Canadian Journal of Administrative Sciences Revue canadienne des sciences de l’administration 32: 224–237 (2015) Published online in Wiley Online Library (wileyonlinelibrary.com) DOI: 10.1002/CJAS.1359 Social impact measurement in social enterprises: An interdependence perspective Linh Nguyen* The University of Sydney Business School and Vietnam National University, Hanoi – University of Economics and Business Betina Szkudlarek Richard G Seymour The University of Sydney Business School The University of Sydney Business School Abstract In response to recent calls for a better understanding of the connection between social enterprises and their environments, we focus on the influence of funding relationships on social impact measurement in social enterprises in Vietnam We utilize resource dependence theory and take a multiple case study approach to explore the issue The findings suggest that in order to understand and explain the social impact measurement behaviours of social enterprises and funding organizations, it is critical to understand the interdependence of the parties rather than focus on the technical issue of measurement alone The paper contributes to the relatively scant but burgeoning theoretical foundations of the social impact measurement and social entrepreneurship domains Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd Résumé En réponse aux récents appels pour une meilleure compréhension du lien entre les entreprises sociales et leurs environnements, cet article s’intéresse surtout l’influence que les relations de financement ont sur le mesure de l’impact social au sein des entreprises basées au Vietnam Il s’appuie sur la théorie de la dépendance des ressources et sur l’étude de cas multiples Les résultats révèlent que pour pouvoir comprendre et expliquer les comportements liés la mesure de l’impact social des entreprises sociales et des organismes de financement, il est crucial de prendre en compte l’interdépendance des parties au lieu de se focaliser uniquement sur l’aspect technique de la mesure L’article contribue aux fondements théoriques relativement jeunes, mais prometteurs, de la mesure de l’impact social et aux domaines de l’entrepreneuriat social Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd Keywords: social impact measurement, social entrepreneurship, interdependence, resource dependence theory, Vietnam Mots-clés : mesure de l’impact social, entrepreneuriat social, interdépendance, théorie de la dépendance des ressources, Vietnam Social entrepreneurship is considered “a catalyst for social transformation” that can resolve the complex economic, social, and environmental problems of today’s world (Alvord, Brown, & Letts, 2004, p 262) Social enterprises (SEs) are considered hybrid organizations (Battilana & Lee, 2014) that prioritize the creation and distribution of social, cultural, and/or natural value (Seymour, 2012) by using business as vehicles to sustain their value generation (Mair & Martí, 2006) With a significant contribution to both economic growth and societal wellbeing, SEs have grown dramatically across the globe in dimension, profile, and dynamism As the majority of SEs work in resource constrained environments (Di Domenico, Haugh, & Tracey, 2010), they are typically seeking to improve accountability and performance to access important resources to sustain their activities SE performance and impact measurement seeks to understand and assess financial and social returns from operations Although economic indicators are crucial for evaluating the sustainable growth of an SE, nonpecuniary impact metrics are arguably more important to ensure the organization meets its mission Unfortunately, these nonfinancial measures can be difficult to articulate given multiple stakeholders and We would like to thank the editor and guest editor, three anonymous reviewers of CJAS for their review and feedback on an earlier version of this manuscript We would also thank the Vietnamese social entrepreneurs and other informants for their time, great support and participation in this study *Please address correspondence to: Linh Nguyen, The University of Sydney Business School, Economics & Business Building H69, NSW, Darlington, New South Wales, 2006, Australia Email: linh.nguyen@sydney.edu.au Correction added on 20 June 2016, after first online publication on 14 December 2015: An affiliation has been added to Linh Nguyen Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd 224 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL accountability relationships (Austin, Stevenson, & Wei-Skillern, 2006; Dees, 2007; Paton, 2003) Social impact measurement refers to the process of defining, monitoring, and employing measures to demonstrate benefits created for the target beneficiaries and communities through evidence of social outcomes and/or impacts (McLoughlin et al., 2009) The measurement of social impact assists SEs in establishing their legitimacy and accountability (Nicholls, 2009); learning and improving their efficiency (Dees, 2007; Paton, 2003); and supporting funders in evaluating their investments (Ebrahim & Rangan, 2010) Some practitioners and researchers propose standardized and formal approaches to measure social impact such as Social Return on Investment (SROI), Impact Reporting and Investment Standards (IRIS), Social Accounting and Auditing (SAA), Cost-Benefit Analysis, and Balanced Scorecards (Ebrahim & Rangan, 2010; Nicholls, 2009) However, commonly accepted metrics are yet to be recognized and not all academics and practitioners support these standardized frameworks Others argue the ultimate goal of measuring social impact is to understand how the social interventions could meet or satisfy the human needs of social wellbeing (Kroeger & Weber, 2014) such as healthcare, education, happiness, equality, and social integration (Hsieh, 2003) Social impact measurement is thus concerned with perceptual judgements of social wellbeing (Diener & Suh, 1997) received by the communities in need, or a self-reflexive evaluation to achieve social mission (Nicholls, 2009) In addition to concerns regarding technical measurement issues, there has been a growing interest among scholars in understanding how social impact measurement is shaped by funding relationships in SE’s setting This interest arises because researchers have noted that social impact measurement is socially constructed (Nicholls, 2008; Paton, 2003) as “measures are not the means of estimating some underlying reality; rather they construct and imbue with authority the notions of performance associated with a particular points of view” (Paton, 2003, p 45) or because researchers have noted that “success or failure can only be determined by contextualizing performance data in terms of a network of stakeholder expectations and perceptions” (Nicholls, 2008, p 38) These relationships have been shown to be critical, especially if SEs are to achieve their goals Social entrepreneurs “develop a large network of strong supporters and an ability to communicate the impact of the venture’s work to leverage resources outside organizational boundaries” (Austin et al., 2006, p 12) The relationships between SEs and stakeholders are considered a kind of resource exchange, manifested as the trade-off between stakeholders’ capital and social impact generated by SEs (Smith & Stevens, 2010) Despite increasing scholarly attention paid to social impact measurement and the funding relationship setting, there remain a number of limitations in the current literature Firstly, while scholars use a different theoretical lens to explore social impact measurement, many studies (such as Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd Ebrahim, 2002, 2005; Moxham, 2009; Thomson, 2010) are guided by the asymmetric dependence approach These works tend to overlook the other side of the funding relationships: symmetric dependence We argue that the symmetric relation deserves further investigation in the context of SE as funding relationships can be mediated by mutual understanding, reciprocity, collaboration, trust, and emotional bond for the common goal (to create societal wellbeing for the community rather than themselves; Dees, 2007) The symmetric and asymmetric aspects of resource dependence view will later be discussed in more detail Secondly, current social impact measurement literature tends to focus on part of the measurement process instead of on integrated aspects of the process The extent to which a funding relationship influences the social impact measurement process has been rarely studied in a single study Thirdly, most of the empirical studies on measuring social impact have concentrated on the United Kingdom, America, and European countries Social impact measurement is underresearched in the context of developing economies and Asia In response to the above gaps in extant literature, we aim to address the following question: How is social impact measurement influenced by social enterprises’ relationships with resource providers? To answer this question, we first concentrate on introducing a more nuanced understanding of resource dependence theory (Gulati & Sytch, 2007; Pfeffer & Salancik, 2003) to explore the effects of funding relationships on the social impact measurement activity Second, we re-emphasize the importance of including context in order to understand phenomena (Cappelli & Sherer, 1991) and organizational behaviour (Johns, 2006) towards social impact measurement We recognize that impact measurement cannot be understood separately from its environment, just as the actors who engage with, or are concerned about, SEs and their performance (Mair & Martí, 2006; Paton, 2003) cannot be separated from their involvement Third, we focus on SEs in Vietnam, a particularly underresearched setting in which the resource constrained environment and absence of robust impact measurement mechanisms have been seen as enormous hurdles for the development and growth of SEs (BC, CIEM, & CSIP, 2012) Vietnam is an especially appropriate country in which to conduct the study, as the challenges facing Vietnamese SEs are not dissimilar to those facing SEs anywhere This paper is organized as follows: we first review the theoretical approaches employed in the extant literature We propose to explore social impact measurement in funding relationships through a resource dependence lens We then present an explanation of the methodology and method, which is followed by a description of three case studies, data collection, and analysis We then present the findings and conclude with some broader theoretical and applied implications of the study as well as areas for further research 225 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL exchange mechanism that ensures goal alignment and enhanced performance (Carman, 2010; Mitchell, 2014) Regarding social impact measurement, funders contribute to the on-going enhancement of the SEs’ activities and development of meaningful data (Mitchell, 2014) rather than creating pressures or burdens on the organizations Resource allocation is considered to be made on the basis of good intentions and philanthropic concerns of social organizations (Benjamin, 2010) Impact assessment and reports, therefore, are seen as tools to develop trust and strengthen long-term relationships between parties (Van Slyke, 2006) As a result, social impact measurement requirements are considered more pragmatic in stewardship relations Social Impact Measurement and Funding Relationships: A Review Engaging with various resource providers make SEs aware of the multiple and heterogeneous expectations of returns generated from resource allocation (Ebrahim, Battilana, & Mair, 2014) Different behaviours could result from diverging or even conflicting expectations of measurement (Austin et al., 2006; Paton, 2003) as well as from the nature of funding relationships These influences include: motivations for measuring social impact (Carman, 2010; Mitchell, 2014); levels of compliance with social impact measurement mandates (Eckerd & Moulton, 2011; Moxham, 2010; Thomson, 2010); resources spent on measurement activities (Smith & Stevens, 2010); expectations about and the choice of the social impact measurement approach (Benjamin, 2010; Smith & Stevens, 2010); and perceptions of the importance of formal impact measurement (Carman, 2009; Smith & Stevens, 2010) We have grouped extant studies exploring social impact measurement and funding relationships into three theoretical categories: (i) agency and stewardship; (ii) structural embeddedness, and (iii) resource dependence The following section will briefly introduce and review each of these theories Structural Embeddedeness A second stream of scholarship takes a structural embeddedeness perspective The structural embeddedness lens draws upon both social network and organizational theories, and suggests that the quality and structure of social relationships formulate actors’ behaviours and decisions (Rowley, 1997) by “creating unique opportunities and access to those opportunities” (Uzzi, 1996, p 675) According to Smith and Stevens (2010), the extent of structural embeddedness between SEs and their funders will impact the perceived importance of formal impact measurement, strategic choice of measurement approaches, and resources spent on evaluative activities They assume two kinds of structural embeddedness shape actions relating to social impact measurement: arms’ length tie and embedded tie An arm’s length tie refers to the funding relationship in which funders not have frequent interaction with, or are geographically far from SEs (Smith & Stevens, 2010) An embedded tie is considered a funding relationship in which funders and SEs are both geographically close and have frequent interaction with each other (Smith & Stevens, 2010) Arm’s length ties are indicated by relationships based on rule and authority whereas embedded ties are relationships characterized by trust and reciprocity between funders and SEs (Smith & Stevens, 2010) If the funders and SEs engage in an arm’s length tie, formal social impact measurement will be perceived as important for investment decision, and the funder is likely to request the SE to utilize such a sophisticated and complex measurement framework (such as SROI) to ensure accountability and transparency (Smith & Stevens, 2010) In contrast, formal metrics are considered less critical for resource allocation decisions in embedded ties: the SE is not expected to utilize complex assessment tools because actors have built trust upon their frequent interactions (Smith & Stevens, 2010) Although Smith and Stevens (2010) have provided significant theoretical perspectives regarding the association between embeddedness and social impact measurement activities, these theoretical relationships have not been empirically explored Despite their call to further research the relationship between Agency and Stewardship Agency theory describes relationships between one party (the principal) and another (the agent) in which parties have some targeted purpose but have dissimilar or even conflicting interests (Jensen & Meckling, 1976) The principal-agent relationship is characterized as asymmetric and with delegated authority in which agents usually take action to meet the principals’ expectations and targets (Benjamin, 2010) Applying the theory to our phenomenon suggests that SEs will evaluate impact mainly to satisfy the requirements of funders rather than any organizational need (Ebrahim, 2003b) Since the principals (funders) and agents (SEs) usually have diverging, or even conflicting aims (Carman, 2010), the motivations for impact measurement can be considered symbolic and formative (Ebrahim, 2003b) As a result, social organizations may sometimes overstate their abilities to funders in order to receive funding (Carman, 2010) Contrasting agency theory, a stewardship lens refers to the relationship between parties in which the principals and agents are seen to share mutual goals and interests (Sundaramurthy & Lewis, 2003) with relationships considered more symmetric Applying this theory in our domain, the stewardship lens can be used to describe collaboration between SEs and funders that share common interests, motivations, aims, and that usually work together to solve problems and generate impact to communities (Carman, 2010; Van Slyke, 2006) Evaluating and reporting impact and outcome will typically be conducted on the basis of an Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd 226 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL embeddedness and social impact measurement, extant studies remain silent on this question in which social enterprises are accountable to resource providers As a result, social impact measurement is typically something enforced by funders, with funders’ assigned mandates (Ebrahim, 2003a) rather than SEs internally developing anything (Dhanani & Connolly, 2012) This may be why, despite being active in developing their own measures, SEs tend to use certain measurement approaches determined by resource providers (Ebrahim, 2005; Nicholls, 2010) Resource Dependence The third stream of literature we review investigates social impact measurement through the resource dependence lens The resource dependence perspective explores, at its heart, the behaviours of organizations and individuals undertaking resource exchanges (Pfeffer & Salancik, 2003) Interdependence is a key concept in resource dependence theory, and is applied whenever one actor does not entirely control all of the conditions necessary for the achievement of an action or for obtaining the outcome desired from the action” (Pfeffer & Salancik, 1978, p 40) To clarify this perspective, we looked back to Emerson (1962), who differentiated two distinct dimensions of interdependence: asymmetric dependence and symmetric dependence (also referred to as joint or mutual dependence) Asymmetric dependence can be characterized as the differential power existing between two actors (Emerson, 1962) in which the stronger party will have benefits and dependence advantages in contrast to the dependence disadvantages of the weaker party (Blau, 1964; Kim, Hoskisson, & Wan, 2004) Applying this to our domain, major resource providers providing substantial resources for the development of the organizations are theorized to have the authority to impact organizations’ decisions and activities (Pfeffer & Salancik, 2003) In contrast to the above, symmetric relationships represent embeddedeness logics that are based on reciprocity and mutual understanding between actors (Casciaro & Piskorski, 2005; Gulati & Sytch, 2007; Newbert & Tornikoski, 2013) The symmetric tie is also characterized as a committed and cohesive partnership that is based on frequent interactions to develop sustainable and beneficial collaborations between parties (McNamara, Pazzaglia, & Sonpar, 2015; Parmigiani & Rivera-Santos, 2011; Villanueva, Van de Ven, & Sapienza, 2012) These close interactions often lead to deep and rich ties that go beyond formal liability among actors (Zaheer & Venkatraman, 1995) As a result, actors are theorized to easily set common goals and share mutual expectations for joint success and sustainable relationships (McNamara et al., 2015; Zaheer & Venkatraman, 1995) In the context of social entrepreneurship, the need to secure and leverage resources creates numerous external pressures from resource providers Furthermore, SEs are likely to perceive the consequences of these tensions in the tasks and reporting of impact measurement (Nicholls, 2010) Surprisingly, asymmetric power relationships dominate social impact measurement literature Scholars consider the key driver of social impact measurement is resource acquisition (Moxham, 2010; Nicholls, 2010) with funders considered more influential to SEs than other stakeholders (Arvidson & Lyon, 2014) Social impact measurement is an “accountability upwards” mechanism (Ebrahim, 2003a) Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd Synthesizing the Literatures Our review of extant literature indicates that despite being labelled differently (agency and stewardship, structured embeddedness, and resource dependence), these theories share similarity in two dimensions: asymmetry (characterized by power imbalance and relationships based on rules, control, and authority) and symmetry (characterized by shared goals and relationships based on reciprocity, trust, and collaboration) We summarize the key insights from our review in Table From this review, we propose to employ a resource dependence perspective to understand multiple aspects of social impact measurement in funding relationships We propose that this perspective will explain the asymmetric and symmetric dependence dimensions more explicitly than other theories applied to this domain We will now investigate these themes in the context of social enterprise in Vietnam Method Research Design In order to understand the socially constructed nature of social impact measurement, we applied a multiple case study strategy to seek a detailed description and in-depth understanding of the phenomenon in its naturalistic context (Stake, 1995) While there are different ways to conduct case studies, this research follows Stake’s approach and focuses on particularization and understanding of actors’ subjective experiences rather than generalization and explanation in the pattern of testable hypothesis that are advocated by more positivistic approaches (such as Eisenhardt, 1989; Yin, 2009) We adopted an interpretive paradigm and explored “the ephemeral, the indefinite and the irregular” phenomenon (Law, 2004, p 4), allowing penetration into “the complex world of lived experience from the point of view of those who live it” (Schwandt, 1994, p 118) Our research aspired to bring both “theoretical insight” and “rich thematic descriptions” of social impact measurement from perspectives of social entrepreneurs, resource providers, and other actors in the sector (Starks & Trinidad, 2007) 227 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL Table Theories Studying Social Impact Measurement in Funding Relationships Funding relationships & social impact measurement Funding relationship Symmetric Reciprocity, shared goals & trust based, collaboration Asymmetric Power imbalance, rule-based, control, delegated authority Stewardship: Agency: • Social impact measurement requirements are pragmatic aiming to enhance social mission and efficiency SEs and funders share common interests, motivations, and aims Actors tend to work together to solve problems and to generate impact to communities (Benjamin, 2010; Carman, 2010; Mitchell, 2014; Van Slyke, 2006) • Social impact evaluation is symbolic and formative Social impact measurement is mainly to satisfy the requirements of funders (for resource access) rather than the organizational needs Embeddedness influences: 2) The strategic choices of measurement approach 3) Resources spent for measurement activities 4) Perceived importance of formal measures Embedded tie: • SEs are not required to use a complex measurement approach • SEs not have to use much resources for measurement activities • Formal impact measurement is not highly emphasized (Smith & Stevens, 2010) Arm’s length tie: • SEs are required to use complex measurement approaches such as SROI • SEs have to use much resources for measurement activities • Formal impact measurement is highly emphasized (Smith & Stevens, 2010) Resource dependence influences: 5) The compliance of SEs towards funders’ measurement mandates Symmetric: Asymmetric: • Social impact measurement in symmetric relation is under researched • Measuring social impact for “accountability upwards.” • SEs comply with funders’ measurement mandates to access resources (Dhanani & Connolly, 2012; Ebrahim, 2003a; Eckerd & Moulton, 2011; Moxham, 2010; Thomson, 2010) Agency and stewardship influence: 1) Motivations for measuring social impact measurement process (key activities, engaged stakeholders, motivations and challenges of measuring social impact, etc.) as well as the funding relationship (history of the relationship, the level of interactions, the nature of the relationship, etc.) The vast majority of interviews were conducted in Vietnamese, and these were later translated into English Where appropriate, we also used other data and materials such as books, reports, newspaper articles, websites, internal documents, observations, and informal discussions These multiple data sources not only contribute to the detailed description of the case and enrich the comparisons, they also clarify informants’ responses and reduce misinterpretations (Stake, 2006) The three cases represent a diversity of missions and businesses in the SE sector with case characteristics detailed in Table As illustrated in Table 2, our three cases were (a) TRAINING SE - a social venture combining hospitality training activities and restaurant business to help street youth escape poverty and vulnerability; (b) LEARNING SE - a social venture integrating art education for disadvantaged Data Collection and Description of Selected Cases The SEs and informants were selected based on a mix of purposeful and snowball sampling techniques (Patton, 1990) This combined strategy enabled us to find “good examples for study, good interview subjects” (Patton, 1990, p 182) Aligning with the purpose of extending theory, the selection of SEs was informed by the potential learning of cases (Stake, 1994) We selected cases based on three criteria: (i) the organizations were known for their high impact on the community; (ii) the SEs had a certain success in mobilizing external resources to enhance their overall performance; and (iii) the organizations perceived the importance of social impact measurement and were engaged in its measurement Over 2012 and 2013, we conducted semistructured interviews with social entrepreneurs, resource providers, and other stakeholders involved (directly and indirectly) in the SE Twenty interviews were conducted face to face, ranging in length from 30 to 90 minutes Interviewees were asked open-ended questions about the social impact Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd (Benjamin, 2010; Carman, 2010; Ebrahim, 2003b) 228 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL Table Key Characteristics of Cases Case WOMEN EMPOWERMENT SE TRAINING SE LEARNING SE Business Employees 1999 Transforming the unemployable youth with low self-esteem to confident, empowered, young hospitality professionals, entrepreneurs, and mentors via a holistic vocational training program Restaurants, hospitality 30 permanent and hundreds of volunteers Beneficiaries Street, underprivileged youth 2006 Providing opportunities for disadvantaged children to play, learn, and create while generating income to improve their life quality Lifestyle souvenirs, gifts 10 permanent, 10 volunteers currently (have trained and worked with over 100 volunteers from 2006-2013) Disadvantaged children Resource providers Institutional and individual donors, corporations, volunteers, international organizations Impact investor, intermediary NGOs (international and local), volunteers Social impact measurement approach Self-developed monitoring and evaluation system Reporting requested by the donors Interviewees Founder (2 interviews); Donor 1; Donor 2; Employees (Human Resource Executive, Marketing Executive, Training Executive, Social Welfare Executive, Restaurant Manager); Consultant Internal measurement approach, investor’s impact measurement, intermediary’s process reporting mechanism Founder (2 interviews) Investor- Regional Manager Investor- Consultant Consultant Volunteer Year of establishment Social mission Handicrafts permanent Dozens of volunteers Disadvantaged women in the protected marine areas Intermediary, local authority, NGOs (international and local), volunteers SROI, monitoring and evaluation system requested by the donors Founder (2 interviews) Donor Intermediary Local government Consultant “orienting framework” to assist theoretical engagement and data interpretations (Lopez & Willis, 2004) This interactive approach enabled us to develop new theoretical concepts while advancing current concepts in order to link what really happens in practice to theories (Berglund, 2007) We now present core themes resulting from the analytical process of the study in the results section children and a souvenir business helping children learn, play, and enhance their low living circumstances; (c) WOMEN EMPOWERMENT SE - an organization that helps empower poor women in marine protected areas by providing vocational training and business advice for handicrafts Data Analysis Recognizing the complicated and massive nature of qualitative data, our data analysis followed an on-going and interactive procedure (Miles & Huberman, 1994) We used NVivo 10 software to support our data management, coding, and analysis (Bazeley & Jackson, 2013; Saldaña, 2012) An initial framework for analysis was developed from broad themes and categories based on the primary coding process deriving from the perspectives and experiences of participants toward social impact measurement We began with a thorough analysis of one case and then transferred the process to the other two cases (Stake, 2006) During this process, we worked back and forth between data and analysis of cases as well as between data and existing literature (DeCuir-Gunby, Marshall, & McCulloch, 2011) We used resource dependence perspective as an Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd 2011 Empowering women living in and around marine protected areas Results The case analysis shows that social impact measurement can be formed along two dimensions of funding relationships: the symmetric and asymmetric tie The former is characterized by shared goals and relationships based on reciprocity, trust, and collaboration, while the latter is predominantly featured with power imbalance and relationships based on regulation, control, and authority From our data, the primary characteristics of symmetric and asymmetric funding relationships together with representative quotes are summarized in Table It is important to acknowledge that Table represents two extreme poles of the continuum, and that certain traits 229 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL Table Interdependence between Resource Providers and Social Enterprises Symmetric Complete trust; long-term relationship Frequent & close interaction; long history of relationship; enjoyable relationships Reciprocity; appreciation; trustworthiness; shared value Close; good relationship; Open & frank with each other Quotes for symmetric tie Asymmetric TRAINING SE & Donor We have complete trust between the two… We take a lasting relationship… There has been a lot of trust Trust has been established and because of that, my support to the enterprise is very easy (Donor 1-Traing SE) TRAINING SE & Donor I became involved with the SE eight years ago… At the moment, one of the enterprise’s trainees lives in my house So I interact with [TRAINING SE] every bloody day (laugh) I interact with other people from [TRAINING SE], probably monthly…I enjoy my interactions from trainees to CEO The relationship [with TRAINING SE] is very close (Donor 2-TRAINING SE) WOMEN EMPOWERMENT SE & Intermediary The SE also makes contributions to our activities They link us to their network and resources that might be beneficial for our activities or other SEs in our network In general, the relationship is very close and natural Actually, we both appreciate each other We see their value And they may see us as a trustworthy organization that they could share with their vision and challenges they face Intermediary(WOMEN EMPOWERMENT SE) WOMEN EMPOWERMENT SE & Donor We have developed a close and good relationship with the founder of WOMEN EMPOWERMENT SE We are very open to each other We speak what we think and we discuss frankly on any issues that we may face during the working process We are very frank to each other (Donor - WOMEN EMPOWERMENT SE) of each relationship were present across all cases We discuss dimensions in which the nature of the funding relationship influences social impact measurement in distinctive ways Delegated authority; Top down relationship TRAINING SE & other funders Because you have the funding so you have to please the donors… A lot of donors have a lot of options We’re competing for a very small pocket of money Everyone competes Donors have choices (Founder-TRAINING SE) LEARNING SE & Investor We told [the SE] that you have to submit this information… so that’s the way we work That’s not particularly collaborative (Consultant, Investor- LEARNING SE) Imbalance power; Meet funder’s requirements WOMEN EMPOWERMENT SE & other funders Some are keen on showing impact via SROI framework, others apply [a] different measurement approach So for each potential funder, we need to think how we demonstrate these impact[s] to meet their requirements (Consultant-WOMEN EMPOWERMENT SE) Pressure, uneasy LEARNING SE & Intermediary Once my husband had an uneasy talk with the Intermediary when they asked us to develop the measurement system “How? We told you that we were willing to learn how to and we need assistance for this area… And it seems that they even want an impact report than ourselves… And it then becomes a pressure for us (Founder-LEARNING SE ) demonstrating transparency, accountability, and legitimacy to investors to access resources since without impact, evidence and reporting funders not see the value created for communities (Consultant, Investor-LEARNING SE; Founder & Consultant-WOMEN EMPOWERMENT SE; Founder-TRAINING SE); and (ii) learning about and improving organizational performance to determine whether they should continue or alter their current strategy to achieve their missions (Founders of TRAINING SE; LEARNING SE; WOMEN EMPOWERMENT SE) While the motivations of Motivations for Measuring Social Impact It is clear that many informants identified SEs’ interdependence with resource providers as a key reason for measuring impact Participants indicated many motivations for measuring impact, with the primary drivers being: (i) Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd Imbalance power Quotes for asymmetric tie 230 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL impact measurement for resource mobilization and learning existed in all cases, our data indicate that in asymmetric relationships, social enterprises measure social impact mainly to access resource and satisfy resource providers while in symmetric relationships, social enterprises measure social impact for their learning purpose For example, FounderTRAINING SE contended that when his enterprise was in its infancy and asymmetrically dependent on funders’ resources, the organization measured social impact in a manner imposed by funders When the organization was more developed and the funding relationship more symmetric, the enterprise changed and measured impact for the purposes of internal learning and organizational improvement The Founder-TRAINING SE stated: impact measurement, compliance was limited if the measurement approach was perceived as too complicated, labourious, or disconnected from SE’s social mission At the same time, while the investor still emphasized the critical nature of impact measurement, the expectations were more flexible and relevant to the SE’s context In time, the investor gradually recognized that: SEs should spend time to create social impact rather than measure it… or trying to figure out how to measure it (Investor, Consultant- TRAINING SE) Measurement Expectations and Choice of Measurement Approach The priority for us now is to have [those] measurement policies and systems in place for internal use, rather than go[ing] with the request of the donors I think that part is very important for the growth and the sustainability of the organisation Case analysis suggests that resource providers in a symmetric dependence relation tended to accept incomplete and imperfect measures because they sympathized with the SEs’ contention that measuring social impact or outcome is “challenging because there is no common or consistent measurement tool” (Intermediary-WOMEN EMPOWERMENT SE) This is despite knowing several impact measurement frameworks available As a result, resource providers tended to not require comprehensive, quantitative impact measurement, neither, did they ask SEs to apply international standard measurement frameworks such as SROI (Intermediary-WOMEN EMPOWERMENT SE) Instead, social impact was evaluated in a simple, qualitative, and informal manner Participant SEs justified the expectations and choice of such simple, informal, and imperfect measurement approaches with the symmetric funding tie featured by the “close,” “reciprocal,” and “trust based” relationships with resource providers Donor1-TRAINING SE shared their experience: Compliance with Resource Providers’ Impact Measurement Mandates Our cases also suggest that when parties are embedded in relationships characterized by symmetric dependence, resource providers are unlikely to mandate impact measurement from SEs To reach consensus in measurement, both parties are expected to be open-minded and willing to discuss, negotiate, and adjust during the process The implementation approach appeared to be characterized as a bottom-up (SEs towards the investor) relationship For example, Founder-WOMEN EMPOWERMENT SE stated that their reports were designed by the enterprise and that the intermediary only asked them simple questions on outputs (for instance, the number of women they trained) Surprisingly, this was not expected to occur in an asymmetric dependence tie: social impact measurement was authorized by resource providers The implementation approach seemed to be more top-down: oriented from resource holders towards SEs The SEs were likely to comply with the resource provider’s requirement because social impact measurement is “mandatory” rather than “collaborative” (Investor, Consultant - LEARNING SE) However, data showed funding relationships to be dynamic and changing over time, resulting in the level of compliance with resource providers’ social impact measurement mandates changing For example, in LEARNING SE Case, initially, the investor and the SE relationship could be categorized as one of asymmetric dependence This could be seen in SE’s compliance with the imposed impact measurement approaches despite SE’s perception of inadequacy in measurement activities However, over time, the funding relationship evolved and became more collaborative and symmetric While the SE still recognized the importance of social Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd In terms of impact measurement, I guess, it’s quite simple to go into it We spoke to a couple of people, it sounds good… We not follow any metrics We’ve got people on the ground there I guess in terms of speaking to them about the enterprise that forms part of our impact measurement But it’s kind of informal We support [the enterprise] since their inception 12 years ago and they have 600-700 graduates currently That’s the key metric we use We have complete trust between the two Alternatively, in an asymmetric tie, funders looked for comprehensive, objective, and intensive social impact data with SEs expected to measure impact in a formal, detailed, professional, standardized, and extensive manner This was considered to assist the investor in building accountability with the SE and showed confident in their investment decision As illustrated in LEARNING SE Case: the Investor used IRIS framework to evaluate social impact that LEARNING SE created along two axes: growth and depth For growth they examined the number that the SE 231 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL reached, either directly or indirectly, and the investor evaluated the impact from an individual to a system perspective For the individual perspective, they evaluated whether disadvantaged people would have a better life, including indicators such as: income, material wellbeing, physical wellbeing, and social wellbeing From a system perspective, the funder evaluated whether the investment made a systematic change (Regional manager, Investor-LEARNING SE) Despite agreeing that the measurement approach assigned by the investor was “very professional and very good to track,” understanding the organization’s performance was found to be “too complicated” by the FounderLEARNING SE Perceived Importance of Formal Social Impact Measurement The cases reveal that when parties are involved in the symmetric tie, formal social impact indicators and reporting are not perceived to be critical to the resource provider’s investment decision Instead, the investment decision was mainly based on trust, informal judgements built upon actors’ interactions, and whether resource providers saw appropriate resources available in the SEs The future engagement with a resource provider was seen to depend upon trust, shared values, reciprocity, and common vision that go beyond the contractual agreement of the funding schemes (Founder, Donor & Intermediary-WOMEN EMPOWERMENT SE; Founder, Donor 1, and Donor 2-TRAINING SE) As an example, an informant reflected: Resources Spent on Social Impact Measurement Data revealed that resources spent on impact measurement are modest when parties engage in a joint dependence tie It appears that investors prefer SEs to spend resources generating impact to reach common goals rather than on the impact measurement itself, as illustrated by the Founder-EMPOWERMENT SE: After they finish the program, social entrepreneurs become our alumni and we continue to connect them to partners, network, and resources that could support their activities (Intermediary- WOMEN EMPOWERMENT SE) In contrast to the symmetric relationship, the data indicated that when SEs and resource providers can be considered to be in an asymmetric dependence tie, social impact measurement was perceived as a critical factor to resource provider’s decision As an example, in LEARNING SE Case: before the investor decided to invest, “social impact assessment was an important step of the due diligence process” (Consultant, Investor-LEARNING SE) Before the contract was signed, the investor and LEARNING SE agreed on a number of metrics that they would track with the social impact assessment report perceived as “so important” for the investor (Consultant, Investor-LEARNING SE) Future collaboration and resource allocation into SEs in asymmetric relationships could be long- or short-term, depending significantly on how SEs perform and how they formally demonstrate their impact Illustrating this, the resource provider stated: Some donors are not concerned much about the impact measurement, they actually not require us to the formal measurement SEs did not expect to spend significant resources on impact measurement activities Resources appear prioritized to achieve mutual objectives—creating social impact for the communities rather than for costly measurement activities: Donors already believe in us … and are always very supportive and help us to achieve our objectives (Founder-WOMEN EMPOWERMENT SE) Significantly, when SEs and resource providers are embedded in an asymmetric dependence relationship the resources spent on impact measurement activities appear relatively greater For example, in LEARNING SE, the investor required the organization to: report on different indicators each month; identify the current situation and plan for the next period every quarter; and submit a midyear report every June and review the portfolio every year end Both the investor and SE agreed that these measurement and reporting activities require a lot of work and that even if the enterprise can make a strong, detailed report as requested by the investor, they ignore many other business activities (FounderLEARNING SE) This requirement illustrates how funders believed SEs need to formally and explicitly provide evidence of their visible impact to persuade funders For example, an informant stated: If you want to get additional funding, you need [to] have a quite good accounting and a quite good social impact measurement system If you have these in place, then more funding will come If you not have anything in place… it is really difficult to get additional funds… it’s like [the] chicken and egg (Regional Manager, Investor -LEARNING SE) In sum, the findings suggest that the relationships between resource providers and SEs in selected cases can be characterized as a symmetric or an asymmetric dependence tie These two dimensions of the relationship influence social impact measurement in several aspects, as depicted in Table Table presents the results of an integrated data coding and analysis strategy The themes that emerged from both literature and empirical data are conceptually interrelated If SEs want to get more, they’ve got to more (Regional manager, Investor-LEARNING SE) Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd 232 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL Table Funding Relationships and Social Impact Measurement Funding relationship Symmetric Impact measurement Motivations for measuring social impact Compliance with resource providers’ measurement mandates Asymmetric Learning & improvement Low Parties are open to discuss social impact measurement options Expectation & choice of social impact measurement approach Resources spent on social impact measurement Perceived importance of formal impact measurement Imperfect, partial Informal, subjective, simple, unrefined, qualitative Modest Not very critical to resource providers’ decision making Investment decision & further engagement are based on: • Trust built upon actors’ transactions • “Shared values” and “reciprocity” vision that go beyond the contractual agreement of the funding schemes The table provides an overview of how social impact measurement is constructed in practice Critical to resource provider’s decision making Investment decision & further engagement are based on: • How SEs perform • How they demonstrate their impact formally is, to satisfy the requirements rather than the organizational needs (Benjamin, 2010; Carman, 2010; Ebrahim, 2003b) As illustrated in our cases, when social enterprises and resource providers are involved in symmetric relationships, the purpose of social impact measurement appears to assist social enterprises improve performance so that the parties can achieve their common objective: to create social impact for people in need In contrast, in asymmetric relationships, social enterprises appear to evaluate social impact mainly to satisfy resource providers’ requirements Previous studies illustrate that resource dependence of SEs leads to accountability upwards, and a high level of SEs’ conformity towards funders’ measurement mandates (Ebrahim, 2003a; Eckerd & Moulton, 2011; Moxham, 2010; Thomson, 2010) While the asymmetric tie is also evidenced in studied cases, our data extends the research by showing that SEs not strictly comply with funders’ mandates in all circumstances In fact, in symmetric relations, parties tend to engage in downwards accountability and a low level of SEs’ conformity towards funders’ mandates Notably, the paper provides empirical support for the conceptual study of Smith and Stevens (2010) regarding measurement expectations, choices of measurement approach, and resources spent on measurement activities that are absent in extant literature The findings illustrate that in relationships categorized as symmetric based on trust, social impact measurement is accepted as offering a partial and imperfect outcome and that is associated with an informal, subjective, simple, unrefined, and qualitative measurement approaches In contrast, in asymmetric relations that are Discussion Summary In this study, we explored how funding relationships influence social impact measurement in the context of Vietnamese social entrepreneurship Our analysis confirms that social impact measurement is socially constructed and significantly shaped by the nature as well as the dynamics of the relationships between SEs and their resource providers in multiple dimensions, including: motivations for measuring social impact, compliance with resource providers’ impact measurement mandates, measurement expectations and choice of measurement approach, resources spent on social impact measurement, and perceived importance of formal social impact measurement These results add evidence to the growing literature on social impact measurement and highlight the significance of funding relationships in perceptions and behaviours of SEs and resource providers over time Regarding motivations for measuring social impact, our findings enhance the existing scholarly research that suggests that parties in the social sector aspire to measure social impact (i) for pragmatic purposes in reciprocal relationships —that is, to achieve SE’s social mission and enhance its efficiency (Carman, 2010; Mitchell, 2014)—and (ii) for symbolic and formative purposes in asymmetric ties—that Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd Accessing resource & satisfying resource providers High SEs tend to strictly comply with resource providers’ measurement mandates Holistic, intensive Formal, standardized, complicated, wide & deep, detailed, professional Large 233 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL associated with regulation, social impact measurement is expected to be holistic and intensive, which is linked with the choice of standardized, wide and deep, detailed, professional, and complicated measurement approaches The funders typically believe this intensive process enables them to better understand the SEs and hold them accountable for the investment received The implications are that social impact measurement requires limited resources for measurement activities in symmetric relationships that are based on trust and enormous resources in asymmetric dependencies that are based on rules (Smith & Stevens, 2010) Additionally, prior research recognizes that formal data are critical for resource allocation in relationships characterized by upward accountability or rule-based ties (Benjamin, 2010; Smith & Stevens, 2010), but are not important in relationships based on trust, reciprocity, and mutual sharing (Carman, 2009; Smith & Stevens, 2010) Our data provide further insights to strengthen these assertions Impact measurement is not perceived as important in situations of symmetric ties where investment decision and further engagements are not based on formal impact data and reporting but mainly on trust The same can be said when the shared values go beyond the contractual agreements between parties On the contrary, social impact measurement is perceived as critical in asymmetric ties such that investment decisions and further support are dependent on how SEs perform as well as how they formally demonstrate their impact Last but not least, the interdependences are shown to be dynamic and to affect social impact measurement perceptions and behaviours of SEs and resource providers over time This finding illuminates and further strengthens prior studies that have emphasized the need to adjust organizational strategies to respond to changing interdependencies in the social entrepreneurship sector (McNamara et al., 2015; Vestrum & Rasmussen, 2013) funding relationships, extant literature has been dominated by an asymmetric perspective (Benjamin, 2010; Campbell, 2002; Ebrahim, 2005; Moxham, 2009; Thomson, 2010) Significantly, our findings show that while both symmetry and asymmetry exist, symmetric relationships are actually quite prevalent in our cases These findings further support recent research recognizing a variety of funding relationships in a social entrepreneurship setting and show how they are mediated by mutual understanding, reciprocity, collaboration, trust, and emotional bond (Carman, 2009; Cutt & Murray, 2000; Smith & Stevens, 2010) to reach the common goal: creating societal wellbeing for the community (Dees, 2007) Second, the study illustrates that the interdependence between SEs and resource providers is dynamic rather than static and can change over time, leading to different behaviours toward social impact measurement (note particularly the cases of TRAINING SE and LEARNING SE) The findings further indicate that although the asymmetric relationship may exist between SE and resource providers, the pressures and power used in this setting are less direct, obvious, and severe than some of the traditional assumptions on power imbalance (Cook, 1977; Kim et al., 2004; Pfeffer & Salancik, 1978) The intrinsic purposes of a seeminglyasymmetric relation in social impact measurement, if any, are to assist SEs to enhance efficiency and create sustainable as well as scalable impact for the disadvantaged communities rather than maximizing the benefits for resource holders themselves Such a discovery is both critical and exciting because it challenges the common view of resource dependence in which the stronger party will have benefits and advantages at the expense of the weaker party (Blau, 1964; Kim et al., 2004; Pfeffer & Salancik, 2003) Overall, our study complements and expands previous findings in the social entrepreneurship domain by bringing new insights to what we understand about the social dimension of social impact measurement in the multifaceted interdependence between SEs and resource providers As a result, this study can be positioned in the context of recent work that has taken a nuanced view of the resource dependence approach This is an especially crucial area that has been largely underresearched in the extant social entrepreneurship literature Contributions to Scholarship Our in-depth study aimed to explore the influences of funding relationships on behaviours toward social impact measurement in social entrepreneurship setting By addressing the research question, the paper contributes to the literature exploring the responses of SEs and resource providers toward social impact measurement (such as Benjamin, 2010; Carman, 2010; Eckerd & Moulton, 2011; Mitchell, 2014; Moxham, 2010; Smith & Stevens, 2010; Thomson, 2010) and to the literature focusing on interdependence between stakeholders (Casciaro & Piskorski, 2005; Gulati & Sytch, 2007; McNamara et al., 2015; Newbert & Tornikoski, 2013; Vestrum & Rasmussen, 2013) First, previous research emphasized the role funding relationships play in shaping behaviours toward social impact measurement While these studies explicitly or implicitly refer to the symmetric and asymmetric dimensions of Copyright © 2015 ASAC Published by John Wiley & Sons, Ltd Applied Implications The findings demonstrate that interdependent relationships shape behaviours towards social impact measurement and sometimes may create pressures or inefficiency for SEs For example, SEs in asymmetric relations may strictly comply with resource providers’ frameworks despite recognition of their inappropriateness Although social impact measurement is seen as important for SEs to ensure their accountability and transparency to access resources (Nicholls, 2009), it should not be implemented as a tool to control 234 Can J Adm Sci 32(4), 224–237(2015) SOCIAL IMPACT MEASUREMENT IN SOCIAL ENTERPRISES NGUYEN ET AL resource holders or considered an additional burden that requires more resources in the resource constrained environment of SEs This research suggests that resource providers and SEs can manage these behaviours by actively monitoring the asymmetric dependence and developing more symmetric ties This is important because symmetric relationships by definition enhance mutual understanding, trust, and commitment for joint actions; facilitate favourable conditions to mobilize resource (Newbert & Tornikoski, 2013; Vestrum & Rasmussen, 2013; Villanueva et al., 2012); and create sustainable impact (McNamara et al., 2015) These relationships can be advanced by SEs’ increased informal interactions with resource providers as well as adoption of different soft power tactics recommended by McNamara et al (2015) These tactics may include developing moral and emotional connections with resource providers; creating and nurturing appeals of shared objectives and mutual benefits; and developing proper negotiation skills in interacting with resource providers (McNamara et al., 2015) Furthermore, SEs could be innovative and develop their own measurement frameworks to demonstrate the social impact that matches their objectives and contexts since there is no common standard or agreed optimal approaches to social impact measurement The findings suggest that SEs consider what to measure and how to measure in order to balance organizational objectives, resources available, and stakeholders’ satisfaction This will in turn enhance our understanding of how social impact measurement is part of organizational strategy (Arvidson & Lyon, 2014) and not just a means to resist and comply with resource providers’ demands (Levay & Waks, 2009) developing economies, we believe that more understanding of the dynamics that occur during the social impact measurement is needed JEL Classification: I30 References Alvord, S.H., Brown, L D., & Letts, C W (2004) Social entrepreneurship and societal transformation: An exploratory study The Jounal of Applied Behavioral Science, 40(3), 260–282 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 Austin, J., Stevenson, H., & Wei-Skillern, J (2006) Social and commercial entrepreneurship: 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Consultant Internal measurement approach, investor’s impact measurement, intermediary’s process reporting mechanism Founder (2 interviews) Investor- Regional Manager Investor- Consultant Consultant