This paper analyses governance and network problems of organizations in social economy for providing personal social services confronting multi-stakeholder problems among social economy, for-profit enterprises and local governments. And, we will look into uniqueness of Japanese social economy organizations and similarity with organizations in European social economy based on empirical researches concerning work incentives, human capital, social capital and independent citizenship among diverse legal status and ownership of organizations for providing personal social services.

Although work incentives are very high through democratic governance in each organization, Japanese social economy is not well coordinated as far as social capitals are concerned. This is not only the case for the relationship with other sectors, for-profit organizations and local governments, but with other organizations in the same social economy. We are going to verify reverse relationship between work incentives and social capital networks.

Several researches, for example, by Carlo Borzaga and Victor Pestoff claims that work incentives and quality of services in the third sector are significantly high in comparison to the public or for-profit sectors. Starting from the similar framework for Japanese social economy, this paper aims at empirical research comparing work incentives and governance problems in Japanese personal social service provision.

From the analysis of this paper, it may be possible to say that the workers in Japanese social economy are highly motivated within its organization, and they succeed in providing quality services. However, organizations in social economy are weak in both of their financial and human resource foundations comparing to the counterparts in Europe; furthermore, networking among third sector organizations and local governments has several difficulties in utilizing and coordinating resources in the region; financial resources, human resources, social capitals and citizenship initiatives.

In contrast, the Japanese employment system in for-profit enterprises has been largely changed since 1990’s. As far as the labor incentive is concerned, the introduction of performance based the wage system had negative effect on work incentives, and caused considerable loss of cooperative attitude among employees and loyalty to organization. Moreover, the workers and officers in the government sector are losing trust and confidence “in” their workplaces and “from” the local citizens.

Now, we found it strongly necessary to enhance the cross sectoral co-operations among social economy, for-profit sector and local governments. For that purpose, cross organizational skills rather than organization specific skills are urgently needed for integrating the management resource among social enterprises (in both social economy and for-profit) and local governments. We define it as “relational skills”. This “relational skills” among persons who are going to coordinate personal social service provisions will play most crucial roles, leading into conquering the reverse relationship between work incentives and social capital networks in Japanese social economy.

This should, of course, go hand in hand with more flexible human resource movement in the Japanese economy, and more prevailing “co-producing” or “citizen participatory” platforms in providing personal social services. That leads to solve the multi stakeholder problems in providing personal social services under the population shrinking society in Japan. (499 Words)