Understanding Value Creation in Social Entrepreneurship: The Importance of Aligning Mission, Strategy and Impact Measurement

Abstract

This paper explores and clarifies the significance of aligning mission, objectives and strategy with impact measurement in social entrepreneurship. We present a framework for understanding the value created by social entrepreneurs, presenting theoretical and practical insights into impact measurement. Drawing on case studies in Latin America, we suggest the presence of a ‘mission measurement paradox’ that affects social entrepreneurs in their attempts to measure social impact and understand value creation. The paradox suggests that social entrepreneurs are failing to evaluate their social impact with sufficient regard to their social mission. Preconceptions resulting from the use of traditional management approaches in social enterprises are presented, with guidance on how these can be avoided by both researchers and practitioners.

Key Words:

• Social impact
• social entrepreneurship
• value creation
• impact measurement
• Latin America

Acknowledgements

Earlier versions of this paper were presented at the Third Latin American and European Meeting on Organizational Studies in Buenos Aires, Argentina in April 2010 and the seventh Annual Satter Conference on Social Entrepreneurs in New York, United States in November 2010. The authors would like to thank conference participants and organizers for their helpful suggestions, as well as the reviewers for their criticisms and insights.

Notes

Within the commercial context there is distinction between ‘value creation’ and ‘value capture’. In this paper we believe it is more appropriate to concentrate on the notion of value creation as it refers to the value generated by the venture that is subjectively assessed based on its perceived worthiness (Bowman and Ambrosini 2000, Lepak et al. 2007), as opposed to value capture, which looks at the value realised through market exchange, objectively evaluated in monetary values (Bowman and Ambrosini 2000, Lepak et al. 2007). The concept of value creation is most relevant to our research focus as it considers the subjectively assessed value created by social entrepreneurs rather than focusing on the relationship between value and market exchange, which does not entirely reflect the social missions that extend beyond the market.