Transcript Introduction to Social Entrepreneurship

Critical Performance Measurement and
the Legitimacy of Blended Value
Accounting
Dr Alex Nicholls MBA
University Lecturer in Social Entrepreneurship
Fellow of Harris Manchester College
[email protected]
Critical Framework
• What to measure?
• Why measure?
• Blended Value Accounting
• Who measures?
• For whom?
• How to measure?
• Metrics that embody ‘what’, ‘why’ and ‘who’
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Critical Framework
Epistemology Strategic Purpose Strategic Focus
What to Measure?
Control
Logic Model
Why Measure?
Planning
Mission Objectives
Who Measures?
Accountability
Stakeholders
How Can These Different Strategic Foci Be Reconciled?
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Legitimacy Model
• To encompass:
• Multiple perspectives
• Positivist v interpretive
• Multiple values
• Which perspectives/values count?
• Accounting (‘Audit Society’) v accountability
• Who determines this?
• What are the consequences?
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What To Measure?
• Materiality
• Contingency
• Social constructs or positivist ‘realities’?
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Whose reality?
Dynamic or set?
Referential or absolute?
Culturally contingent?
Sectorally contingent?
What To Measure?
• Direct impacts
• Process
• Outputs
• Outcomes
• Indirect externalities
• Public goods
• Unit of analysis?
• Individual: pragmatic
• Aggregate/common good: cognitive
• ‘Other people’: normative
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What To Measure?
• Individual human impacts
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Highly personal
Multiple variables
Complex to measure
Timescales unclear
• Externalities
• Causality
• Generating social capital
• Bonding/bridging
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Contingency Framework
Ebrahim and Rangan (2010)
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Logic Model
Ebrahim and Rangan (2010)
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Where Does Impact Lie?
Procuring
Supplies
Fair Trade
Employing
Workers
Designing
Product or
Service
Producing
Product or
Service
Marketing
to Target
Disenfranchised
Groups
Delivering
Education
Green
Techniques
Microfinance
Nicholls (2008)
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Why Measure?
• External accountability
• Internal decision making
• Assessment of broader social impact
Mulgan (2010)
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Why Measure?
• Measure of mission success/failure
• Inform future resource allocation
• Reward success
• Support initial funding proposals
• Attract continuing funds
• Add credibility to social ventures
• Create models and benchmarks
• Best practice
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Theorizing Reporting
• Positivist
• Reporting data represents empirical reality (Whittington,
1986)
• Critical Theorist
• Reporting data enacts power mechanisms (Chua, 1986;
Power and Laughlin, 1996; see also Lukes, 1974)
• Interpretive
• Reporting data acts as a symbolic mediator for
discussion between organizational practice and
stakeholders (Ryan et al, 1992; Gambling et al, 1993)
Nicholls (2009)
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SE Incorporation and Reporting
Form of Incorporation
Annual Reporting Requirements
Social Entrepreneurship
Examples
Charity
Annual report to Charity Commission to Hackney Community
include public benefit statement and
Transport
consolidated financial accounts*
Industrial and Provident Society (IPS)
Financial accounts to Companies House Baywind Energy Co-op
+#
Company Limited By Guarantee
Financial accounts to Companies House Oxfam
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Company Limited By Shares
Financial accounts to Companies House Divine Chocolate Ltd
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Public Limited Company
Financial accounts to Companies House Cafedirect
+
Unincorporated Voluntary Organization
None
Oxford Fair Trade Coalition
Community Interest Company (CIC)
Financial accounts + and CIC34 report
on activities to Companies House
Develop Your Child
*There
is some variation depending on turnover: see Table 2
# IPSs can also be charities and would then be required to submit a Trustees’ Report as well as financial accounts
+ Registered companies can submit unaudited financial accounts if they satisfy two or more of the following:
•aggregate turnover must be £5.6 million net (£6.72 million gross) or less;
•the aggregate balance sheet total must be £2.8 million net (£3.36 million gross) or less;
•the aggregate average number of employees must be 50 or few
Nicholls (2009)
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BVA Spectrum
Nicholls (2009)
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Who Measures (For Whom)?
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Beneficiaries/clients/customers
Funders/shareholders
Employees
Local community
Partners
Government/regulatory agencies
Third parties (civil society/media/competitors)
Society at large
Perceptions Of Impact Differ For Different
Stakeholders
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Who Is The ‘Customer’?
User
Purchaser
Influencer
Clinical services
(indigent)
Patient
Donor
Government
Elder services
Senior
Clients’ children
Competitors
Child
Parent
Parent
Competitors
Pharmacy
Patient
Insurance
Regulatory/legal
Laboratory
services
Public Clinic
State
Government policy
Child health
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Who Measures?
The quality of an NGO’s work is primarily
determined by the quality of its
relationships with its intended
beneficiaries
Slim (2004)
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8 Principles Of Accountability
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Inclusivity
Comparability
Completeness
Regularity and evolution
Embeddedness
Communication
Externally verified
Continuous improvement
Zadek (1998)
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Effective Accountability
• Good measures of mission success/failure
• Informs future resource allocation
• Reward success
• Supports initial funding proposals
• Attract continuing funds
• Creates models and benchmarks
• Best practice
• Increases legitimacy of social venture
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‘Listen First’
Jacobs and Wilford (2010)
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How To Measure?
GIIRS
IRIS
Wood and Leighton (2010)
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Measurement Typology
Ebrahim and Rangan (2010)
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Measurement Typology
Ebrahim and Rangan (2010)
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How To Measure?
Mulgan (2010)
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Young Foundation NHS Tool
• Likert Scales + data (if available)
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Strategic fit
Potential health outcomes
Cost savings and economic effects
Risks associated with implementation
Mulgan (2010)
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Fair Trade Impacts
Nelson (2009)
Nelson and Pound (2009)
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Fair Trade Impacts
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Economic impacts
Environmental impacts
Empowerment impacts
Quality of life and well-being impacts
Gender and equity impacts
Nelson and Pound (2009)
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IRIS Framework
• ORGANIZATION DESCRIPTION
• Indicators that focus on the organization’s mission, operational model, and
location
• PRODUCT DESCRIPTION
• Indicators that describe the organization’s products/services and markets
• FINANCIAL PERFORMANCE
• Commonly reported financial indicators
• OPERATIONAL IMPACT
• Indicators that describe the organization’s policies, employees, and
environmental performance
• PRODUCT IMPACT
• Indicators that describe the performance and reach of the organization's
products and services
• GLOSSARY
• Definitions for common terms that are referenced in the indicators
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GIIRS
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GIIRS
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SROI
OTS (2007)
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Organizational Legitimacy
A general perception or assumption that the
actions of an entity are proper, appropriate, or
values and beliefs desirable within a socially
constructed set of norms
Suchman (1995)
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Organizational Legitimacy
From an institutional perspective, legitimacy
is…the means by which organizations obtain and
maintain resources…and is the goal behind an
organization’s widely observed conformance or
isomorphism with the expectations of key
stakeholders in the environment
Dart (2004)
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Legitimacy Typology
Regulatory
Associational
Pragmatic
Normative
Cognitive
Legal
By association
Self interest
Expected
Worldview
Basis of
Judgement
Compliance with
relevant legal
requirements
and/or international
conventions
Association with
other entities that are
already perceived to
be legitimate and/or
powerful
Ability to meet the
direct needs and
interests of specific
stakeholders making
the judgement
Acting in ways that
are consistent with
stakeholders’
expectations of how
relevant SEs should
act
Fitting in to conceptual
categories that
stakeholders habitually
use to understand the
world around them
Antecedents
Legally constituted;
Mandated by
conventions
Working relationship
with powerful
governmental or
corporate body;
Associated with
person of repute or
celebrity
Effective service
delivery;
Grounded knowledge
to influence policy
debate;
Providing a channel
for exercising
charitable values
Perceptions of how a
SE or a type of SE
behave (e.g.
effective service
delivery to clients,
acting with integrity /
courage of
convictions);
Expectations of how
a type of SE should
behave
Pre-existing categories of
entity;
Concepts that construct
social reality;
Entities that are part of
social fabric, (e.g. BBC &
Oxfam in the UK)
Strategic
Management
Registration with
regulatory authority
Publicised
partnerships;
Alliance building
Understand and meet
key stakeholders’
needs;
Develop professional
expertise
Follow socially
progressive
techniques and
procedures;
Manage public
relations
Align with existing
categories;
Achieve longevity and
national respect
Nicholls (2010)
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Critical Legitimacy Framework
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Epistemology
Strategic Purpose
Legitimacy
Strategic Focus
What to Measure?
Control
Regulatory,
Normative
Logic Model
Why Measure?
Planning
Pragmatic
Mission Objectives
Who Measures?
Accountability
Normative,
Cognitive
Stakeholders
Stakeholder Perceptions
Stakeholder
Legitimacy Perceptions:
Legitimacy Perceptions:
Customer/Beneficiary
Market-Based
Welfare-Based
Employee
Contractual
Trust-Based
Government
Regulation
Public Benefit
Competitors
Financial Performance
Social Performance
Investor/Donor
Value Creation
Cognitive Fit
Owner(s)
Private Benefit
Public Benefit
Third Party Actors
Organizational Brand
Sectoral Brand
Positivist/Hard Data
Interpretive/Soft Data
Nicholls (2010)
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Performance Legitimacy
Performance Legitimacy
Impact
Metrics
Regulatory
Data Dashboard
Associational
Empirical (Hard) Domain
Pragmatic
Normative
Accountability
Mechanisms
Cognitive
Interpretive (Soft) Domain
Nicholls (2010)
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Performance Legitimacy?
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