Measuring impact and creating change: a comparison of the main methods for social enterprises

Abstract

Purpose

There is currently a wide range of methods for measuring social impact. Each method uses specific indicators, mainly because of the diverse characteristics of social enterprises (SEs) and the type of impact that is analysed, thus hindering the definition of a single, shared measurement system and, at the same time, prompting the proliferation of countless alternative methods. Many enterprises experience difficulties in selecting the best method to carry out the measurement process correctly. The purpose of this paper is to contribute to filling in conceptual gaps inherent to measuring impact and value creating in the domain of social entrepreneurship (SE), as well as equipping the social entrepreneur with better knowledge of the methodologies available for measuring impact and supporting their decision-making process.

Design/methodology/approach

The aims of this paper are, therefore, threefold: to identify the common conditions of how to measure social impact (literature); to analyse how measurement is actually undertaken in practice (process); and to compare the four main methodologies, among the numerous ones, that have been developed to measure the impact generated by SEs so far (methods and comparison). The authors compared four of the most commonly used methodologies in the field of social impact measurement, analysing advantages, disadvantages and application fields. They evaluated whether a method can be considered preferable to others in each case.

Findings

The paper demonstrated the high fragmentation that characterised the existing literature concerning the measurement of social impact and the wide range of methodologies used, thus leading to a great confusion in regard to the selection of the most appropriate methodology for the pursuit of one's own ends. This often discourages the undertaking of the measurement process. The analysis used in this paper leads us to conclude that the social return on investment method is more popular than the other three alternatives.

Research limitations/implications

There are significant deficiencies in methodologies adopted, and researchers must use innovative, situated approaches that fit with the SE literature. The authors concluded that for the future, there is a need to do a SLR in a disciplined way. Further research is strongly recommended in this area, to provide more comparative studies of existing methods. It is hoped that enterprises can be directed towards using a limited range of formal methods that can capture the diversity of the various application cases, thus making it possible to compare different situations: a limited range of formal methods that can capture the diversity of the SEs considered and the impacts generated will be promoted.

Practical implications

The authors also want to analyse how the SEs concretely realise the measurement of their impact that often do not use the formal methodologies presented in the literature but rather tools created by the ad hoc companies on the basis of their specific needs.

Originality/value

This paper makes a theoretical contribution to the literature of the theory on social value within the SE field by having regard to how to measure social impact. It partially responds to Choi and Majumdar’s (2014) and Hlady-Rispal and Servantie’s (2016) calls for the development of a theory of measuring social value.

Citation

Perrini, F., Costanzo, L.A. and Karatas-Ozkan, M. (2021), "Measuring impact and creating change: a comparison of the main methods for social enterprises", Corporate Governance, Vol. 21 No. 2, pp. 237-251. https://doi.org/10.1108/CG-02-2020-0062