility only

0.0%

0.0%

65.7%

0.0%

34.3%

0.0%

0.0%

100.0%

Other social welfare facility

Contracted-out facility only

0.0%

6.3%

92.9%

0.0%

0.5%

0.0%

0.3%

100.0%

Other social welfare facility

Contracted-out facility only

0.0%

0.0%

97.3%

0.0%

2.7%

0.0%

0.0%

100%

Other social welfare facility

Contracted-out facility only

5.9%

3.2%

0.0%

61.0%

0.1%

0.9%

28.8%

100.0%

As for the income data of the social welfare corporations concerning the contracted-out
facilities, income from the government contracts or income from the approved
businesses occupied substantial shares. Five out of nine corporations earned more thanninety percent of income from the government subsidy and government contracts andapproved businesses. The other four corporations received more than half of theirincome from government contracts and approved businesses.
Therefore, the financial conditions of the non-profit contractors are heavily dependent
on the government contracts, subsidies and government approved businesses. The
weight of other revenues such as member fees and donations is very small.

64

10.3.2. Korean case
Table 10-38. Income of the non-profit contractors: specified non-profit corporations (%),
Income of fiscal 2008 (Korean data)
Kind of facility
NumberFacility

Facility

Other

for the handicapped

for the elderly

social welfare facility

①

④

②

③

⑤

⑥

⑦

⑧

⑨

Member fee

14.3

0.0

0.0

8.4

0.0

0.0

0.0

0.0

0.0

Government subsidy

67.1

63.5

70.8

76.8

9.1

34.2

26.0

64.8

48.0

Government

0.0

0.0

11.3

0.0

0.0

0.0

0.0

4.2

26.1

4.5

33.0

9.9

0.0

72.8

47.7

4.6

2.8

5.1

Donation

10.3

2.8

2.4

4.5

15.5

5.9

67.3

14.9

13.1

Others

3.8

0.7

5.7

10.3

2.7

12.2

2.2

13.3

7.7

Total

100

100

100

100

100

100

100

100

100

contracting-out
Other commercial
incomeIn the Korean survey, financial data and information were collected from 53 non-profit
contractors out of 57 contractors that responded the mail surveys. They are classified
into three groups in the context of organization type; 34 specified non-profit
corporations (including private non-profit organizations), 15 social welfare corporations,and 4 incorporated education institution. Here, the financial data from nine specified
non-profit corporations are shown below as representative data.
Looking at the percentage distribution of income by kind of income in the case of thecontractors of facilities for the handicapped, we can identify income from thegovernment subsidies occupied substantial share, more than sixty percent. As for thecontractors of the facilities for the elderly, some corporations get substantial moneyfrom other commercial income. Among the contractors of other social welfare facilities,
there is a corporation whose donation income occupies 67.3%. Overall most of thespecified non-profit corporations depend upon the funding from the government such as
subsidies and contract money. Member fees and donations usually occupy a small
percentage in the total income.
Next, the financial data from seven social welfare corporations are shown in the tablebelow as representative data. Like the above mentioned specified non-profit
corporations, income from the government subsidies and contracts occupied substantial
shares. Six out of seven corporations earned more than sixty percent of income from the65government subsidy and government contracts. The weight of other commercial income
varies between 4.4 % and 35.0 %. The share of member fees and donations is relatively
small.
Table 10-39. Income of the non-profit contractors: social welfare corporations (%),
Income of fiscal 2008 (Korean data)
Kind of facility

Facility for the elderlyOthersocial welfare facility

Number

①

②

③

④

⑤

⑥

⑦

Member fee

0.0

0.0

0.0

0.0

0.0

0.0

2.8

Government subsidy

61.6

66.8

30.6

50.5

51.2

43.8

46.9

Government

0.0

0.0

21.0

15.3

21.0

22.7

29.7

20.5

25.4

35.0

11.6

4.4

15.4

9.3

Donation

8.2

5.3

8.6

9.2

15.3

9.8

7.2

Others

9.7

2.5

4.8

13.4

8.1

8.3

4.1

Total

100

100

100

100

100

100

100

contracting-out
Other commercial
incomeAll together, the financial conditions of the Korean non-profit contractors are heavily
dependent on the government subsidies and contracts. The weight of member fees isminimal and some contractors earn substantial money from other commercial activities
and donations.

10.3.3. Japan-Korea Comparison
The financial structures of the Japanese non-profit contractors are very similar to thoseof the Korean ones. They depend on the income from the government such as subsidies
and contracts. Japan’s social welfare corporations rely on the income from thegovernment approved business, namely the government as well as facility users pay thecosts of services provided by the corporations.
The Korean non-profit contractors get income from more various sources than theJapanese counterparts. However, both Korean and Japanese non-profit contractors
mainly depend upon the income from the government with relatively small amount ofincome from member fees and donations. Without income from the government,
66

non-profit contractors could not survive in both Japan and Korea.

11. Relationship between the LSGBs, non-profit contractors and municipality
governments: Survey data from the Japanese LSGB questionnaire
Twenty-one local self-governing bodies (LSGBs) locating nearest to the contracted-out
public facilities were surveyed in Japan. The participation rate was 86.6% and theaverage number of executives was 23.1. The main features of the active member were
60 years old or over, male, retired, high school graduates and average or low income.
17 respondents agreed the level of government involvement in the LSGB was deep.
Types of partnership with the city government were information sharing (19respondents), informal cooperation (10 respondents), subsidy, but no contracting out (11respondents), contracting out (12 respondents) and organizing committee (11respondents).
Table 11-1. Relationship between the LSGB and the non-profit contractor
The LSGB ortheorganization
establishedby the LSGB
is acontractor.

Total
Percentage of
response in
21

There are
Local
Periodical
local
residents are meetings
residents who included inconcerning
are thethe governing themembers of council of the management
the non-profit organization of the facility
organization.

Dispatch ofvolunteers to
the social
welfarefacility

RelationalNo
activities
involvement
apart from the
managementof the facility

5

7

7

9

4

7

2

23.8%

33.3%

33.3%

42.9%

19.0%

33.3%

9.5%

Based on the data from the pilot survey, the types of relationship between the LSGB
and the non-profit contractor are classified into 6 categories; cthe LSGB or theorganization established by the LSGB being a contractor, dlocal residents as themembers of the contractor, elocal residents included in the governing mechanism of thecontractor, fperiodical meetings concerning the management of the facility, gdispatchof volunteers to the facility and hrelational activities apart from the management of the
facility. The Respondents were asked to select among 6 categories the type of
relationship with the non-profit contractor, permitting multiple choices.
9 out of 21 respondents selected periodical meetings. 7 respondents chose “local
residents as the members of the contractor,” “local residents included in the governing
mechanism of the contractor” and “relational activities apart from the management of
the facility.” Five respondents chose “the LSGB or the organization established by the67

LSGB being a contractor.”
Along with the questions in the local government survey and non-profit contractor
survey, the LSGBs’ views were collected concerning the following hypothetical question.
The level of involvement of local residents determines the quality of service(responsive service at the contracted-out public facility).
The level of involvement is given as follows.
①

A LSGB or the organization established by the LSGB is the contractor②

Local residents as the members of the contractor non-profit organization③

Local residents in the governance mechanism of the contractor non-profit
organization④

Local residents participating open meetings of the contractor non-profit
organization⑤

Local residents as volunteers in the contracted-out facility

Table 11-2. The LSGB or the organization established by the LSGB is a contractor.
Strongly
disagree
Number ofsampleDistribution

8
100%

0
0.0%

Disagree0
0.0%Neither agree Agreenor disagree

3
37.5%

Strongly
agree

4
50.0%

1
12.5%

Table 11-3.Local residents as members of the contractor
Strongly
disagree
Number ofsampleDistribution

9
100%

0
0.0%

Disagree0
0.0%Neither agree Agreenor disagree

3
33.3%

Strongly
agree

5
55.6%

1
11.1%

Table 11-4.Local residents in the governance mechanism of the contractor
Strongly
disagree
Number ofsampleDistribution

8
100%

0
0.0%

Disagree0
0.0%Neither agree Agreenor disagree

4
50.0%

Strongly
agree

4
50.0%

Table 11-5. Meetings between local residents and the contractor

68

0
0.0%

Strongly
disagree
Number ofsampleDistribution

12
100%

0
0.0%

Disagree0
0.0%Neither agree Agreenor disagree

2
16.7%

Strongly
agree

9
75.0%

1
8.3%

Table 11-6.Local resident volunteers
Strongly
disagree
Number ofsampleDistribution

11
100%

0
0.0%

Disagree0
0.0%Neither agree Agreenor disagree

2
18.2%

Strongly
agree

8
72.7%

1
9.1%

According to the responses from the LSGBs shown in the tables above, most of the
LSGBs agreed that all these five types of relationship between the local
residents/LSGBs and the non-profit contractors contributed to more responsive to theusers’ needs.

12. Relationship between the non-profit contractors, users’ associations andmunicipality governments: Survey data from the Korean questionnaire
In Korea, we could not identify local self-governing bodies which have similar functions
to the Japanese ones. Local self-governing bodies are to play supporting roles inmanaging public facilities.

Instead, associations organized by the users of thecontracted-out public facilities (users’ associations) were made respondents in the
Korean surveys.
66 users’ associations were surveyed in Korea. The participation rate was 83.2% and theaverage number of executives was 8.4. The main features of the active member were
40-50 years old or over, male, self-employed, undergraduates and average or low
income.
50 respondents agreed the level of government involvement in the users’ associations
was deep.
Types of partnership with the city government were information sharing (22respondents), informal cooperation (31 respondents), subsidy but no contracting out (29respondents), contracting out (6 respondents) and organizing committee (11respondents).
69

Table 12-1. Relationship between the users’ association and the non-profit contractor
Users' associationor the organization
established by theusers' association
is a contractor.

Total
Percentage of
response in 65

There are local Local residents
residents who are included inare the members the governingof the non-profit council of the
non-profit
contractor.
contractor

Periodical meetings
to exchange
information andopinions concerning
the management of
the facility

Dispatch ofvolunteers to
the contractedout public
facilityNo
Relational
activities apart involvementfrom themanagement of
the facility

0

11

11

6

19

15

1

0.0%

16.9%

16.9%

9.2%

29.2%

23.1%

1.5%

The types of relationship between the users’ association and the non-profit contractor
are classified into 6 categories as mentioned above; cthe users’ association or theorganization established by the users’ association being a contractor, dlocal residents as
the members of the contractor, elocal residents included in the governing mechanism of
the contractor, fperiodical meetings concerning the management of the facility,
gdispatch of volunteers to the facility and hrelational activities apart from the
management of the facility. The Respondents were asked to select among 6 categories
the type of relationship with the non-profit contractor, permitting multiple choices.
19 out of 65 respondents selected “dispatch of volunteers to the facility.” 6 out of 65
respondents selected periodical meetings. 15 respondents chose “relational activities
apart from the management of the facility.” There was no respondent that chose “theusers’ association or the organization established by the users’ association is acontractor”

13. Role of the local self-governing bodies in securing better public services
In our hypotheses, we assumed that there existed local self-governing bodies in bothcountries. However, we could not identify the entities which had similar functions as theJapanese “Ji-Chi-Kai” in Korea. Therefore, we could only make use of the results fromthe local government surveys and non-profit contractor surveys to verify our
hypotheses.
The tables for the relationship between the local residents and non-profit contractors
described above (tables 10-8, 10-9, 10-10, 10-11, 10-29, 10-31, 10-33, 10-35) obviously
support our hypotheses.
we can calculate the mean values as follows by allocating one to five points according to
the responses (strongly disagree; one point, disagree; two points, neither agree nor
70disagree; three points, agree; four points, strongly agree; five points).
Table 13-1. Mean values for the local government surveys
Variables
Inclusion of local resident member

Governance mechanism participation

Open meetings

Volunteers involvement

Country

N

Mean

Korea

62

3.50

Japan

98

3.71

Korea

66

3.44

Japan

89

3.67

Korea

45

3.36

Japan

94

3.91

Korea

67

3.78

Japan

98

3.77

Table13-2. Mean values for non-profit contractor surveys
Variables
Inclusion of local resident member

Governance mechanism participation

Open meetings

Volunteers involvement

Country

N

Mean

Korea

42

4.05

Japan

15

4.27

Korea

44

4.00

Japan

15

3.73

Korea

23

4.00

Japan

17

3.94

Korea

54

4.48

Japan

16

4.06

In both tables 13-1 and 13-2, mean values are more than three points. The responses
from the local governments and non-profit contractors in both Japan and Korea
implicitly support our hypotheses. Actual confirmation of the hypotheses needs
quantitative performance indicators. Here, further research undertakings are needed.
To investigate the difference in the mean scores between Korea and Japan, an
independent sample t-test was conducted. The results of the t-test are shown in thetables 13-3 and13-4. As shown in the table 13-1, the respondents of local governments inJapan obtained a higher mean score as compared to their counterparts in Korea, except
71volunteer involvement item. As such, the respondents of local governments in Japan
have more positive perception about the effect of inclusion of local resident members,
governance mechanism participation, open meeting on social service responsiveness.
Also, the results in the table 13-3 indicated that there was strong significant differencein the means value of open meeting variable (p=.001). Due to the results, the null
hypothesis about open meeting effect on service responsiveness is rejected. On the other
hand, there were no significant differences in the mean value in the inclusion of local
resident members, governance mechanism participation, volunteering involvement
effect on service responsiveness.
Table 13-3. Independent t-test results of local governments
Variables
Inclusion of local resident member

Governance mechanism participation

Open meetings

Volunteers involvement

Country

N

Mean

Korea

62

3.50

Japan

98

3.71

Korea

66

3.44

Japan

89

3.67

Korea

45

3.36

Japan

94

3.91

Korea

67

3.78

Japan

98

3.77

t

Sig. (twotailed)

-1.53

0.13

-1.918

0.058

-3.48

.001**

0.089

0.929

*significant at 0.05, **significant at 0.001(Equal variances not assumed)
The following Table 13-4 shows the opposite results of local government in the table13-3. The respondents of nonprofit facilities in Korea obtained a higher mean score ascompared to their counterparts in Japan, except the inclusion of local resident member
item. As such, the respondents of nonprofit facilities in Korea have more positive
perception about the effect of governance mechanism participation, open meeting,volunteer involvement on social service responsiveness. The results indicated that there
was a significant difference in the means value of volunteer involvement variable(p=.003). Due to the results, the null hypothesis about volunteer involvement effect onservice responsiveness is rejected. On the other hand, there were no significant
differences in the mean value in the inclusion of local resident members, governancemechanism participation, public hearing effect on service responsiveness.
72

Table 13-4. Independent t-test results of NPOs
Variables
Inclusion of local resident member

1

2

Governance mechanism participation

Open meetings

3

Volunteers involvement

4Country

N

Mean

Korea

42

4.05

Japan

15

4.27

Korea

44

4.00

Japan

15

3.73

Korea

23

4.00

Japan

17

3.94

Korea

54

4.48

Japan

16

4.06

t

Sig. (twotailed)-1.365

0.19

1.252

0.216

0.315

0.754

3.218

.003*

*significant at 0.05, **significant at 0.001(1, 4: Equal variances not assumed, 2, 3: Equal variances assumed)

14. Future Challenges: what we can learn from the experiences of Japan and Korea?
14.1. Summary and conclusion
While the Japanese municipality governments face the urgent needs to conduct
administrative reform for cutting government spending, the Korean counterparts areconfronted with the growing needs of social services under the insufficient
infrastructures. Taking account of these different circumstances, among many reform
items, the contracting-out of public facilities, especially social welfare facilities inprinciple, was selected for comparative study.
The uniqueness of our research is to show what the common elements are and what thedifferences are in the relationship between municipality governments, non-profit
contractors and local residents between Japan and Korea under the government
contracting-out arrangement by making use of the survey data. Field surveys wereconducted in both countries with the same survey designs including questionnaires
developed from the comparative perspective.
In contracting-out of public facilities, the Japanese municipalities did so in order toreduce the government spending and civil servants, while the Korean municipalities did
so to improve the quality of services and for seeking external civic expertise. The
background of contracting-out is different between two countries.
73

On the other hand, contractors were selected based on the expertise and experiences ofmanaging the same kind of facilities, and municipality governments regarded thecapability and expertise of the staff and the financial strength of the contractors asnecessary conditions for non-profit organizations to manage public facilities
appropriately in both countries. In both countries, municipalities made use of various
methods to supervise the contractors to deliver quality services. Non-profit contractors
mostly depended upon the government funding and did hope to increase the income
from the government in both countries. Thus, as for the relationship between themunicipality governments and non-profit contractors, we could observe common
elements between Japan and Korea.
On the contrary, the self-governing environments in the community were quite different
between the two countries. According to the survey data, the Japanese municipality
governments, non-profit contractors and “Ji-Chi-Kai” (local self-governing bodies)were connected and collaborated in running the contracted-out facilities for more
responsive service delivery. In Korea, we could not easily identify the same kind ofentities as the Japanese “Ji-Chi-Kai.” Users’ associations of the contracted-out facilities
were surveyed instead of “Ji-Chi-Kai.” Their involvements in running the facilities were
not as participatory as the Japanese counterpart.
In conclusion, the conditions on which non-profit sector can be qualified as reliable actor
in delivering public services are; expertise and financial strength on the non-profit
sector side, appropriate supervising mechanisms and funding on the government side.
In both countries, member fees and donations were minor contributors in the income of
non-profit sector. The collaboration between the municipality governments, non-profit
contractors of public facility and local resident was high and beneficial to improving thequality of services in Japan. In the Korean case, however, each actor was contributing to
the services more independently which raises the question of coordination andcollaboration in terms of the network. In addition, we could not find a local
self-governing body similar in functions as the Japanese “JI-Chi-Kai” in Korea. Further
research efforts are needed to explore in this respect.
We could get the survey data from the local governments and non-profit contractors to
support the following hypotheses.

74Hypothesis 1:
A local resident inclusion as members in the non-profit contractor can contribute to more
responsive service delivery by the contractor.
Hypothesis 2:
The local resident participation in the governance mechanism of the contractor such as anadvisory committee can contribute to more responsive service delivery by the contractor.
Hypothesis 3:
Open meetings between the local residents and the contractor, which are held by thecontractor, can contribute to more responsive service delivery by the contractor.
Hypothesis 4:
The local residents’ involvement as volunteers in the activities conducted in the facility cancontribute to more responsive service delivery by the contractor.

14.2. Future challenges in Japan
In Japan, we could not collect quantitative data to verify the hypothesis. Research
efforts to get quantitative performance indicators are needed in the future.
As for the surveys on the Japanese side, sample size of non-profit contractors and the
LSGBs is rather small, twenty-one. And some remarkable undertakings were observedat the specific facilities. Further research undertakings are needed to have morequantitative data as well as larger sample size enough to be categorized by type of
facility.

14.3. Future challenges in Korea
There is the tong and ban system and the Saemaul movement. The government hasenacted “local self-governing committee” system under the Nom Hyon Administration.
Partly because of some regionalism in Korea, municipality governments did not takenecessary actions to introduce this system at one time. Some governments started toconvene the committees soon after the system was introduced, while other governments
did finally organize the committees after Mr. Lee Myon-baku was elected as President.
As a whole, we could not get necessary data and information to describe thecommunity-level self-governing activities in Korea. In this context, further research
efforts are needed.

75

76

Appendix 1. Population of the respondent minicipalities in Japan

Prefecture

Municipality

1 Yamagata

Yamagata city

2 Yamagata

Tsuruoka city

3 Yamagata

Sakata city

4 Yamagata

Yonezawa city

5 Yamagata

Tendo city

6 Yamagata

Higashine city

7 Yamagata

Sagae city

8 Yamagata

Shinjo city

9 Yamagata

Kaminoyama city

10 Yamagata

Nanyou city

11 Yamagata

Nagai city

12 Yamagata

Murayama city

13 Yamagata

Takahata town

14 Yamagata

Shonai town

15 Yamagata

Kahoku town

16 Yamagata

Obayazawa city

17 Yamagata

Kawanishi town

Population

Source2005 Population Census

256,012142,384
117,577
93,17863,86445,834
43,62540,71736,01335,19030,92928,192
26,026
24,677
20,73820,695

do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,
do.,

77

18,769
18 Yamagata

Yuza town

19 Yamagata

Shirataka town

20 Yamagata

Yamanobe town

21 Yamagata

Mogami town

22 Yamagata

do.,16,852

do.,

16,331

do.,

15,415do.,

10,761

Mamurogawa
town

do.,

10,054do.,

23 Yamagata

Oe town

24 Yamagata

Oguni town

25 Yamagata

Oishida town

26 Yamagata

Mikawa town

27 Yamagata

Kaneyama town

28 Yamagata

Nishikawa town

29 Yamagata

Funagata town

30 Yamagata

Tozawa village

31 Yamagata

Sakekawa village

32 Yamagata

Okura village

33 Kanagawa

Yokohama city

3,679,488

34 Kanagawa

Kawasaki city

1,417,944 do.,

35 Kanagawa

Sagamihara city

713,885 do.,36 Kanagawa

Yokosuka city

420,300 do.,

9,915

do.,

9,742

do.,

8,824

do.,

8,003

do.,

6,949

do.,

6,917

do.,

6,671

do.,

5,915

do.,

5,447

do.,

4,226

78

Estimated population as of 1 May 2010

37 Kanagawa

Hiratsuka city

260,063 do.,38 Kanagawa

Chigasaki city

234,674 do.,

39 Kanagawa

Atsugi city

225,474 do.,40 Kanagawa

Ebina city

127,239 do.,

41 Kanagawa

Isehara city

100,981 do.,

42 Kanagawa

Ayase city

82,992 do.,

43 Kanagawa

Zushi city

58,899 do.,

44 Kanagawa

Miura city

48,384 do.,

45 Kanagawa

Samukawa town

47,765 do.,46 Kanagawa

Minamiashigara

44,151 do.,city

47 Kanagawa

Oiso town

32,775 do.,48 Kanagawa

Hayama town

32,502 do.,

49 Kanagawa

Ninomiya town

29,633 do.,

50 Kanagawa

Yugawara town

26,663 do.,

51 Kanagawa

Oi town

17,829 do.,

52 Kanagawa

Kaisei town

16,336 do.,

53 Kanagawa

Hakone town

13,348 do.,

54 Kanagawa

Nakai town

10,026 do.,

55 Kanagawa

Manazuru town

8,232 do.,56 Shizuoka

Hamamatsu city

804,032

57 Niigata

Niigata city

785,134 do.,58 AichiToyota city

412,141 do.,59 Aomori

Aomori city

311,508 do.,60 Iwate

Morioka city

287,192 do.,61 NaganoMatsumoto city

227,627 do.,62 Niigata

Joetsu city

208,082 do.,

63 Miyazaki

Miyakonojo city

133,062 do.,

64 Iwate

Oshu city

130,171 do.,65 Iwate

Ichinoseki city

125,818 do.,

66 Miyazaki

Nobeoka city

121,635 do.,

67 Akita

Yokote city

103,652 do.,

68 Ishikawa

Kaga city

74,982 do.,

69 NaganoIna city

62,869 do.,70 Iwate

Miyako city

60,250 do.,79

2005 Population Census

71 Hokkaido

Ishikari city

60,104 do.,

72 Miyagi

Kesennuma city

58,320 do.,

73 Gifu

Ena city

55,761 do.,

74 Akita

Noshiro city

51,703 do.,

75 Fukushima

Shirakawa city

47,854 do.,76 Kagosima

Amami city

47,212Estimated population as of 31 May 2010

77 Kumamoto Tamana city

45,341

2005 Population Census

78 Nagasaki

Hirado city

38,3892005 Population Census

79 NaraUda city

35,822Estimated population as of 1 June 2010

80 KobeKobe city

1,525,393 do.,81 Fukuoka

Fukuoka city

1,401,279 do.,82 Hiroshima

Hiroshima city

1,154,391 do.,

83 Chiba

Chiba city

924,319 do.,84 Okayama

Okayama city

674,746 do.,85 Kumamoto Kumamoto city

669,603 do.,86 Kagoshima Kagoshima city

604,367 do.,

87 Ehime

Matsuyama city

514,937 do.,88 Oita

Oita city

462,317 do.,89 Ishikawa

Kanazawa city

454,607 do.,90 Nagasaki

Nagasaki city

442,699 do.,

91 Gifu

Gifu city

399,931 do.,

92 Wakayama Wakayama city

375,591 do.,

93 KagawaTakamatsu city

337,902 do.,

94 Akita

Akita city

333,109 do.,95 Gunma

Maebashi city

318,584 do.,

96 Okinawa

Naha city

312,393 do.,97 Shiga

Otsu city

301,672 do.,

98 Fukushima

Fukushima city

290,869 do.,99 Ibaraki

Mito city

262,603 do.,

100 Fukui

Fukui city

252,220 do.,

101 Mie

Tsu city

165,182 do.,

102 Miyagi

Shiogama city

57,715

Estimated population as of 31May 2010

103 Miyagi

Shibata town

38,532Estimated population as of 31July 2010

104 Miyagi

Kawasaki town

10,5832005 Population Census

105 Miyagi

Murata town

12,7402005 Population Census

80106 Miyagi

Osaki city

136,482

Estimated population as of 1July 2010

107 Miyagi

Tome city

89,316

2005 Population Census

108 Miyagi

Misato town

25,681

Estimated population as of 31May 2010

109 Miyagi

Ishinomaki city

163,335

Estimated population as of 31July 2010

110 Miyagi

Okawara town

23,515

Estimated population as of 31July 2010

111 Miyagi

Taiwa town

24,776

Estimated population as of 31March 2010

112 Miyagi

Higashimatsushima city

43,295

Estimated population as of 1May 2010

113 Miyagi

Marumoro town

15,952Estimated population as of 1July 2010

114 Fukuoka

Dazaifu city

69,433

Estimated population as of 31July 2010

115 Tokyo

Nerima ward

707,844

Estimated population as of 1Aug 201081

Appendix 2 : Questions in the Questionnaire
Questionnaire for municipality governments
1.

Background and reasons of contracting-out; the biggest reason2.

Background and reasons of contracting-out; the second biggest reason

3.

Kinds of facility contracted-out to private non-profit organizations. Multiple
choices.

4.

The main reason of selecting this private non-profit organization as a contractor

5.

Quality of facility management provided by the non-profit organization

6.

Supervising means by the city government. Multiple choices.

7.

Ratings of the users in the survey

8.

Conditions that the private non-profit organization can manage the public facility
appropriately. Two choices

9.

If there is a local resident member in the contractor, such inclusion contributes tomore responsive service delivery by the contractor or not

10. If the local residents participate in the governance mechanism of the contractor,
such inclusion contributes to more responsive service delivery by the contractor ornot
11. If the contractor organization holds open meetings between the local residents andthe contractor, such meetings contribute to more responsive service delivery by thecontractor or not
12. If the local residents are involved as volunteers in the activities conducted in thefacility, such involvement contributes to more responsive service delivery by thecontractor or not
13. The level of citizens participation in solving community-related problems
14. Types of self-governing bodies. Multiple choices
15. Local self-governing bodies have been active past a few years or not
16. Types of relationship between the self-governing bodies and the city government.
Multiple choices.
17. Local self-governing bodies are carrying out their own activities to solve
community-related problems or not
Questionnaire for non-profit contractors of public facilities
1.

Type of organization

2.

Room for improving the management of the facility by making use of original ideas
and methods.
82

3.

Expertise of the contractor is made use of in managing this facility or not

4.

Contractor carries out activities stipulated in the statute of the contractor in
relation to the facility management or not

5.

Activities stipulated in the statute and conducted in relation to this contracted
facility management contribute to more responsive service delivery or not

6.

Conduct of users' satisfaction survey or not

7.

Ratings of the users in the survey

8.

This contract contributes to the strengthening the organizational (personnel andfinancial) foundations of the contractor or not

9.

Necessary revenues for the stable management of the contractor. Multiple choices.

10. Preferable revenue for the stable management of the contractor. Multiple choices.
11. Types of partnership with the city government. Multiple choices are allowed.
12. There are many local residents as members in the contractor or not.
13. With local resident members in the contractor, such inclusion contributes to more
responsive service delivery or not.
14. Level of the local resident participation in the contractor’s governance mechanism
is high or not
15. With local residents participating in the governance mechanism, such inclusion
contributes to more responsive service delivery or not.
16. Is there any meeting or get-together between your organization and local residents?
17. When there are some meetings or get-together between your organization and local
residents, do you agree such meetings contributes to more responsive service
delivery by your organization?
18. Do you agree there is any involvement of the local residents as volunteers in theactivities conducted in this facility?
19. When the local residents are involved as volunteers in the activities conducted inthis facility, do you agree such involvement contributes to more responsive service
delivery by your organization?
Questionnaire for local self-governing bodies located near the public facilities(Japanesesurvey)1.

Participation rate2.

Number of executives

3.

Features of the active members (Age group, Gender, Education level, Income level,
Occupation)

4.

Relationship between your organization and the city government; Government83

involvement in a community self-governing body.

Do you agree the level ofgovernment involvement in a community self-governing body is deep?
5.

Types of partnership with the city government. Multiple choices are allowed.

6.

Involvement in the non-profit organization, which is the contractor of the social
welfare facility located in the community. Multiple choices are allowed.

7.

When your organization or the organization established by your organization is acontractor, do you agree such arrangement contributes to more responsive service
delivery?

8.

When there is a local resident member in the contractor organization, do you agreesuch inclusion of local resident contributes to more responsive service delivery by
the contractor?

9.

When the local residents participate in the governance mechanism of the contractor
organization, do you think such inclusion of local resident contributes to more
responsive service delivery by the contractor?

10. When the contractor organization holds open meetings between the local residents
and the contractor, do you agree such meetings contribute to more responsive
service delivery by the contractor?
11. When the local residents are involved as volunteers in the activities conducted in
the facility, do you agree such involvement contributes to more responsive service
delivery by the contractor?

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