DIY-Materials as Enabling Agents of Innovative Social Practices and Future Social Business

Abstract

In the panorama of materials for design, a novel phenomenon is emerging. We already individuated it and called DIY-Materials. In the developed countries (mostly in Europe and North America), DIY-Materials are the response to an increasing standardized industrialization in the field of materials and technologies. Thanks to the democratization of technologies, today more people, designers included, have access to technology to create, edit, print, modify, share and act on anything, even on materials. The contemporary diffusion of making and the maker`s space phenomena also known as FabLabs are spreading a kind of low-tech approach conversely to the classic industrial one. The designers, as well as the people, demonstrate more often a will to return to do things by themselves; by touching the source of a form, feeling the emotion of a particular surface effect, or the surprise of an unexpected color, one can gain control of any single creation.

The aim of the paper is to speak about DIY-Materials and define a new framework to explain their possible role as enabling agents of innovative social practices and future social businesses. We will present concepts like DIY practices, Material Activism, Creative Communities, Social Business and Social Innovation about materials. It is our assumption that the DIY-Materials can also arise from the creativity of a community in which the designer acts as a facilitator.
The definition of DIY-Materials becomes richer as it includes the materials as ideas that simultaneously meet social needs and create new social relationships or collaborations. In other words, they are innovations that are both good for society and enhance society’s capacity to act and create social businesses.

Full text

Full Terms & Conditions of access and use can be found at
http://www.tandfonline.com/action/journalInformation?journalCode=rjse20
Download by: [Politecnico di Milano Bibl], [Irene Bengo] Date: 30 January 2016, At: 04:47
Journal of Social Entrepreneurship
ISSN: 1942-0676 (Print) 1942-0684 (Online) Journal homepage: http://www.tandfonline.com/loi/rjse20
Indicators and metrics for social business: a review
of current approaches
Irene Bengo, Marika Arena, Giovanni Azzone & Mario Calderini
To cite this article: Bengo, I., Arena, M., Azzone, G., Calderini, M. (2016). Indicators and metrics for
social business: a review of current approaches. Journal of Social Entrepreneurship, 1 (2), 1-24.
To link to this article: http://dx.doi.org/10.1080/19420676.2015.1049286
Published online: 17 Jun 2015.
Submit your article to this journal
Article views: 98
View related articles
View Crossmark data

Indicators and metrics for social business:
a review of current approaches
IRENE BENGO ,MARIKA ARENA, GIOVANNI AZZONE &
MARIO CALDERINI
Department of Management, Economics and Industrial Engineering, Politecnico di Milano, Milan, Italy
ABSTRACT This paper aims to perform a review of different accounting frameworks, including
indicators and metrics applicable to the social business sector, discussing the strengths and the
weaknesses of different approaches in relationship to their ability to respond to objectives and
interests of different stakeholders in the social business ecosystem. Then, the paper discusses the
key role that indicators and metrics could play in the light of the transformations that the social
business sector is witnessing, such as the emergence of new financial supply chains and the
entrance of new relevant players.
KEY WORDS: social business, social accounting, metrics and indicators, stakeholders,
information needs
1. Introduction
In the last decade, relevant social problems started to seriously afflict the so-
called developed economies, challenging policy makers at the international
level. The worldwide financial crisis has dampened the world economy, gener-
ating problems of financial sustainability to private and public organizations
(Sgherri and Zoli 2009). The governments in many countries had to face criti-
cal issues such as a general decrease of families’ income, growing level of
unemployment especially for vulnerable groups (e.g. women, youth and
immigrants), need of cutting social programmes (e.g. education, health care,
work benefits) to preserve financial sustainability (Vis, Kersbergen, and
Hylands 2011; Karanikolos et al. 2013). At the same time, the situation has
not improved for developing countries that still face huge social problems
such as economic poverty, hunger, unsafe water supplies, poor education sys-
tems and poor sanitation (Brinkman et al. 2009; OECD 2014; Santos 2012;
Seelos and Mair 2005; World Bank 2003).
Correspondence Address: Bengo Irene, Department of Management, Economics and Industrial
Engineering, Politecnico di Milano. Email: irene.bengo@polimi.it
Ó2015 Taylor & Francis
Journal of Social Entrepreneurship, 2016
Vol. 7, No. 1, 124, http://dx.doi.org/10.1080/19420676.2015.1049286
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

One of the options that have been proposed to tackle these challenges is
represented by social business that has been defined as a market-based
arrangement whose primarily focus is on the pursuit of social and environ-
mental objectives, however, ensuring, at least, the reimbursement of the
investment (Austin, Stevenson, and Wei-Skillern 2006; Yunus 2007; Yunus,
Moingeon, and Lehmann-Ortega 2010). In this respect, social business is con-
ceived as a new form of entrepreneurial initiative that joins the social purpose
traditionally associated with the not-for-profit sector with the creation of eco-
nomic value traditionally associated with for-profit organizations (Wilson
and Post 2013; Auerswald 2009;Alter2006; Austin, Stevenson, and Wei-Skillern
2006).
This idea has attracted the attention of many different players in the eco-
nomic system since there is some preliminary evidence that’s social business
initiatives can actually pay off, socially and financially (Wilson and Post 2013;
Karamchandani, Kubzansky, and Frandano 2009;FreireichandFulton2009).
On the one hand, new forms of organizations with the specific aim of develop-
ing social business i.e. the so called Social Enterprises emerged and grew
rapidly in numbers. According to the European Commission, the social econ-
omy includes two million enterprises (i.e. 10% of all European businesses) and
employs over 14.5 million employees (i.e. 6.5% of working population of the
EU-27 and about 7.4% in EU-15 countries) (European Commission 2013).
On the other hand, also profit and not-for-profit organizations started to
find a potential role in social business. The former, in fact, saw the opportu-
nity to invest in social business, as a possible way to exploit new synergies
between financial and social performances and to redefine their corporate
social responsibility strategies (Crowther and Reis 2011; Sinkovics et al.
2014). The latter recognized the ability of social business of dealing effectively
with the social problems, being more sustainable in financial terms (Santos
2012; Seelos and Mair 2005).
Despite the enthusiasm raised by its origin, social business initiatives still
struggle to survive and grow, because they have to deal with a progressive recon-
figuration that is taking place in the social business ecosystem that requires a
change of mindset from the operators as well as the adoption of new managerial
tools. In many countries, in fact, the social sector is witnessing to the rise of new
financial supply chains that play a crucial role in funding the provision of social
services (and, therefore, the organizations implicated in it). This new scenario is
characterized by the presence of new actors, such as new financial intermediaries
(Grabenwarted and Liechtenstein 2011; Bugg-Levine and Emerson 2011), public
actors that are changing their procurement practices (Sethi 2005; Achleitner
et al. 2011) and social impact investors (Jansson and Biel 2011; Chan, Makarov
and Thompson 2010;Gl
€
anzel, Schmitz, and Mildenberger 2012) that are those
that now fund social service providers in a consistent way. This reconfiguration
obviously requires the organizations that want to operate in the social business
to pay attention to their ‘revenues stream’, and understand how to increase it
building a cooperative relationship with the above actors.
Concerning this issue, different authors identified the poor understanding
of value generated amongst the stakeholders and the rise of tensions and
2 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

conflicts in meeting both the financial and the social bottom line as critical
barriers to the growth of the social business sector (Bull and Crompton 2006;
Marks and Hunter 2007; Nicholls, 2010a). In order to capture this value and
demonstrate the impact of social business organizations, accounting frame-
works are needed, for supporting the communication and the interaction
between all the actors. Though this problem is not new in the accounting liter-
ature since it has been addressed in the field of social accounting (Mathews
1997; Richmond, Mook, and Quarter 2003)a consolidated framework con-
sistent with social business specific characteristics is still missing (EU 2014;
Arena, Azzone, and Bengo 2015; Sacks 2002).
The lack of a recognized accounting framework with credible indicators and
metrics is seriously limiting the capacity of social business organizations to
compete in this new socio-economic scenario at different levels. First, it limits
the ability of social business organizations to attract investments and dona-
tions, since potential investors/donors do not have reliable and recognized
instruments to evaluate the potential and the results of their investment and
compare them against other investment options (Marks and Hunter 2007;
Plotnieks 2014). Second, the lack of shared indicators and metrics limits the
possibility for social business organizations to obtain policy makers’ support,
because policy makers struggle to evaluate the impact of social business proj-
ects and activities on both the society and public finance (Paton 2003;Saltuk
et al. 2014). Finally, it limits the ability of the managers themselves in planning
and controlling their operational activities and communicating with the broad
range of stakeholders (Nicholls 2009; Alexander, Brudney, and Yang 2010).
To address this problem, this paper aims to perform a review of different
accounting frameworks, indicators and metrics applicable to the social busi-
ness sector, discussing the strengths and the weaknesses of different
approaches in connection to their ability to respond to objectives and infor-
mation needs of different stakeholders. To this aim, the paper positions the
problem of measuring social business performance in the social accounting
discourse, and analyses what are the main stakeholders’ objectives and infor-
mative needs in the field of social business. Then it reviews the state of the art
literature concerning indicators and metrics for measuring social business
results, to show how these instruments are developing and discuss which areas
could be improved in order to address the interests of different stakeholders.
The rest of the paper is articulated as follows. Section 2 presents the
research framework. Section 3 outlines the information needs of different
stakeholders. Section 4 presents the research method. Section 5 presents the
results of the literature review. Finally, Section 6 discusses the research find-
ing and concludes with a possible agenda for future research.
2. Social Accounting and Social Business
In the field of social accounting, researchers already addressed the problem of
the pervasive role of the system of stakeholders and their multi-dimensional
interests in informing accounting mechanisms.
Indicators and metrics for social business 3
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

Social accounting has its origins in the early 1970s, when it was referred to
as either environmental accounting or social and environmental accounting,
reflecting its concerns with the impact of the organization on the natural
environment (Bebbington, Gray, and Owen 1999; Mathews 1997). Gradu-
ally, the emphasis on the environmental impact has shifted to a broader
range of social concerns as it is highlighted in a recent definition of social
accounting as ‘a systematic analysis of the effects of an organization on its
communities of interest or stakeholders, with stakeholder input as part of
the data that are analysed for the accounting statement’ (Mook and Quarter
2006).
Social accounting is based on the idea of integrating the information needs
of different stakeholders and balancing their different social and economic
objectives (Gray 2002; Mathews 2004). Based on the theoretical foundation
of social constructivism, stakeholders are seen as a key players in the con-
struction of the organization itself (Gray 1997), reflecting the interaction
between the organization and its environs (Guba and Lincoln, 1989). Social
accounting reflects the ‘core values’ of the organization, which, in turns,
reflects the core values of stakeholders. Hence social accounting mirrors the
interests of stakeholders (Wendt 1999; Nicholls, 2010b), synthetizing the
views of different actors and balancing or negotiating between competing
interests and expectations (Sefton, 2000).
In this process of reciprocal influence, a stakeholder can be privileged com-
pared to others, by influencing even more the aforementioned interplay. From
this perspective, social accounting might become a sort of ‘public relations
tool’ which is adopted to win (or maintain) the approval of those stakeholders
whose continued support is crucial for the perceived legitimacy of an organ-
ization’s activities (Bebbington, Unerman, and O’Dwyer 2014; Bebbington
and Gray 2001). If this is the case, practices of social accounting might be per-
ceived as addressing the interests of the most powerful stakeholders, while
marginalizing the interests and needs of less powerful ones.
Moving from these premises, the analysis of social accounting literature
highlights the coexistence of three different problems that are particularly rel-
evant in the field of social business.
The first is an issue referring to the multi-stakeholder orientation of social
accounting, which requires a definition of ‘social account’ i.e. the account
of corporate activity containing a combination of financial and nonfinancial
information based upon the views of different stakeholders (Gray 2000).
Social accounting scholars discuss the need of empowering the broadest range
of stakeholder through stakeholder engagement (O’Dwyer 2005, Gray 2002,
Thomson & Bebbington 2005), and advance the ideals of stakeholder repre-
sentativeness and influence extending the accountability and transparency of
organizations (Owen and Swift 2001).
The second problem is explained by different stakeholders having different
and sometimes contrasting objectives; based on these objectives they have also
different information needs (Wilson 2014; Richmond, Mook and Quarter
2003; Preston and Donaldson 1999). Hence, an organization should map dif-
ferent stakeholders’ expectations, objectives and interests, in order to develop
4 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

a different set of possible metrics (Herman and Renz, 1997; Fletcher et al.
2003) and reduce the asymmetries between the organization and its stakehold-
ers (Gray et al. 1997, Gao and Zhang 2006).
Finally, any system of social accounting has the potential of transferring
power from one stakeholder to another (EC 2014) and from an organization
to its stakeholders (Freeman 1984, Friedman 2002, Richmond, Mook and
Quarter 2003). The information flow influences and is influenced by the bal-
ance of powers among the actors (the power of parties to demand it and/or
the willingness/desire of an organization to provide it Stone 1975; Gray et al.
1997). This balance between powers also interacts with law or quasi-law
processes (Gray 2001) that, under some circumstances, might influence the
information flows in different ways (for instance by setting some minimum
requirements).
All these three issues are particularly relevant in connection to social busi-
ness, which is characterized by a complex stakeholders’ system where differ-
ent actors can easily have contrasting objectives. Furthermore, the balance of
power between different actors is very fluid, since the regulatory framework is
still fragmented and the system of values of social business ecosystems are
constantly evolving. Hence, the problem of identifying what accounting
frameworks are more suitable to answer social business specific features
appears particularly relevant and is derived by an analysis of the interests of
different groups of stakeholders (Nicholls 2009).
Moving from these considerations, the next section maps the interests of
the main groups of stakeholders while Section 4 analyses the existing account-
ing frameworks, indicators and metrics used to measure SB values and under-
lining as these approaches respond to the stakeholders needs.
3. The Stakeholders’ Information Needs
In this section, the paper discusses different information needs associated
with three broad categories of stakeholders/actors that play a significant role
in the ‘social business ecosystem’: different types of funders (including invest-
ors and other funders like charities, foundations); policy makers and decision
makers in social business organizations. As follows, are analysed the stake-
holders’ interests based on the idea that when choosing any metrics or devel-
oping a new one, it is important to take into account what purpose these
metrics will serve (Plotnieks 2014).
The first category of stakeholders includes different social business funders
distinguishing between private/institutional investors and grant-makers
(charities, foundations…). The private and institutional investors put resour-
ces in a social business initiative in order to obtain a financial and a social
return (Bugg-Levine and Emerson 2011; Hebb 2013; Jackson 2013). Hence,
investors in social business should be able to recognize the financial and social
impact determined by their investments. To this aim, traditional approaches
tend to underestimate the return of an investment in social business, since the
contribution to social value creation is disregarded by traditional financial
Indicators and metrics for social business 5
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

markets, though it is generally recognized that the socio-economic develop-
ment leads the financial growth. In the case of social business, an investment’s
pay off is, in fact, constituted by two components the financial and the
social one however only the former is actually quantified and used to com-
pare the investment returns against those associated by different asset classes.
This situation leads to the need embracing approaches that could better cap-
ture the impact produced by a social business organization in both social and
financial terms. The grant-makers, on the other hand, have different interests,
since the financial return from grants is by definition zero. Hence, this type of
funders generally wish to measure the social impact achieved by a social busi-
ness organization and the cost for achieving that impact in order to compare
the performance of a specific initiative with different projects/initiatives pur-
suing similar goals (Chan 2009).
The second category of stakeholders includes policy makers (e.g. central
governments and international policy bodies). Policy makers have an articu-
lated relationship with social business organizations. On the one hand, they
are up to define policies that could (or could not) support social business ini-
tiatives (Saltuk 2014). Governments, for instance, can create an environment
favourable to social entrepreneurship (Paton 2003), by defining rules and
regulations that simplify business operations for social business organiza-
tion. Furthermore, public support is essential in building community aware-
ness and trust in connection to social business (Korosec and Berman 2006).
From this perspective, policy makers need indicators and metrics to assess
the potential contribution of social business and evaluate the impact of these
policies for communities and citizens, and the central government. On the
other hand, central Governments can finance social business organizations
directly, by subcontracting some social services or participating as a partner
in carrying out a social programme. From this perspective, they have to be
able to evaluate the results of the subcontracting organizations in term of
the services quality and demonstrate the impact generated by social pro-
grammes that have been developed (SEC 2011; Hyndman and McMahon
2011;G82014).
Finally, the third category of stakeholders includes decision makers in
social business organizations which could be a social entrepreneur or other
managers (henceforth decision makers). For these actors, the achievement of
the social mission is clearly the heart of a social business initiative and it
passes through the management of day by day operations (Ormiston and
Seymour 2011). To achieve their social mission, decision makers need to mon-
itor how operations are run, understand how to improve effectiveness in the
service delivery, monitor the social impact, and interact and communicate
with all the above stakeholders. From this perspective, they need indicators
and metrics to support internal decision making processes, guide their choices
and improve effectiveness and efficiency of business operations. Furthermore,
indicators and metrics could enhance accountability and support the achieve-
ment of legitimacy with the broad range of stakeholders (Kendall and Knapp
2000; Paton 2003; Alexander, Brudney, and Yang 2010).
6 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

4. Research Method
To map instruments currently used to define a indicators and metrics for
social business a scoping literature review was performed (Arksey and
O’Malley 2005). This approach was selected because it is considered particu-
larly suitable when the review is aimed to outline the current state of the art
in an area of interest, that cannot be closely defined, and identify gaps where
further research is required. The scoping review may be contrasted with the
systematic review, because the latter is more restricted in focus: the systematic
review aims to provide answers to questions from a relatively narrow range
of quality assessed studies, whilst a scoping study is less likely to seek to
address very specific research questions nor to assess the quality of included
studies (Arksey and O’Malley 2005).
These characteristics of a scoping literature review are coherent with the fea-
tures of the area under investigation: social business per se is a dynamic and
fuzzy concept (Peredo and McLean 2006) and many approaches to social busi-
ness performance measurement have originated in different disciplines/fields,
such as management accounting, operations management, social responsibility
and sustainability, and have been then ‘borrowed’ and adapted in more recent
literature dealing with not-for-profit sector and international cooperation,
social enterprise and social business, impact finance and impact investing (G8
2014). Furthermore, some models and approaches have originated in the prac-
tice, being only later formalized from a theoretical perspective (Hornsby 2012)
Moving from these considerations, the scoping review was performed fol-
lowing the protocol suggested by Arksey and O’Malley (2005), that consists
of five steps: (1) identifying the questions; (2) identifying relevant literature;
(3) selecting the literature; (4) charting the data; and (5) collating, summariz-
ing and reporting the results (see Table 1 for details).
The approaches highlighted by the literature review were categorized into
three groups of contributions (see Figure 1). The first group, synthetic indica-
tors, includes models that leads to the construction of a synthetic indicator
aimed to measure social value creation. The second group of contributions,
process-based approaches, includes models that focus on the process of
‘production’ of a social service/product, articulating the analysis of social
business performance in inputs-outputs-outcomes and impacts. Finally the
third group, dashboards and scorecards, includes models aimed to provide a
picture of the results of an organization aimed to social business, according
to different performance dimensions, that are considered representative of
the results of the organization.
5. Results of the Review
Different contributions were organized into three groups, based on the key
characteristics of the analysed approaches/frameworks. As follows, the three
streams of references are presented, highlighting the context in which these
approaches originated (e.g. not-for-profit organization, or social enterprises,
or impact finance initiatives) and the key similarities and differences in the
Indicators and metrics for social business 7
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

proposed approaches, as well as their main contribution in terms of ability to
define indicators and metrics.
5.1. Synthetic Measures
The first group of models includes approaches that lead to the calculation of a
synthetic indicator/metrics to provide a measure of the global performance of
a social organization.
These approaches focus on the final outcome of a social business organiza-
tions, even if some of them take their move from inputs-outputs-outcomes
models (NEF 2007) or, more in general, from the process of value creation by
social business (Sacks 2002; Grabenwarter and Liechtenstein 2011). At any
rate, the final result is a synthetic indicator/metric of the value created from
an economic, environmental and social perspective.
Among these models, the most famous is social return on investment
(SROI), developed by the Roberts Enterprise Development Fund (REDF)
for social enterprises and tested by the New Economics Foundation (NEF) in
2007. SROI is defined as a form of adjusted costbenefit analysis that takes
into account, in a more holistic way, different types of impacts that social pro-
grammes may determine (Lawlor 2009). Like more traditional costbenefit
analysis, SROI combines the discounted cash flows associated with benefits
and costs related to a certain activity over a certain period of time (Lyon
et al. 2010). In particular, it is defined by the following formula:
SROI Dnet present value of benefits=net present value of investment:
Table 1. The scoping review.
Steps of the scoping review How the step was performed
Identifying questions The key questions we attempted to answer are: Which
indicators and metrics can be used in social business? What
approaches can be used to support the identification of
indicators and metrics? Do these approaches really respond
to objectives and information needs of different
stakeholders?.
Identifying relevant
literature
We adopted a strategy that involved searching for research
evidence via different sources: electronic databases, hand-
searching of key journals, existing networks, relevant
organizations and conferences.
Selecting the literature We included papers that propose indicators, conceptual
frameworks and guidelines for selecting indicators and
metrics in social business (considering not for-profit, social
enterprises, impact finance initiatives). A preliminary
selection was based on the title and abstract of the papers.
Charting the data Materials collected were charted according to three main type
of approach: synthetic indicators, process-based models,
and dashboards and scorecards.
Collating, summarizing and
reporting the results
The results of the review are presented in section four
according to the three categories outlined above.
8 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

Hence, it requires to review and synthesize the inputs, outputs, outcomes
and impacts made and experienced by the stakeholders of an organization in
relation to its activities, and assigning a monetary value to social, economic
and environmental benefits and costs created by an organization. SROI mea-
surement should be matched by qualitative evidence based on stakeholder
inquiry, wherein the stakeholder is defined as ’people or organizations that
experience change, whether positive or negative, as a result of the activity
being analysed (Nicholls 2009).
In order to estimate the positive (or negative) social value of non-traded,
nonmarket goods the use of financial proxies is the main attraction in decid-
ing to use the SROI approach (Flockhart 2005). SROI measures the value of
social benefits created by an organization, in relation to the relative cost of
achieving those benefits (Rotheroe and Richards 2007).
A further synthetic indicator is the Local Multiplier 3 (LM 3) developed by
Sacks (2002) for NEF. LM3 is based on the concept that an economic multi-
plier effect describes the impact that spending has in the economy, taking into
consideration the knock-on effects. The ‘multiplier’ is an economic concept: a
higher proportion of money re-spent in the local economy means a higher
Figure 1. Approaches used to define indicators and metrics for social business.
Indicators and metrics for social business 9
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

multiplier effect because more income is generated for local people. More
income retained locally, or nationally, means more jobs, higher pay and more
tax revenue for government, all of which may lead to better living standards.
The measuring process is articulated into three steps: (1) identifying a source
of income, (2) following how it is spent and (3) following how it is re-spent
within a defined geographic area (local economy).
Finally, Grabenwarter and Liechtenstein (2011) propose the Gamma
Model, that originates in the social impact investing field with the aim to
design a system to define a synthetic indicator to measure social or environ-
mental impacts consistently with the financial market standards. The model
grounds in the capital asset pricing model (CAPM) and integrates the concept
of social and/or environmental impact into an investment’s overall return
equation, deriving the gamma factor, that is a synthetic measure of the value
created by an impact investment. In particular, the model splits the impact
metrics into the impact objectives at investment level as indicators perfor-
mance indicators (KPIs) and the performance of investment through an
‘impact-adjusted return’. Then, it proposes the use of impact performance
indicators as input factors for impact investment performance indicators, i.e.
the impact performance indicators, from the point of view of manager,
express the quality of investment selection decisions based on the impact per-
formance. In this way, it defines an integrated measure for financial and
impact-investing performance at portfolio level respecting the freedom for
meaningful KPIs for the individual organizations.
5.2. Process-Based Models
The second group of models focuses on the process of ‘production’ of a social
service/product, articulating indicators and metrics into inputsoutputs
outcomes and impacts.
This stream of literature originates in the public sector, where public
administrations performances are usually assessed through the so-called three
Es framework: economy, efficiency, and effectiveness, based upon an input,
output, and outcome model (Flynn 1997; Rose, 1999; Carter, Klein, and Day
1995; Perrin 1998; Smith 1995; Heinrich 2002). In recent years, a few authors
adapted and applied these models to social business, following the process
through which an organization’s activities lead to the organization’s outcome
and impact, articulating the relationship between the activities, outputs, out-
comes, and impacts along the so-called impact chain of a social-purpose orga-
nization (Olsen and Galimidi 2008; GSVC 2012; Hornsby and Blumberg
2013).
All these models are articulated as a guideline to develop a set of indicators/
metrics, however, some of them focus on the identification of the performance
dimensions (Ebrahim and Rangan 2010), whilst other models also provide a
guideline to select or build the KPIs based on internal and external factors
(Bagnoli and Megali 2011; Hornsby 2012; GSVC 2012; Arena, Azzone, and
Bengo 2015).
10 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

The first group of contributions includes models that focus on the definition
of the performance dimensions that should be considered to cover the impact
chain, however, without defining a set of indicators in operational terms
(Ebrahim and Rangan 2010).
Ebrahim and Rangan (2010) propose a contingency framework that specifi-
cally aims at measuring performance in social sector organizations, monitor-
ing how organizational inputs and activities lead to outputs, outcomes, and,
societal impacts. In particular, the authors suggest that, given the variety of
work, aims, and capacities of social sector organizations, some organizations
should measure long-term impacts, while others should stick to measure
shorter-term results. Hence, they propose an approach for determining which
kinds of KPIs are appropriate, as driven by the mission and goals of the orga-
nization, but do not formalize the set of indicators/metrics in a pre-defined
system.
The second stream, composed by models that define both the performance
dimensions and a set of KPIs, starts with Bagnoli and Megali (2011) that pro-
pose a multidimensional control system that constructs a map of indicators
to measure social enterprise performance. The model is articulated into three
performance dimensions: economic and financial performance, social effec-
tiveness and institutional legitimacy. In particular, social effectiveness is
defined in terms of compliance with the social mission of a social enterprise.
Moreover, in matching these three dimensions, the model integrates perfor-
mance measures and indicators, for instance, as concerns the economic-finan-
cial and social-effectiveness fields, an example of integrated indicator is the
productivity of inputs (labor costs for services rendered, etc.). Similarly, for
the economic-financial and legitimacy fields, an example is compliance with
the non-distribution constraint; for the social effectiveness and legitimacy
fields, the correspondence between achieved results (revenues, outcomes,
impact) and the social business’s stated mission, involvement of workers and
users/beneficiaries in decision making.
Hornsby (2012) proposes a Methodology for Impact Analysis and Assess-
ment (MIAA), that focuses on an organization’s impact. MIAA comprises
two main dimensions of analysis: confidence, that looks at the financial and
operational performance of an organization; and impact, that focuses on the
social and environmental benefits. In addition, MIA includes a mapping stage
where the profiles of organizations are classified with respect to location, sec-
tor, size etc. To evaluate the impact of activities MIAA considers the theory
of change (GSVC 2012), referring to the impact chain, that starts with a
breakdown of activities, mapping what inputs it is using, how these activities
produce outputs, which in turn lead to outcomes. Finally, MIAA proposes a
guide for the selection of appropriate indicators, with a predefined set of met-
rics that could be adapted to the specific characteristics of an organization.
Finally, MIAA provides a guideline concerning impact reporting as the pro-
cess by which the organization communicates its results.
The Global Social Venture Competition (GSVC) in 2012 develops the
Social Impact Assessment (SIA), that is thought for social enterprises. This
model suggests to quantify the value of an organization through three priority
Indicators and metrics for social business 11
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

indicators, connected to the three priority results that the organization wants
to achieve.
This approach is based on the theory of change to describe how the activi-
ties of a social enterprise will lead to the desired final outcome and the social
impact on the value chain. The model defines three steps for the social impact
evaluation. The first step consists in defining the social value chain of the
organization, the second step consists in the identification of three measurable
indicators of social impact more correlated with the social results and in defi-
nition of the indicators calculation methodology. The third step provides the
calculation of social impact indicators and the feasible plan definition to eval-
uation and monitoring including the unintended consequences and/or nega-
tive of the business. To guide the identification of the indicators, the model
refers to the Impact Reporting Standard & Investment (IRIS) framework,
that provides a reporting standard for the social and environmental perfor-
mance of an organization. In details, IRIS provides a library of indicators
with standard definitions that are applicable to different sectors (GIIN 2011)
Finally, Arena et al. (2014) propose a stepwise method for social enterprises
to support the development of their own performance measurement system
PMS. This framework is the result of an adaptation of the contingency model
developed by Ebrahim and Rangan (2010) to social enterprises specificities.
Moving from the original model, that is based on three elements: input, out-
put and outcome, the authors elaborated a revised model that distinguished
between management and social effectiveness (consistently with Bagnoli and
Megali, 2011) and they introduce consistency variables based on the premise
that resource employed, products produced and results achieved by an SE
(social enterprise) should be consistent with the mission of the organization.
After defining the performance dimensions, the authors provide a guideline
for supporting the design of the PMS. To this aim, the authors elaborate on
the approaches of Fletcher et al. (2003) and Bourne and Walker (2005)to
deal with the information needs of different stakeholders, and guide the con-
struction of the KPIs.
5.3. Dashboards and Scorecards
The third group of models includes dashboards and scorecards aimed to identify
a set of indicators and metrics to cover different performance dimensions, that
are considered representative of the results of the social business organization.
These models generally refer to the objectives of the organization itself and
define a set of indicators covering different of areas/performance dimensions.
Beside these commonalities, the proposed approaches present some pecu-
liar characteristics, that make them somehow different from one another.
First, they can be distinguished based on the criteria used to define the perfor-
mance dimensions and to select the KPIs within each area. On the one hand,
some models rely on the social and economic goals of the organization and
articulate the performance dimensions accordingly (defining monetary met-
rics or not), other models embrace a stakeholder perspective and articulate
the performance dimensions based on stakeholders’ priorities. A second
12 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

element of differentiation refers to the inclusion of a guideline to drive the
process of selection of the performance dimensions and the KPIs. In other
words, some of the analysed models are configured as a step-wise approach
aimed to support the development of a performance measurement system for
social businesses. Finally, the latter element of differentiation refers to the
integration of the dashboard with a synthetic measure to ‘sum up’ the overall
social impact.
The first group of contributions includes some modification of the balanced
scorecard proposed by Kaplan and Norton in 1996, in order to make the orig-
inal model more adherent to the social business paradigm (Kaplan and
Norton 2001; Moore 2003; Somers 2005; Bull 2007). These models generally
result in changes of the scorecard dimensions, and integration of further per-
formance areas, however, without a significant shift in the unpinning logic of
the balanced scorecard i.e. deploying the strategic objective of an organiza-
tion into operational objectives in order to capture how value is created
(Brignall and Modell 2000).
Kaplan proposes an adaptation of the balanced scorecard model for not-
for-profit organizations. Kaplan starts from the consideration that, for
these organizations, the agency’s mission represents the rationale for their
existence and put it at the centre of the scorecard model (Kaplan and Norton
2001). Then, since the realization of the mission is characterized by a time lag,
the measures in the four main perspectives of the Balanced Scorecard provide
the short- to intermediate-term targets and feedback. In this way, the model
seeks to bridge the gap between vague mission and strategy statements and
day-to-day operational actions, shifting the attention of a not-for-profit orga-
nization from programmes and initiatives to their results and outcomes.
Somers (2005) introduces three main changes to the original balanced
scorecard model to adapt it to the needs of a social enterprise. First, he adds
an additional layer, introducing social goals above the financial perspective;
second, he broadens the financial perspective to focus on sustainability; third,
the customer perspective is widened to capture a larger number of stakeholder
groups.
Lastly, Bull (2007), again adapting the model to the context of social enter-
prises, partially modifies the original perspectives into multi-bottom line;
stakeholders’ environment; internal activities (related to structure, communi-
cation, quality…), and learning organization (dealing with training and
knowledge management).
In this stream of references, is also included Moore (2003) model, who pro-
poses the Public Value Score Card as an adaptation of original balance score-
card for not-for-profit organizations, as a mean to capture the specificities of
not-for-profit organizations. This model is graphically represented by a
‘strategic triangle’, that directs the attention of decision makers to three
aspects that are highly critical to develop and implement an entity’s strategy.
The first point of the triangle, the value circle, focuses the attention on what
constitutes the ultimate value the organization seeks to produce. The second
point of the triangle, the legitimacy and support circle, focuses attention on
‘customers’ that author described as ‘third party payers’ including under this
Indicators and metrics for social business 13
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

label both those customers who pay for the service, or benefit from it, and
those who cover some portion of the costs i.e. donors and government. The
third point of the triangle focuses the attention on the ‘operational capacity’
that aims to explain whether an enterprise has the ability to achieve the
desired goals.
This set of models captures the social, economic and financial dimension
and support the definition of related KPIs. However, they provide a static
framework, without an explicit connection to the whole value chain
(McLoughlin et al. 2009).
The second group of contributions includes models that embrace a stake-
holder perspective to define the performance dimensions and to select the
indicators and metrics (Simmons 2003; Bassi 2011).
Bassi (2011) elaborates a measurement tool for nonprofit organizations
called Social Added Value Evaluation System that focuses on the participa-
tive nature of these organizations. He identifies the contribution of a not-for-
profit organization in the production of relational value and creation of social
capital. In particular, the system distinguishes between Economic and Cul-
tural and Political Added Value, which together form the Total Societal
Added Value that a third sector organization conveys to society. For each
dimension, the author identifies some sub-dimensions and observable ele-
ments. For instance, the capacity to produce good relationships is described
as the degree of ‘internal relational capacity’, i.e. the frequency among inter-
nal stakeholders and the intensity (strategic importance) of these relation-
ships; ‘external relational capacity’, i.e. the frequency of relationships with
the external stakeholders; and intensity (strategic importance) of this relation-
ship. Then, the author identifies seven KPIs for the internal relational capac-
ity and measures the other aspect mainly through a questionnaire aimed to
detect the extent and importance of the network of relationships the organiza-
tions are involved.
Simmons (2003) focuses on the stakeholders’ perspective as a key to
develop a performance management system, basing his model on the assump-
tion that effective governance must incorporates the views of different stake-
holders in the decision making process. Hence, the model proposed by
Simmons relies on the use of different stakeholders’ perspectives to determine
legitimacy and priority of different business activities/choices. To this aim,
the stakeholder analysis is used to determine the relevance of different aspects
that should be measured and the performance management system is seen as
a ‘negotiated outcome’ among stakeholders. This view raises the critical issue
of how to achieve stakeholder consensus on different KPIs and relationships
among them, and both models don’t focus on the monetary metrics.
The third group of contributions includes those models that are configured
as a guideline to support the identification of the performance dimensions
and the related KPIs. These models generally provide both a conceptual
framework and a practical approach to define the indicators, defining a
sequence of steps to tailor the KPIs to the specific characteristics of social
business and the informative needs of managers (DTA 2008; McLoughlin
et al. 2009).
14 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

The Fit for Purpose model has been proposed by the Development Trusts
Association in 2008, as a diagnostic tool to help a new or developing social
enterprise to assess its strengths and weaknesses. The tool consists of five sec-
tions: governance, enterprise and business planning, financial management,
partnership working and policies and procedures. For each section, there is
set of up to seven KPIs; and for each KPI a guideline is provided to better
specify the indicator and assess it according to a three-point rating scale
(Development Trusts Association 2008).
McLoughlin et al. (2009) propose a guideline for social impact measure-
ment of social enterprises (SEs), that is labelled SIMPLE, that stands for
Social Impact for Local Economy. The Simple model combines elements of
competitive analysis with the development of a performance measurement
model, based on a five-step approach. These steps help SE managers to con-
ceptualize the impact problem; identify and prioritize impacts for measure-
ment; develop appropriate impact measures; report impacts and integrate the
results in management decision making and the culture of the organization.
Furthermore, this model provides some criteria for defining a set of indicators
to measure the impact produced by the social business organization, here
labelled Key Impact Indicators.
Finally, Yang, Huang, and Lee (2014) propose the Performance Assess-
ment Model for Social Enterprise. This is a hierarchical model articulated
along three levels. At the first level, three performance dimensions are identi-
fied: essence of social enterprise, social impact, business operations. At the
second level, each dimension is further articulated into more specific areas, to
whom is associated a set of assessment factors or KPIs (third level). The
essence of social enterprise is further articulated into two areas, that are the
social mission and the social entrepreneur. The social mission comprises four
assessment factors: having a clear social mission, satisfactory correlation
between social mission and operation, support of social mission by stakehold-
ers, understanding of the social mission by members. The social entrepreneur
is divided into three assessment factors: cognition degree of social mission,
transforming social mission into a clear goal of social enterprise, ability to
achieve a social mission. Similarly, social impact is divided into two areas:
social contribution with six assessment factors (e.g. mitigation of social prob-
lems, creating positive community benefits), and social outcome with four
assessment factors (e.g. creating or improving social products, creative value
of innovative value). Business operations are further disaggregated into three
areas: the firm survival that comprises five assessment factors (e.g. stability of
resource supply, ability to use and integrate resources); the social relationship
that comprises four factors (e.g. scope of social networks, ability to promote
social mission), and the future potential that comprises six factors (e.g. ability
to afford products and services continuously and maintaining good relation-
ships with stakeholders). The relationship among the dimensions, areas and
assessment factors is a network structure, for which the model defines the
relationships between different factors and the relative weights.
The last model is characterized by the integration of the dashboard
approach with a synthetic indicator (Meadows and Pike 2010). In this work,
Indicators and metrics for social business 15
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

the authors identify three dimensions: Business Model, Financial Return,
Organization Development, to whom they associate a set of KPIs that are
interrelated and that reflect a coherent strategy from different stakeholders’
point of view. Then a synthetic indicator, the SROI (see Section 5.1 for a dis-
cussion of this indicator) is proposed to capture the value of the benefits that
accrue to a wider constituency as a consequence of the existence and interven-
tions of a particular social enterprise.
6. Discussion and Conclusion
This paper starts from the idea that the lack of shared and recognized indica-
tors and metrics represents a relevant obstacle to the growth of the social
business sector since it limits the ability of these organizations of ensuring
transparency and accountability (Nicholls 2009), attracting investors (Wilson
2014; Saltuk et al. 2014), mobilizing resources (Plotnieks 2014) monitoring
business operations (Arena, Azzone, and Bengo 2015) and managing the bal-
ance of power among the actors considering their different objectives (EC
2014). Several authors, recognizing the importance of indicators and metrics
to foster the growth of the social business sector, have proposed different
models, characterized by different inherent features, that can be broadly
grouped into three main categories: synthetic indicators, process-based
approaches and dashboards and scorecards. Hence, as follows, the research
first discusses how these models answer to the interests of the key stakehold-
ers of the social business sector, identifying the strengths and weaknesses of
each approach. Then, it draws some concluding remarks, moving from a sin-
gle stakeholder view, to the overall social business ecosystem.
Starting with the first issue, the paper highlights, for each stakeholder, his
informative needs and the models that appear more suitable to respond to
them. The investors, for instance, are interested in understanding the potenti-
alities of different funding opportunities to decide who/what they want to
finance. From this perspective, models that propose synthetic indicators, such
as SROI, allow to compare the results of different organizations. On the other
hand, grant-makers need to achieve a more comprehensive view of how a
social business organization operates. In this case, models that are more com-
plete can better respond to the funder’s need of assessing the social impact
produced. The Gamma Model (Grabenwarter and Liechtenstein 2011), for
example, goes into this direction by complementing a synthetic metric with
different impact performance indicators and impact investment performance
indicators.
Policy makers, as already discussed, could play different roles with respect
to social business organizations, since they could act as funders, contractors
or lawmaker. Accordingly, their informative needs can change significantly.
In the first case, they informative needs and the related indicators are aligned
with those of the grant-makers, since, in this case, they are interesting in
understanding the social impact produced by their investments. When they
act as contractors, they aim to control service performance more in details,
16 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

which calls for some disaggregated measures, that can be obtained through
process-based approaches. Finally, when they act as a policy maker, for
instance to redefine different aspects of the legal framework or making
choices about priorities in the public spending allocation, they need a com-
plete picture of the value chain and the impacts determined in its different
stages. From this perspective, process-based approaches and synthetic metrics
could serve these requirements better.
Finally, decision makers within social business organizations have to moni-
tor a comprehensive set of parameters, in order to achieve an overall picture
of the organization’s performance. From this perspective, dashboards and
process-based models appear to be most suitable to answer to this stake-
holder’s interests. Dashboards and scorecards models, as previously
highlighted, try and adapt the original Kaplan and Norton’s Balanced Score-
card to the characteristics of the social business (Kaplan and Norton 2001;
Moore 2003; Somers 2005; Bull 2007). However, these models do not propose
a set of indicators, but provide a framework to develop it. Hence, they could
be integrated with some standard frameworks that provide extensive exam-
ples of indicators and metrics, as Development Trusts Association (2008),
and McLoughlin et al. 2009 and Yang, Huang, and Lee (2014). On the other
hand, a sound alternative/integration compared to dashboards is represented
by process-based models, that provide a picture process of the ‘production’ of
a social service articulating the analysis of social business performances in
inputs-outputs-outcomes and impacts. Similarly to dashboards, they should
be integrated with standard frameworks (Hornsby 2012; GSVC 2012; Arena
et al. 2014).
These considerations, however, do not take into account at all the complex-
ity and dynamism of the relationships that characterize the social business
ecosystem. The new configurations that are currently emerging in the social
business sector, in fact, rely on the establishment of partnerships and collabo-
rative relationships among the above actors, that are pushed by new financial
supply chains (EU 2014; Wilston 2014). Since these actors play a different
role in the financial supply chain, some trade-offs emerge and are reflected in
the specific interests of each of these players. For example, considering the
case of a project where payments to the investors are based on the social
changes generated (as in the case of social impact bonds), there could be a
complex pattern of interests. Policy makers, in fact, could focus on govern-
mental cost savings and social impact generated for the community, investors
could focus on financial returns and decision makers could focus on monetiz-
able societal changes.
This problem is further amplified by the progressive broadening of the
actors involved in the social business ecosystem, in particular in connection
to the social impact investment market (Bugg-Levine and Emerson 2011) that
includes social ventures, intermediaries and impact investors. These new
actors are carriers of a new ‘incentive system’ that is strongly informed by the
emerging of new financing opportunities, further stretching the above trade-
offs. In this new scenario, the measurement problem moves from a technical
sphere, related to what indicators, what metrics are more suitable for each
Indicators and metrics for social business 17
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

player to the governance sphere, where metrics and indicators are influenced,
and in turns could influence, the balance of power among different actors.
As mentioned above, the measurement infrastructure in the social business
sector is still in its infancy, hence it is likely to be informed by the actors that
will be able to become more influential in the specific context. For instance, if
in the emerging financial supply chain, traditional players of the financial
markets will prevail, indicators and metrics could follow more traditional log-
ics, focusing on financial returns. Oddly, this could determine an over-empha-
sis on financial results in the social business sector, at a time when many
private sector organizations have been moving towards more comprehensive
indicators and metrics (G8 2014).
On the contrary, if the ecosystem will develop in a more balanced way or if
social business organizations will be able to take on a leading role in setting
the agenda, indicators and metrics are expected to be more focused on social
impacts, maybe disregarding financial returns. At any rate, this evolution will
be influenced by the evolution of the social business ecosystem, for whom at
present is difficult to make a prevision, and practice variations can be
expected in different fields and different countries.
Furthermore, it is worthy of mentioning that metrics and indicators could
play a crucial role in influencing political bargaining processes and power rela-
tionships among different actors within an organization and, more in general,
within the whole eco-system at the policy level (Brignall and Modell 2000).
Measuring something provides not only the basis for managing it (Emerson
2003), but it is typically central in decisions concerning performance evalua-
tion, resource allocation, and new policy developments. Hence, the choice of a
specific metric compared to another could lead to a larger or smaller recogni-
tion of the contribution of the social business sector itself, eventually favouring
or hampering future potential developments.
From this perspective, looking at the single stakeholder is relatively not
useful because he is influenced by his own interests; instead governments
and policy makers at the international level should take on the responsi-
bility of ensuring that the negotiation among different stakeholders hap-
pens in a fair context. In this light, they should define proper governance
mechanisms, embracing a systemic view of the eco-system, and ensure the
development of a fair measurement infrastructure. This appears particu-
larly important in order to avoid to lose the opportunity of leveraging on
social business in order to improve the provision of social services and
address some of the big societal challenges that have been discussed in
the beginning of the paper.
A final consideration concerns the need of fostering a cultural change, that
goes beyond the introduction of indicators and metrics, in order to integrate
societal impacts in the economic system. Metrics and indicators are funda-
mental to favour the establishment of virtuous circle whereby investors can
invest (instead of donate) in a social business initiative, that in turns ensure a
financial return and is committed (and locked) to create social value and
determine concrete impacts. This could play a role in fostering a more equita-
ble economic system.
18 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

This cultural change is partially taking place in terms of policies. The
emphasis that the European Commission is placing upon the growth of social
business and impact investing as a more effective way to answer to emerging
social challenges provides evidence of the commitment of policy makers in
this field. This attention is further confirmed by the recent OECD report enti-
tled ‘New Investments Approaches for Addressing Social and Economic
Challenges’ (Wilston 2014), and by the results of the Working Group on
impact measurement (under the direct supervision of the Social Impact
Investment Task Force). Policy makers at different levels recognize a central
role to the governments in creating the ‘right’ infrastructure to strengthen
new private-public partnership models, to scale up innovative solutions and
to ensure the alignment between capital demand (social business) and capital
offer (impact investing).
For ensuring this alignment, it is important that every Country, succeed in
beating ‘the invisible heart of markets’ (G8 2014), defining adequate laws to
facilitate the growth of social business, implementing technical support for
social enterprises and helping private sector organizations to see in the social
impact dimension a strategic driver for investment allocation.
The attention of policy makers is also reflected in the evolution of practices
embraced by for-profit organizations. In this field, traditional accounting
frameworks have been evolving over time, creating a bridge between different
accounting instruments, as in the case of new guidelines entitled ‘Linking
GRI and IRIS’ (GRI and IRIS 2014). These guidelines aim to help impact
investors to make a connection between IRIS and GRI, aggregating and com-
paring performance in a reliable way. The relevance of this issue is confirmed
by the results of a survey conducted by the GIIN and J.P. Morgan (Saltuk
et al. 2014), where more than two-thirds of respondents agree about the need
of standardized impact metrics to foster the development of the industry.
This paper signs a potential contribution to both theory and practice. From
an academic perspective, the paper analyses the state of the art literature in a
systemic way, highlighting the strengths and weaknesses of different
approaches and connecting them to the information needs of key stakehold-
ers in the social business sector. Coherently with prior research in the field,
the paper underlines how metrics and indicators are a fundamental factor to
foster the development of the social business sector. In particular, it highlights
how indicators and metrics can contribute to favour the alignment between
supply and demand in the financial supply chain, in the light of a broader
vision of social business ecosystem and its potential trajectories of develop-
ment. For practitioners, this paper delivers a pragmatic perspective on how
social impact can be evaluated and which tools can better answer to the inter-
ests of different stakeholders, considering that practitioners themselves
(including investors, social entrepreneurs, policy makers) are those that are
more involved in the measurement issue.
In the end, the paper discusses potential areas for future development of
this research. As regards, the stakeholders, it carried out a first analysis that
is based on the current state of the art. Since the social business sector is under
significant development, the information needs of different stakeholders and
Indicators and metrics for social business 19
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

the related indicators and metrics could change following the evolution of the
ecosystem and the incidence and power of these stakeholders may vary con-
siderably between countries, parts of the social business sector or moment in
time. From this perspective, future research could embrace the ecosystem per-
spective and address in more depths, through an empirical analysis, the role
of metrics and indicators in balancing the powers of different actors in the
social business ecosystem. Concerning this issue some aspects that appear to
be particularly interesting deal with the governance system of the measure-
ment infrastructure for instance, is a third sector agency that monitors per-
formance in the social sector a potential solution to the measurement
challenge?
Disclosure statement
No potential conflict of interest was reported by the authors.
References
Achleitner, A. K., A. Heinecke, A. Noble, M. Schoning, and W. Spiess-Knalf 2011. “Unlocking the
Mystery: An intoduction to Social Investment.” Innovations 6 (3): 4150.
Alexander, J., J. L. Brudney, and K. Yang 2010. “Introduction to the Symposium: Accountability and
Performance Measurement: The Evolving Role of Nonprofits in the Hollow State.” Nonprofit and
Voluntary Sector Quarterly 39 (4): 565570.
Alter, K. A., 2006. “Social Enterprise Models and Their Mission and Money Relationships.” In Social
Entrepreneurship: New Models of Sustainable Social Change, edited by A. Nicholls, 205233. Oxford:
Oxford University Press.
Arena, M., G. Azzone, and I. Bengo 2015. “Performance Measurement for Social Enterprises.” VOLUN-
TAS: International Journal of Voluntary and Nonprofit Organizations 26 (2): 649672.
Arksey, H., and L. O’Malley 2005. “Scoping Studies: Towards a Methodological Framework.”
International Journal of Social Research Methodology 8 (1): 1932.
Auerswald, P. 2009. “Creating Social Value.” Stanford Social Innovation Review 7 (2): 5155.
Austin, J., H. Stevenson, and J. Wei-Skillern 2006. “Social and Commercial Entrepreneurship: Same,
Different, or Both?.” Entrepreneurship Theory and Practice 30 (1): 122.
Bagnoli, L., and C. Megali 2011. “Measuring Performance in Social Enterprises.” Nonprofit and Voluntary
Sector Quarterly 40 (1): 149165.
Bassi, A. 2011. Il valore aggiunto sociale del terzo settore. Verso un sistema di indicatori per la misurazione
della performance delle imprese sociali. Milan: QuiEdit.
Bebbington, K. J., R. H. Gray, and D. L. Owen 1999. “Seeing the Wood for the Trees: Taking the Pulse of
Social and Environmental Accounting.” Accounting, Auditing and Accountability Journal 12 (1): 4751
Bebbington, J., J. Unerman, and B. O’Dwyer, eds. 2014. Sustainability Accounting and Accountability.
Abingdon: Routledge.
Bebbington, J., and R. Gray 2001. “An Account of Sustainability: Failure, Success and a Recon-
ceptualization.” Critical Perspectives on Accounting 12 (5): 557588.
Bourne, L., and D. H. T. Walker 2005. “Visualising and Mapping Stakeholder Influence.” Management
Decision 43 (5): 649660.
Brignall, S., and S. Modell 2000. “An Institutional Perspective on Performance Measurement and Manage-
ment in the ‘New Public Sector’.” Management Accounting Research 11 (3): 281306.
Brinkman, H. J., S. De Pee, I. Sanogo, L. Subran, and M. W. Bloem 2009. “High Food Prices and the
Global Financial Crisis Have Reduced Access to Nutritious Food and Worsened Nutritional Status
and Health.” Journal of Nutrition 140 (1): 153S161S.
Bugg-Levine, A., and J. Emerson 2011. “Impact Investing, Transforming How We Make Money While
Making a Difference.” Innovations 6 (3): 3140.
20 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

Bull, M., and H. Crompton 2006. “Business Practices in Social Enterprises.” Social Enterprise Journal
2 (1): 4260.
Bull, M. 2007. “Balance: The Development of a Social Enterprise Business Performance Analysis Tool.”
Social Enterprise Journal 3 (1): 4966.
Carter, N., R. Klein, and P. Day 1995. How Organisations Measure Success: The Use of Performance Indi-
cators in Government. London: Routledge.
Chan, H. W., V. Makarov, and S. Thompson 2010. “Beyond the “Tradeoff”: A new Analytical Framework
for the Social Impact Investing Industry.” Working Paper.
Chan, K. H. 2009. “Impact of Intellectual Capital on Organisational Performance: An Empirical Study of
Companies in the Hang Seng Index (Part 1).” Learning Organization 16 (1): 421.
Crowther, D., and C. Reis 2011. “Social Responsibility or Social Business?” Social Business 1 (2): 129148.
Development Trusts Association, DTA. 2008. “Fit for Purpose: The Development Trusts Association
Healthcheck for Community Enterprise Organisations.” Accessed October 6th, 2014. http://locality.org.
uk/wp-content/uploads/Fit-for-Purpose.pdf.
Ebrahim, A., and K. Rangan 2010. “The Limits of Nonprofit Impact: A Contingency Framework for
Measuring Social Performance.” Harvard Business School Working Paper.
Emerson, J., 2003. “The Blended Value Proposition: Integrating Social and Financial Returns.” California
Management Review 45 (4): 36
European Commission, 2013. “Social economy and social entrepreneurship, Social Europe guide, Volume
4.” Directorate-General for Employment, Social Affairs and Inclusion, March 2013. Accessed Novem-
ber 10, 2014. http://www.sofisam.se/download/18.3453fc5214836a9a472a0430/1411643786917/EU+kom
missionen,+Social+Economy+and+Social+Entreprenreurship.pdf.
European Commission, 2014. “Proposed Approaches to Social Impact Measurement” in European Com-
mission legislation and in practice relating to: EuSEFs and the EaSI. Accessed November 10
th
2014.
http://www.ec.europa.eu/internal_market/social_business/docs/expert-group/social_impact/140605-sub-
group-report_en.pdf.
Fletcher, A., J. Guthrie, P. Steane, G. Roos, and S. Pike. 2003. “Mapping Stakeholder Perceptions for a
Third Sector Organization.” Journal of Intellectual Capital 4 (4): 505527.
Flockhart, A. 2005. “Raising the profile of social enterprises: the use of social return on investment (SROI)
and investment ready tools (IRT) to bridge the financial credibility gap.” Social Enterprise Journal,1
(1): 2942.
Flynn, N. 1997. Public Sector Management. London: Prentice-Hall/Harvester Wheatsheaf.
Freeman, R. E. 1984. Strategic Management: A Stakeholder Approach. Boston, MA: Pitman Publishing
Company.
Freireich, J., and K. Fulton. 2009. Investing For Social and Environmental Impact: A Design for Catalyzing
an Emerging Industry. New York, NY: Monitor Group.
Friedman, A. L., and S. Miles. 2002. “Developing Stakeholder Theory.” Journal of Management Studies,
31 (1): 121.
Gao, S. S., and J. J. Zhang. 2006. “Stakeholder Engagement, Social Auditing and Corporate
Sustainability.” Business Process Management Journal 12 (6): 722740.
G8, Social Impact Investment Taskforce. 2014. “IMPACT INVESTMENT: The invisible heart of markets
harnessing the power of entrepreneurship, innovation and capital for public good.” Accessed November
10
th
, 2014. http://www.socialimpactinvestment.org/.
Gl€
anzel, G., B. Schmitz, and G. Mildenberger. 2012. “Report on Social Finance Investment Instruments,
Markets and Cultures in the EU, a deliverable of the project” The theoretical, empirical and policy
foundations for building social innovation in Europe Brussels: European Commission, DG Research.
Global Social Venture Competition, GSV. 2012. “Social Impact Assessment Guidelines.” Accessed Sep-
tember 19th, 2014. http://www.i-edu.org.cn/gsvc/download/2011_GSVC_SIA_Guidelines.pdf
Global Impact Investing Network. 2011. “Impact-Based Incentive Structures, Aligning Fund Manager
Compensation with Social and Environmental Performance.” Accessed November 10th, 2014. http://
www.thegiin.org/binary-data/RESOURCE/download_file/000/000/332-1.pdf
GRI AND IRIS. 2014. “Linking GRI and IRIS: How to Use the IRIS Metrics in the Preparation of a Sus-
tainability Report Based on the GRI G4 Sustainability Reporting Guidelines.” Accessed February 9th,
2015. http://www.globalreporting.org/G4 and https://iris.thegiin.org
Grabenwarter, U., and H. Liechtenstein. 2011. “In Search of Gamma-An Unconventional Perspective on
Impact Investing.” IESE Business School, University of Navarra.
Indicators and metrics for social business 21
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

Gray, R. H., C. Dey, D. Owen, R. Evans, and S. Zade. 1997. “Struggling with the Praxis of Social
Accounting: Stakeholders, Accountability, Audits and Procedures.” Accounting, Auditing and Account-
ability Journal 10 (3): 325364.
Gray, R. H. 2000. “Current Developments and Trends in Social and Environmental Auditing, Reporting
and Attestation: A Review and Comment.” International Journal of Auditing 4 (3): 247268.
Gray, R. 2001. “Thirty Years of Social Accounting, Reporting and Auditing: What (if anything) Have We
Learnt?.” Business Ethics: A European Review 10 (1): 915.
Gray, R. H. 2002. “The Social Accounting Project and Accounting, Organizations and Society: Privileging
Engagement, Imagination, New Accountings and Pragmatism Over Critique?” Accounting, Organiza-
tions and Society 27 (7): 687708.
Guba, E. S., and Y. S. Lincoln. 1989. Fourth Generation Evaluation. Newbury Park, CA: Sage.
Hebb, T. 2013. “Impact Investing and Responsible Investing: What Does It Mean?” Journal of Sustainable
Finance and Investment 3 (2): 7174.
Heinrich, C. J. 2002. “Outcomes-Based Performance Management in the Public Sector: Implications for
Government Accountability and Effectiveness.” Public Administration Review 62 (6): 712725.
Herman, R. D., and D. O. Renz. 1997. “Multiple Constituencies and the Social Construction of Nonprofit
Organization Effectiveness.” Nonprofit and Voluntary Sector Quarterly 26 (2): 185206.
Hornsby, A, 2012. “The Good Analyst, Impact Measurement and Analysis in the Social-Purpose Uni-
verse.” Investing for Good. Accessed September 19 th, 2014. http://www.goodanalyst.com/fileadmin/
ifg_users/pdf/thegoodanalyst.pdf
Hornsby, A., and G. Blumberg. 2013. “The Good Investor A Book of Best Impact Practice.” Investing for
Good. Accessed September 19th, 2014. http://www.goodinvestor.co.uk/download-the-good-investor-
pdf/
Hyndman, N., and D. McMahon. 2011. “The Hand of Government in Shaping Accounting and Reporting
in the UK Charity Sector.” Public Money & Management 31 (3): 167174.
Jansson, M., and A. Biel. 2011. “Motives to Engage in Sustainable Investment: A Comparison Between
Institutional and Private Investors.” Sustainable Development 19 (2): 135142.
Jackson, E. T. 2013. “Interrogating the Theory of Change: Evaluating Impact Investing Where It Matters
Most.” Journal of Sustainable Finance & Investment 3 (2): 95110.
Kaplan, R. S., and D. P. Norton 2001. “Transforming the Balanced Scorecard from Performance
Measurement to Strategic Management.” Part II. Accounting Horizons 15 (2): 147160.
Karamchandani, A., M. Kubzansky, and P. Frandano. 2009. “Emerging Markets, Emerging Models: Mar-
ket Based Solutions to the Challenges of Global Poverty.” Monitor Group. Accessed November 3rd,
2014. http://www.monitor.com/Portals/0/MonitorContent/documents/Monitor_Emerging_Markets_
NEDS_03_25_09.pdf
Karanikolos, M., P. Mladovsky, J. Cylus, S. Thomson, S. Basu, D. Stuckler, J. P. Mackenbach, and M.
McKee. 2013. “Financial Crisis, Austerity, and Health in Europe.” The Lancet 381 (9874): 13231331.
Kendall, J., and M. Knapp. 2000. “Measuring the Performance of Voluntary Organisations.” Public
Management 2 (1): 105132.
Korosec, R. L., and E. M. Berman. 2006. “Municipal Support for Social Entrepreneurship.” Public Admin-
istration Review 66 (3): 448462.
Lawlor, E. 2009. “Social Return on Investments: an Approach to Avoiding False Economies.” Working
Paper. TSRC, Birmingham. Accessed September 10th, 2014. http://eprints.mdx.ac.uk/7104/
Lyon, F., M. Arvidson, D. Etherington, and I. Vickers. 2010. “Social Impact Measurement (SIM) Experi-
ences and Future Directions for Third Sector Organisations in the East of England.” Report for EEDA.
Accessed October 10th, 2014. http://www.the-guild.co.uk.
Marks, L., and D. J. Hunter. 2007. Social Enterprises and the NHS: Changing Patterns of Ownership and
Accountability. London: Unison.
Mathews, M. R. 1997. “Twentyfive Years of Social and Environmental Accounting Research.”
Accounting, Auditing & Accountability Journal 10 (4): 481531.
Mathews, R. 2004. “Developing a Matrix Approach to Categorise the Social and Environmental Account-
ing Research Literature.” Qualitative Research in Accounting & Management 1 (1): 3045.
McLoughlin, J., J. Kaminski, B. Sodgar, S. Khan, R. Harris, G. Arnaudo, and S. Mc Brearty. 2009. “A
Strategic Approach to Social Impact Measurement of Social Enterprises. The SIMPLE Methodology.”
Social Enterprise Journal 5 (2): 154178.
22 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

Meadows, M., and M. Pike. 2010. “Performance Management for Social Enterprises.” Systemic Practice
and Action Research 23 (2): 127141.
Mook, L., and J. Quarter. 2006. “Accounting for the Social Economy: The Socioeconomic Impact State-
ment.” Annals of Public and Cooperative Economics 77 (2): 247269.
Moore, MH. 2003. “The Public Value Scorecard: A Rejoinder and an Alternative to Strategic Performance
Measurement and Management in Non-Profit Organizations.” Hauser Center for Nonprofit Organiza-
tions Working Paper, 18.
New Economics Foundation (NEF). 2007. “Measuring Real Value: A DIY Guide to Social Return on
Investment.” Accessed November 3rd, 2014. http://www.neweconomics.org/
Nicholls, A. 2010a. “Institutionalizing Social Entrepreneurship in Regulatory Space: Reporting and
Disclosure by Community Interest Companies.” Accounting, Organizations and Society 35 (4): 394415.
Nicholls, A. 2010b. “The Legitimacy of Social Entrepreneurship: Reflexive Isomorphism in a
PreParadigmatic Field.” Entrepreneurship Theory and Practice 34 (4): 611633.
Nicholls, A. 2009. “We Do Good Things, Don’t We?: ‘Blended Value Accounting’ in Social
Entrepreneurship.” Accounting Organizations and Society 34 (67): 755769.
O’Dwyer, B. 2005. “Stakeholder Democracy: Challenges and Contributions From Social Accounting.”
Business Ethics: A European Review 14 (1): 2841.
OECD. 2014. “General Assessment of the Macroeconomic Situation.” Economic Outlook, no. 2. Accessed
October 6th 2014. http://www.oecd.org/eco/outlook/General-assessment-of-the-macroeconomic-situa
tion.pdf
Olsen, S., and Galimidi. 2008. “Catalog of Approaches to Impact Measurement, Assessing Social Impact
in Private Ventures.” Social Venture Technology Group. Accessed November 3rd, 2014. http://www.
midot.org.il/Sites/midot/content/Flash/CATALOG%20OF%20APPROACHES%20TO%20IMPACT%
20MEASUREMENT.pdf
Ormiston, J., and R. Seymour. 2011. “Understanding Value Creation in Social Entrepreneurship: The
Importance of Aligning Mission, Strategy and Impact Measurement.” Journal of Social Entrepreneur-
ship 2 (2): 125150.
Owen, D. L., and T. Swift. 2001. “Social Accounting, Reporting and Auditing: Beyond the Rhetoric?”
Business Ethics: A European Review 10 (1): 48.
Paton, R. 2003. Managing and Measuring Social Enterprises. London: Sage.
Peredo, A. M., and M. McLean. 2006. “Social Entrepreneurship: A Critical Review of the Concept.”
Journal of World Business 41 (1): 5665.
Perrin, B. 1998. “Effective Use and Misuse of Performance Measurement.” American Journal of Evaluation
19 (3): 367379.
Plotnieks, D. 2014. “Mechanisms Fostering Social Entrepreneurship as Potential Instruments for
Economic Development: The Eastern Partnership Perspective.” Baltic Journal of European Studies 4
(2): 3449.
Preston, L. E., and T. Donaldson. 1999. “Stakeholder Management and Organizational Wealth.” Academy
of Management Review 24 (4): 619.
Richmond, B. J., L. Mook, and J. Quarter. 2003. “Social accounting for nonprofits: Two models.”
Nonprofit Management and Leadership 13 (4): 308324.
Rose, A., and A. Lawton. 1999. Public Services Management. London: Prentice Hall.
Rotheroe, N., and A. Richards. 2007. “Social Return on Investment and Social Enterprise: Transparent
Accountability for Sustainable Development.” Social Enterprise Journal 3 (1): 3148
Sacks, J. 2002. The Money Trail: Measuring Your Impact on the Local Economy Using LM3. London: New
Economics Foundation.
Saltuk, Y., A. Idrissi, A. Bouri, A. Mudaliar, and H. Schiff. 2014. “Spotlight on the Market: The Impact
Investor Survey.” Global Social Finance, JP Morgan and the Global Impact Investing. London: Network.
Santos, F. M. 2012. “A Positive Theory of Social Entrepreneurship.” Journal of Business Ethics 111 (3):
335351.
SEC. 2011. “Creating a Favourable Climate for Social Enterprises, Key Stakeholders in the Social Econ-
omy and Innovation.” Communication from the commission to the European Parliament, the Council, the
European economic and social committee and the committee of the regions. Social Business Initiative.
Accessed November 10th, 2014. http://www.europarl.europa.eu/.
Seelos, C., and J. Mair. 2005. “Social Entrepreneurship: Creating New Business Models to Serve the Poor.”
Business Horizons 48 (3): 241246.
Indicators and metrics for social business 23
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016

Sefton, T. 2000. “Getting Less for More: Economic Evaluation in the Social Welfare Field CASEpare 44”.
Centre for Analysis of Social Exclusion, London School of Economics, London. Accessed May 5th, 2015 .
http://www.eprints.lse.ac.uk/6444/1/Getting_Less_for_More_Economic_Evaluation_in_the_Social_Wel
fare_Field.pdf.
Sethi, S. P. 2005. “Investing in Socially Responsible Companies Is a must for Public Pension
FundsBecause There Is No Better Alternative.” Journal of Business Ethics 56 (2): 99129.
Sgherri, S., and E. Zoli. 2009. “Euro Area Sovereign Risk During the Crisis.” International Monetary
Fund, Working Paper. Accessed May 5th, 2015. http://www.kif.re.kr/KMFileDir/
129001476237347500_IMF%20wp09222.pdf.
Simmons, J. 2003. “Balancing Performance, Accountability and Equity in Stakeholder Relationships:
Towards More Socially Responsible HR Practice.” Corporate Social Responsibility and Environmental
Management 10 (3): 129140.
Sinkovics, N., R. R. Sinkovics, and M. Yamin. 2014. “The Role of Social Value Creation in Business
Model Formulation at the Bottom of the PyramidImplications for MNEs?.” International Business
Review 23 (4): 692707
Smith, P. 1995. “Performance Indicators and Outcomes in the Public Sector.” Public Money & Manage-
ment 15 (4): 1316.
Somers, A. B. 2005. “Shaping the Balanced Scorecard for Use in UK Social Enterprises.” Social Enterprise
Journal 1 (1): 4357.
Stone, C. D. 1975. Where the Law Ends. New York, NY: Harper & Row.
Thomson, I., and J. Bebbington. 2005. “Social and Environmental Reporting in the UK: A Pedagogic
Evaluation.” Critical Perspectives on Accounting 16 (5): 507533.
Vis, B., K. Kersbergen, and T. Hylands. 2011. “To What Extent Did the Financial Crisis Intensify the Pres-
sure to Reform the Welfare State?” Social Policy & Administration 45 (4): 338353.
Wendt, A. 1999. Social Theory of International Politics. Cambridge: Cambridge University Press.
Wilson, F., and E. J. Post. 2013. “Business Models for People, Planet & Profits”: Exploring the Phenomena
of Social Business, a Market-Based Approach to Social Value Creation.” Small Business Economics 40
(3): 715737.
Wilson, K. E. 2014. “New Investment Approaches for Addressing Social and Economic Challenges.”
OECD Science, Technology and Industry Policy, Papers No. 15, OECD.
World Bank. 2003. World Development Report 2004. “Making Services Work for Poor People.” World
Bank. Accessed September 19th, 2014. https://openknowledge.worldbank.org/handle/10986/5986
License: CC BY 3.0 IGO.
Yang, C. L., R. H. Huang, and Y. C. Lee. 2014. “Building a Performance Assessment Model for Social
Enterprises-Views on Social Value Creation.” Science Journal of Business and Management 2 (1): 19.
Yunus, M., B. Moingeon, and L. Lehmann-Ortega. 2010. “Building Social Business Models: Lessons from
the Grameen Experience.” Long Range Planning 43 (23): 308325.
Yunus, M. 2007. Creating a World Without Poverty: Social Business and the Future of Capitalism. New
York, NY: PublicAffairs.
24 I. Bengo et al.
Downloaded by [Politecnico di Milano Bibl], [Irene Bengo] at 04:47 30 January 2016