Skip to main content
SpringerLink
Log in

From Legitimacy to Learning: How Impact Measurement Perceptions and Practices Evolve in Social Enterprise–Social Finance Organization Relationships

  • Original Paper
  • Published:
VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations Aims and scope Submit manuscript

Abstract

While the links between the fields of social enterprise and social finance appear apparent, academic research on the relationship lags behind practice. This study examines how social enterprises interact with social finance organizations in the context of impact measurement. Through qualitative research with eight social enterprises and their respective funders, I find evidence that both sides view impact measurement primarily as a means for establishing legitimacy prior to engagement, and in the early stages of their relationship. These relationships are hierarchical and rigid at early stages, but over time evolve into more collaborative partnerships. Eventually, social enterprises embrace impact measurement as a tool for organizational learning, and social finance organizations develop more empowering approaches for impact measurement. The level of flexibility and the closeness of the relationship between social finance organizations and social enterprises suggest important lessons for the development of a more enabling use of impact measurement.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1

Similar content being viewed by others

Notes

  1. “Access to Energy” (GIIN 2016) is one of the older and more prominent areas of social enterprise and social finance activity (with over $7 billion in invested), second only to microfinance (Mudaliar et al. 2016).

  2. Due to the small sample and the relatively high profile of the funders, I am unable to provide too much information about their organizations without revealing their identities.

References

  • Ahlstrom, D., & Bruton, G. D. (2006). Venture capital in emerging economies: Networks and institutional change. Entrepreneurship Theory and Practice, 30(2), 299–320.

    Article  Google Scholar 

  • Arena, M., Azzone, G., & Bengo, I. (2015). Performance measurement for social enterprises. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 26(2), 649–672.

    Article  Google Scholar 

  • Arvidson, M., & Lyon, F. (2014). Social impact measurement and non-profit organisations: Compliance, resistance, and promotion. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 25(4), 869–886.

  • Arvidson, M., Lyon, F., McKay, S., & Moro, D. (2013). Valuing the social? The nature and controversies of measuring social return on investment (SROI). Voluntary Sector Review, 4(1), 3–18.

    Article  Google Scholar 

  • Bacq, S., & Lumpkin, G. (2014). Can social entrepreneurship researchers learn from family business scholarship? A theory-based future research agenda. Journal of Social Entrepreneurship, 5(3), 270–294.

    Article  Google Scholar 

  • Bagnoli, L., & Megali, C. (2011). Measuring performance in social enterprises. Nonprofit and Voluntary Sector Quarterly, 40(1), 149–165.

    Google Scholar 

  • Benjamin, L. M. (2008). Account space: How accountability requirements shape nonprofit practice. Nonprofit and Voluntary Sector Quarterly, 37(2), 201–223.

    Article  Google Scholar 

  • Benjamin, L. M. (2010). Mediating accountability: How nonprofit funding intermediaries use performance measurement and why it matters for governance. Public Performance & Management Review, 33(4), 594–618.

    Article  Google Scholar 

  • Carman, J. G. (2011). Understanding evaluation in nonprofit organizations. Public Performance and Management Review, 34(3), 350–377.

    Article  Google Scholar 

  • Corley, K. G., & Gioia, D. A. (2004). Identity ambiguity and change in the wake of a corporate spin-off. Administrative Science Quarterly, 49(2), 173–208.

    Google Scholar 

  • Dacin, M. T., Dacin, P. A., & Tracey, P. (2011). Social entrepreneurship: A critique and future directions. Organization Science, 22(5), 1203–1213.

    Article  Google Scholar 

  • Dahler-Larsen, P. (2011). The evaluation society. Stanford University Press.

  • Dees, J. G. (2008). Philanthropy and enterprise: Harnessing the power of business and social entrepreneurship for development. Innovations: Technology, Governance, Globalization, 3(3), 119–132.

    Article  Google Scholar 

  • Defourny, J., & Nyssens, M. (2010). Conceptions of social enterprise and social entrepreneurship in Europe and the United States: Convergences and divergences. Journal of Social Entrepreneurship, 1(1), 32–53.

    Article  Google Scholar 

  • Dichter, S., Adams, T., & Ebrahim, A. (2016). The power of lean data. Stanford Social Innovation Review, Winter, 36–41.

  • Dicke, L. A. (2002). Ensuring accountability in human services contracting can stewardship theory fill the bill? The American Review of Public Administration, 32(4), 455–470.

    Article  Google Scholar 

  • DiMaggio, P., & Powell, W. W. (1983). The iron cage revisited: Collective rationality and institutional isomorphism in organizational fields. American Sociological Review, 48(2), 147–160.

    Article  Google Scholar 

  • Ebrahim, A. (2003). Accountability in practice: Mechanisms for NGOs. World Development, 31(5), 813–829.

    Article  Google Scholar 

  • Ebrahim, A. (2016). Accountability myopia: Losing sight of organizational learning. Nonprofit and Voluntary Sector Quarterly, 34(1), 56–87.

    Article  Google Scholar 

  • Ebrahim, A., & Rangan, V. K. (2010). Putting the brakes on impact: A contingency framework for measuring social performance. In Academy of Management Proceedings (Vol. 2010, No. 1, pp. 1–6). Briarcliff Manor, NY 10510: Academy of Management.

  • Ebrahim, A., & Rangan, V. K. (2014). What impact? California Management Review, 56(3), 118–141.

    Article  Google Scholar 

  • Eisenhardt, K. M. (1989a). Agency theory: An assessment and review. Academy of Management Review, 14(1), 57–74.

    Article  Google Scholar 

  • Eisenhardt, K. M. (1989b). Building theories from case study research. Academy of Management Review, 14(4), 532–550.

    Article  Google Scholar 

  • Eisenhardt, K. M., & Graebner, M. E. (2007). Theory building from cases: Opportunities and challenges. The Academy of Management Journal, 50(1), 25–32.

    Article  Google Scholar 

  • Giddens, A. (1984). The constitution of society. Cambridge: Cambridge University Press.

    Google Scholar 

  • Glänzel, G., & Scheuerle, T. (2016). Social impact investing in Germany: Current impediments from investors’ and social entrepreneurs’ perspectives. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 27(4), 1638–1668.

    Article  Google Scholar 

  • Gordon, J. (2014). A stage model of venture philanthropy. Venture Capital, 16(2), 85–107.

    Article  Google Scholar 

  • Grimes, M. (2010). Strategic sensemaking within funding relationships: The effects of performance measurement on organizational identity in the social sector. Entrepreneurship Theory and Practice, 34(4), 763–783.

    Article  Google Scholar 

  • Gugerty, M. K., & Karlan, D. (2018). The Goldilocks challenge: Right-fit evidence for the social sector. Oxford: Oxford University Press.

    Book  Google Scholar 

  • Hatry, H. P. (2013). Sorting the relationships among performance measurement, program evaluation, and performance management. New Directions for Evaluation, 2013(137), 19–32.

  • Kerlin, J. A. (2010). A comparative analysis of the global emergence of social enterprise. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 21(2), 162.

    Article  Google Scholar 

  • Lall, S. (2017). Measuring to improve versus measuring to prove: understanding the adoption of social performance measurement practices in Nascent social enterprises. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 28(6), 2633–2657.

    Article  Google Scholar 

  • Langley, A. (1999). Strategies for theorizing from process data. Academy of Management Review, 24(4), 691–710.

    Google Scholar 

  • Lincoln, Y. S., & Guba, E. G. (1985). Naturalistic inquiry (Vol. 75). Beverley Hills: Sage.

    Google Scholar 

  • MacIndoe, H., & Barman, E. (2013). How organizational stakeholders shape performance measurement in nonprofits: Exploring a multidimensional measure. Nonprofit and Voluntary Sector Quarterly, 42(4), 716–738.

    Article  Google Scholar 

  • Mair, J., & Marti, I. (2006). Social entrepreneurship research: A source of explanation, prediction, and delight. Journal of world business, 41(1), 36–44.

    Article  Google Scholar 

  • Manetti, G. (2014). The role of blended value accounting in the evaluation of socio-economic impact of social enterprises. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 25(2), 443–464.

    Article  Google Scholar 

  • Miles, M. B., & Huberman, A. (1994). Qualitative data analysis: An expanded sourcebook. Beverley Hills: Sage.

    Google Scholar 

  • Miller, T. L., Wesley, I., & Curtis, L. (2010). Assessing mission and resources for social change: An organizational identity perspective on social venture capitalists’ decision criteria. Entrepreneurship Theory and Practice, 34(4), 705–733.

    Article  Google Scholar 

  • Mitchell, G. E. (2014). Why will we ever learn? Measurement and evaluation in international development NGOs. Public Performance and Management Review, 37(4), 605–631.

    Article  Google Scholar 

  • Mudaliar, A., Schiff, H., & Bass, R. (2016). Annual impact investor survey. New York: Global Impact Investing Network.

    Google Scholar 

  • Network, G. I. I. (2015). What is impact investing. Online under: https://thegiin.org/impact-investing/need-to-know.

  • Network, G. I. I. (2016). Annual impact investor survey. Web access: https://thegiin.org/knowledge/publication/annualsurvey2016.

  • Newcomer, K., Baradei, L. E., & Garcia, S. (2013). Expectations and capacity of performance measurement in NGOs in the development context. Public Administration and Development, 33(1), 62–79.

    Article  Google Scholar 

  • Nicholls, A. (2009). ‘We do good things, don’t we?’: ‘Blended Value Accounting’ in social entrepreneurship. Accounting, Organizations and Society, 34(6), 755–769.

    Article  Google Scholar 

  • Nicholls, A. (2018). A general theory of social impact accounting: Materiality, uncertainty and empowerment. Journal of Social Entrepreneurship, 9(2), 132–153.

    Article  Google Scholar 

  • Nicholls, A., & Paton, R. (2009). Emerging resource flows for social entrepreneurship; theorizing social investment. Oxford: Skoll Centre for Social Entrepreneurship.

    Google Scholar 

  • Nicholls, A., & Pharoah, C. (2008). The landscape of social investment: A holistic topology of opportunities and challenges. Oxford: Skoll Centre for Social Entrepreneurship.

    Google Scholar 

  • Ormiston, J., & Seymour, R. (2011). Understanding value creation in social entrepreneurship: The importance of aligning mission, strategy and impact measurement. Journal of Social Entrepreneurship, 2(2), 125–150.

    Article  Google Scholar 

  • Salamon, L. M. (Ed.). (2014). New frontiers of philanthropy: A guide to the new tools and new actors that are reshaping global philanthropy and social investing. Oxford: Oxford University Press.

    Google Scholar 

  • Scarlata, M., & Alemany, L. (2010). Deal structuring in philanthropic venture capital investments: Financing instrument, valuation and covenants. Journal of Business Ethics, 95(2), 121–145.

    Article  Google Scholar 

  • Schneider, A. (2017). Social entrepreneurship, entrepreneurship, collectivism, and everything in between: Prototypes and continuous dimensions. Public Administration Review, 77(3), 421–431.

    Article  Google Scholar 

  • Strauss, A., & Corbin, J. (1990). Basics of qualitative research (Vol. 15). Newbury Park: Sage.

    Google Scholar 

  • Terjesen, S., Bosma, N., & Stam, E. (2016). Advancing public policy for high-growth, female, and social entrepreneurs. Public Administration Review, 76(2), 230–239.

    Article  Google Scholar 

  • Thomson, D. E. (2011). The role of funders in driving nonprofit performance measurement and use in strategic management. Public Performance and Management Review, 35(1), 54–78.

    Article  Google Scholar 

  • Weber, M. (1978). Economy and society: An outline of interpretive sociology (Vol. 1). Berkeley: University of California Press.

    Google Scholar 

  • Yin, R. K. (2011). Applications of case study research. Beverly Hills: Sage.

    Google Scholar 

  • Young, D. R., & Lecy, J. D. (2014). Defining the universe of social enterprise: Competing metaphors. VOLUNTAS: International Journal of Voluntary and Nonprofit Organizations, 25(5), 1307–1332.

    Article  Google Scholar 

Download references

Acknowledgements

The author wishes to thank Kathryn Newcomer (George Washington University), Burt Barnow (George Washington University), Jim Koch (Santa Clara University), Jasmine Johnson (George Washington University), and Nathan Dietz (The Urban Institute) for their invaluable comments and feedback. The author is also grateful to the study participants, the editors, three anonymous reviewers, and session participants at the ARNOVA 2017 conference.

Author information

Authors and Affiliations

  1. School of Planning, Public Policy and Management, The University of Oregon, 147D Hendricks Hall, 1209 University of Oregon, Eugene, OR, 97403-1209, USA

    Saurabh A. Lall

Authors
  1. Saurabh A. Lall
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Saurabh A. Lall.

Ethics declarations

Conflict of interest

The author declares that he has no conflict of interest.

Additional information

Publisher's Note

Springer Nature remains neutral with regard to jurisdictional claims in published maps and institutional affiliations.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Lall, S. From Legitimacy to Learning: How Impact Measurement Perceptions and Practices Evolve in Social Enterprise–Social Finance Organization Relationships. Voluntas 30, 562–577 (2019). https://doi.org/10.1007/s11266-018-00081-5

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s11266-018-00081-5

Keywords

Search

Navigation