Measuring Social Impact – A Key to High Performing Social Enterprises

Measuring Social Impact – A Key to High Performing Social
Enterprises
By
Sioutzos Giorgos
Supervisor: Dr. Pavlos Vlachos
This dissertation paper has been submitted to “Alba Graduate Business School “In partial
fulfillment for the degree of MSc in International Business and Management
Αthens
June 2019

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"Effective Measuring of Social Impact – A Key to High Social Enterprises Performance”
© Sioutzos Giorgos, 2019
Copyright ©
Sioutzos Giorgos, 2019
All rights reserved.
I hereby declare that this work has not been submitted for any other degree at this University or
any other institution and that, except where reference is made to the work of other authors, the
material presented is original.

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Εxecutive Summary
This paper critically evaluates how effective social impact measurement can lead to the
legitimacy and prospering of social enterprises (SEs). Effective balancing of economic and
social purposes contributes towards high SEs performance and should be mirrored in
specific monetarized indicators. There is no doubt that effective measurement of the
operations and the outputs of SEs is a step toward achieving the desirable social change
and at the same time remaining a healthy and sustainable as an entity. Trade-offs and
tensions are inevitable in dual purpose organizations and success is more likely when
leaders of SEs address them on hand. I focus my examination on the Social Return of
Investment (SROI) framework which was significant developed both from the academic
and business community. SROI tool is not just a descriptive report. It is a methodology
that turns the benefits of social action into a monetary equivalent. This makes social
impact more readily assessable and controllable, especially for financial markets
participants like banks and debt providers, who appreciate monetizing. Social Businesses
can use this tool in order to keep a sustainable long-lasting operation and to evaluate the
outcomes of their social projects. The importance of a more holistic performance
measurement system is highlighted across all this thesis. I demonstrate the process of
measuring a social impact equal to 4.43 using SROI for a Greek social venture and I identify
common misunderstandings and difficulties accompanied with the measurement
process.

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Key Words: Social Impact Measurement, Social Enterpeunship, SROI Analysis

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Acknowledgements
Throughout the writing of this dissertation I have received a great deal of support and
assistance from my supervisor. I would like to thank Dr. P. Vlachos, whose expertise was
invaluable in the formulating of the research topic and methodology in particular.

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Table of Contents
Εxecutive Summary ...................................................................................................................3
Key Words ..................................................................................................................................4
Acknowledgements ....................................................................................................................5
1. Motivation for this research/Research questions/Goals ....................................................9
1.1. Research Questions & Main Goals................................................................................11
2. Methods and Materials ....................................................................................................12
2.1. Literature review ..........................................................................................................12
2.1.1. Literature review search protocol and sources.........................................................13
2.2. Case study methodology ..............................................................................................14
2.2.1. Criteria for choosing the case ...................................................................................15
3. Literature Review .............................................................................................................16
3.1. The Philosophical Origins of SE.....................................................................................17
3.2. What is Social Entrepreneurship?.................................................................................19
3.3. The Greek SE Landscape...............................................................................................24
3.4. SEs Hubridity ................................................................................................................28
3.5. Measurement as a key management Tool....................................................................34
3.5.1. The Performance Measurement Cycle .....................................................................36
3.6. SE Specific Measurement Challenges ...........................................................................38
3.7. The Balanced Scorecard ...............................................................................................42
3.8. Τhe GIIRS Model ...........................................................................................................45
3.9. The IRIS Model..............................................................................................................47
3.10. The Cost Benefit Analysis..........................................................................................48
3.11. SROI Framework Description....................................................................................49
3.11.1. SROI Methodology Steps ..........................................................................................51
3.11.2. Practical Benefits of SROI Analysis............................................................................53
3.11.3. The Role of Social Mission and Organizational Culture in Effective Social Impact
Measurement...........................................................................................................................55
3.12. SROI Similarities with other Methodologies .............................................................57
4. Case Study ........................................................................................................................59
4.1. SE “Faros” Description..................................................................................................59
4.2. Porter’s 5 Forces Analysis in the SE “Faros”..................................................................62
4.3. SWOT Analysis..............................................................................................................64

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4.4. Resourced Based View of Faros....................................................................................66
4.5. SROI Measurement of Faros SE initiative......................................................................69
4.6. Critique of the Process..................................................................................................76
4.7. Recommendations for Faros SE ....................................................................................77
5. Conclusions – Recommendations.....................................................................................77
6. References........................................................................................................................86
Appendix I – Key Findings from the Articles .............................................................................93

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“Social entrepreneurs are not contend just to give a fish or teach how to fish. They will not
rest until they have revolutionized the fishing industry.”
Bill Drayton, Leading Social Entrepreneurs Changing the World

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1. Motivation for this research/Research questions/Goals
In recent years, the weakness of social state to alleviate the plethora of social pathogens
has led the private sector to meet the needs of society and to contribute in addressing
modern social, economic and environmental issues problems. In today's knowledge
society, it is urgent to develop solutions for structural economic, social and political
reforms. The global financial and social crisis of 2008-2009 was an indicator of how the
short-term profitability mindset and related strategies, policies, and actions of financial
institutions, stock markets, and individuals can cause global economic, social, ecological
and ethical crises (Roblek, Meško, Pejić-Bach & Bertoncelj, 2014). The consequences of
this crisis have led to the breakdown of key business which resulted in decreasing
consumer demand estimated in trillions of U.S. dollars. Implications of weak demand led
to the Great Recession between 2008 and 2012 and influenced the European sovereign-
debt crisis (Magdoff & Foster, 2014).
Social Enterprise (SE) is a type of business which uses timeless business concepts and
operates considering the limits of the modern capitalistic world in order to accomplish its
mission which is to lead to certain social change and improvement of social pathogens.
However, the rapid growth of SE research and the embryonic nature of the literature have
led to many, not harmonically connected theoretical approaches. This seems to be also
the case in a sub-stream of SE research and practice, that of the impact measurement of

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the SE. SEs must be profitable and at the same time bring about social change, for many,
two conflicting goals. This dual fight in today’s tough business environment makes social
enterprises seeking and cultivating the aspect of ambiance in order to achieve social
significant results through achieving a minimum level of financial inputs.
It could be said that the oxymoron in SE is the use of “pure” business methods that are
criticized for social negative consequences to dull these consequences. Fighting fire with
fire may be perhaps the solution. But you have to be aware not to be burnt by the fire
you started. A successful SE should have the heart of Mother Teresa and the mind of Ford.
And this double mindset it’s not without any gray aspects. Getting the balance right is
definitely a tough endeavor.
Social entrepreneurs must fight to address social issues. They should recognize
opportunities where others see chaos and confusion. The motives for starting a new for-
profit business or a SE are different, although the means for achieving their strategic
goals, are the same. Wholly dedicated to creating social value without ignoring the
importance of profit as a fuel for healthy operation and sustainability is what
differentiates social from traditional entrepreneurs and delimit the blurred territories
between a high socially responsible company and a SE.
This paper’s motivation is to offer different views about social impact measurement and
to present how specific issues connecting to the mission and operation mindset of SE
make measurement a challenging task. Particularly, the SROI impact measurement

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methodology is a great example of how hybridity and tensions appear in SEs reflect the
measurement process.
1.1. Research Questions & Main Goals
With a critical spirit this thesis aspires to answer the following research questions:
R.Q.1.: What triggers the creation of the SE?
R.Q.2.: How SEs manage their dual-purpose nature? What challenges trigger the hybridity
that characterizes SE?
R.Q.3.: How SEs measure their impact? A critical analysis of alternative frameworks.
R.Q.4.: Is the Social Return of Investment (SROI) framework a contributing factor to the
long-term success of social enterprises?
After giving insights in the above research question this thesis aims to achieve the
following goals:
G.1.: Present best practices in the social impact measurement.
G.2.: Offer a refinement of SROI methodology.

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2. Methods and Materials
We use a two-step methodological approach to advance an in-depth understanding of
the context and linkages between social entrepreneurship and the measurement of its
social impact: Α literature review followed by a case study analysis. The literature review
provides an overview of the current state of social impact measurement at SEs which pre-
requires a review of the SEs literature broadly. The Case Study aims to present common
difficulties in social impact measurement through carrying out a social impact
measurement for a Greek’s SE initiative.
2.1. Literature review
Using a literature review allows a rigorous and critical assessment of the academic work
in SE with an emphasis in social impact measurement. Literatures reviews play a critical
role in scholarship as with this method science remains first and foremost a cumulative
endeavor (Anne.,2009).
Conducting a literature review offers several benefits that have led me to use this method
in my dissertation. In what follows, I enumerate the most important.
i. It offers a general overview of a body of research with which you are not familiar.
ii. It reveals what has already been done well, so that you do not waste time
"reinventing the wheel."
iii. It offers new ideas you can use in your own research.

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iv. It helps determine the flaws in existing research.
v. It enables you to position your research vis-à-vis past research.
2.1.1. Literature review search protocol and sources
To conduct the literature review on social entrepreneurship with an emphasis in social
impact measurement, we followed a search process protocol using the following
databases: Business Source Complete (EBSCO), Science Direct and JSTOR. We searched
for articles containing the terms “social enterprise”, “Social Enterpeunship”,
“Measurement Techniques”, “Social Performance Evaluation”, “dual purpose firms “and”
Organizational Hybridity” in title, abstract, or keywords.
Uncovered articles qualitatively arranged in clusters1
, relating to their research on SE on
an individual, organizational and societal level of analysis. Although such a qualitative
procedure is subjective by nature, as it depends on the evaluations and beliefs of the
researchers who carry it out, the benefits of this method are indisputable and refer to a
well-established approach used in prior studies of this kind.
1 The main clusters are Social Enterpeunship, Measurement Techniques-Evaluating Social Performance and dual
purpose firms – Organizational Hybridity.

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2.2. Case study methodology
When the research interest/questions/objectives are transferred to a specific, complex
and functional situation, then the concept of "case study" is used to characterize the
research strategy (Stake, 1995, Yin, 2009, Anisimova & Thomson, 2012). The "case" has
space-time limits, functional parts and its own "identity". Cases are usually people,
groups, programs, educational institutions or bodies and, more rarely, events and
procedures (Stake, 1995).
In the relevant literature (Cohen et al., 2008), several case study analysis typologies exist,
which signify, on the one hand, its versatility and, on the other, its ability to respond to
different research fields and to different research subjects (Shaw, 1999). It is not our
intention to provide exhaustive reference in the relevant debate. However, Stake (1995)
speaks of "native" (intrinsic) case study, instrumental case study and collective case study
or multiple case study case study. In the first two the origin (internal or external) plays a
crucial role in the interest of the researcher and by extension the type of subjects under
consideration questions. The native case study focuses on a particular person, group,
event or organization. This is what we try to achieve by using Faros SE as a case study.
The research interest emerged from the need for the researcher to learn as much as
possible about the subject case.

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2.2.1. Criteria for choosing the case
The appropriate case, according to Yin (1994), should be "critical", "extreme" or
"revealing". For example, if an event has disturbed the proper functioning of a company
due to some unexpected and extremely critical, then this company is an ideal one when
the evaluation attempts to study and understand it functioning, decisions and actions of
the management and the collective instruments in extreme conditions. Yin suggests the
case is unusual and interesting.
In our research, Faros is a Greek SE with a clear services portfolio and an organizational
structure that is a representative model of a social purpose organization was selected. As
the following chart shows Faros SE case fulfills several case study selection criteria as
these are offered by Yin (1994):
"Representativeness" & Self-
sufficiency of the case Faros is a typical SE that depict many characteristics of the
Greek SE landscape. It has a clear services portfolio, a clear
legal form, certain procedures and organizational structure
that allow us to claim the self-sufficiency of this case.

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Delimitation
The services Faros offers to the customers and activities as
well as a well-defined set of beneficiaries puts certain limits
that are helpful in the assumptions that will be made during
the SROI calculation.
Possibility of
"generalization" The insights from Faros social impact measurement
discussion can be applied in a number of SEs.
Focusing on relationships
and processes (holistic
approach)
A resourced-based and industry-based analysis for Faros
will lead to a holistic approach which takes into
consideration the external and the internal environment in
which the organization operates.
Figure 1. Criteria Faros SE fulfills for using as a case study
3. Literature Review

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3.1. The Philosophical Origins of SE
The fundamental step in bridging the gap between romantic social businesses definitions
and practical results these organizations are fighting to achieve, is rethinking and
redefining the reason of existence of the SEs, their purpose, their fundamental ideology.
The mission is the broad description of the intention of the company and the type of
activities it plans to undertake (Campbell, 1997). Mission statement, that operationalizes
the mission of the enterprise, defines the business that the SE is in, its goals and approach
to achieving those goals (Rigby, 2011). This rethinking has to be done with a practical
mindset that can be executable in the context of modern business environment. It is an
undeniable fact that from this rethinking the term “Social Enterprise” was emerged.
The "raison d'être" is the deep meaning that a company gives to its activity and the way
in which it defines its utility. It responds to basic and universal needs such as protection,
health, freedom of movement or even imagination. Expressing one's raison d'être is an
engaging act because it guides and informs strategic choices while helping to discern risk.
It is a driving force for action and an inspiration for initiatives. This is one of the main
answers to the first research question.
The defining characteristic of a SE is its dual mission and resulting hybridity (Battilana,
Pache, Sengul, & Kimsey, 2019). But the difficulty for achieving this by classic private firm
institutions connects the raison d’ être of SE with achieving this dual proposal. Successful
dual-purpose companies have this in common: They take an approach we call hybrid

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organizing, which involves four levers: setting and monitoring social goals alongside
financial ones; structuring the organization to support both socially and financially
oriented activities; hiring and socializing employees to embrace both; and practicing dual-
minded leadership (Battilana et al., 2019).
A successful SE is a system where all the actors have accepted the purpose. This vision of
the SE shared by all, from the manager to the operator, must resonate within each of
them. It must make sense and answer the question of "Why am I doing it?” “What I stand
for”? “How I am going to achieve what I want to achieve?”
Dees (2001) stated that the distinguishing feature of social entrepreneurship is keeping
the social mission central and explicit. Thus, Dees described social entrepreneurs as being
focused on social value creation by advancing a positive social change. Dees’s definition
is the most commonly used and cited in the social entrepreneurship literature. The
clarification of purpose and fundamental ideology is both coming from market trends,
external environment and the personal beliefs and vision of the senior management
team. Especially for the last aspect, the role of founder’s beliefs is critical for the success
of a SE. A central characteristic of social entrepreneurs is their prosocial personality,
defined as “an enduring tendency to think about the welfare and rights of other people,
to feel concern and empathy for them, and to act in a way that benefits them” (Penner &
Finkelstein, 1998, p. 526).
Having in mind the importance of mission statement through a vast majority of academic
articles, this paper underlines that the formal strategic planning process, which includes

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a creation of a comprehensive mission statement, is positively related to, and largely
determines, the success of a social business and the avoidance of risks in the dual mission
journey.
Entrepreneurial behavior, either the classical or the social one, implies a set of actions
that challenge existing moral standards. And this is regardless the social mission that
drives a SE. The morality of means is different from the morality of mission.
Is it moral to use unmoral means to achieve a moral mission? This is clearly a philosophical
discussion in the field of SE. Ethical dilemmas are more profound in SEs, at least compared
to the traditional for-profit firm. The challenge for achieving social impact while you use
financial input for that, can detract you from your mission representing a moral hazard.
Thus, the raison d être is of critical importance in order for a SE to bring about financial
results and at the same time to operate ethically with the goal being to achieve its social
mission.
3.2. What is Social Entrepreneurship?
Social Entrepreneurship is considered to be a critical parameter and appropriate practice
for the relief of several social problems that, on the one hand, cannot be resolved by the
state and on the other the private sector is not willing to undertake SE initiatives, since
the resultant economic benefits are likely to be negligible. The term consists of two
components: the business and the social dimension. The first ingredient part is very

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popular as a large number of work has been done mainly to investigate those (business)
reasons contributing to entrepreneurship. The second component describes the social
orientation of entrepreneurship. For the social dimension there are a number of
definitions, with a focus on finding new opportunities with high social value, new
innovations and ventures with low economic returns.
Drayton (2002) claimed that there is no social entrepreneur without a powerful, system-
changing idea and that social entrepreneurs ‘‘envisage a systemic change, identifying the
jujitsu points that allow them to tip the whole society into the new path and then persist
and persist until the job is done’’.
Seelos and Mair (2005, p. 241-243) define social entrepreneurship as the economic
activity "that provides new productive models of products and services which serve the
immediate human needs of the poorest sections of society which remain unanswered by
today's economic and social structures.” However, social entrepreneurship means
different things for different people. Mair and Martin (2006) collected a multitude of
definitions for the concept of social entrepreneurship that can be classified into the
following three categories:
i. Organizations seeking funds to meet social needs,
ii. Organizations that commercialize the satisfaction of social needs, and
iii. Organizations that have the sole purpose of relieving human suffering and
dismantling existing social structures.

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Similarly, Roper and Cheney (2005) discuss three types of social entrepreneurship with an
emphasis on ownership of the business, such as:
i. Private social entrepreneurship, i.e. private initiatives to alleviate social problems
with a view to profit and to innovation creation;
ii. Social entrepreneurship of non - profit making; entrepreneurship in the not-for-
profit sector, and
iii. Public-sector social entrepreneurship, i.e. public sector initiatives organizations to
solve social problems.
The following chart best describes the position an SE can take, essentially being a hybrid
between for profit and not-for-profit organizations.2
2
Adopted from Dees (2001)

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Figure 2 The SE conceptualized at the middle of pure for-profit and not-for- profit organizations. This middle area
however gives a plethora of different forms that a SE can take.
It is true that purely commercial entrepreneurship has a social aspect, as individuals are
engaged in exchange and social value is created through the process of conducting
business. However, what makes SE distinctive from purely commercial entrepreneurship
is the explicit focus on social value creation rather than economic value. As we will discuss
below, this is most likely driven by altruistic reasons and a concern for others. Thus, the
driving motivation of social entrepreneurs is social value for the common good. There are
areas of differentiation between social and commercial entrepreneurship. Austin,
Stevenson, and Wei-Skillern (2006) identified four key areas that distinguish commercial
and social entrepreneurship:
i. social nature of the opportunity,

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ii. motivation due to fundamentally distinct missions,
iii. human and resource mobilization,
iv. Performance measurement.
Offering an overview of social entrepreneurship’s distinctions from pure for profit firms,
Di Domenico et al. (2010) described the pursuit of revenue generation strategies that lead
to financial sustainability striving for goals that meet community needs (Borzaga &
Defourny, 2001); the importance of accountability to constituents; the tendency to be
market-driven (Dart, 2004); and to be associated with resource-scarce communities (Di
Domenico et al, 2010).
A really interesting approach to SE is the one found in Abrar, Gohar, Shoaib (2018) article
where the SE is considered a creative destruction process. Altering the long established
practices and strangling to find more efficient ways and means to achieve social change
goals makes them a kind of “creative Destructors” with a Schumpeterian validation. SE is
definitely a process of creative distraction at the social setup of society.
Among the ways social entrepreneurs assess their influence is through successful
innovation. The social entrepreneur’s capacity to innovate can be strengthened or
weakened by the degree of structural levers in place that sustain any innovative activity.
These levers include financial and human capital that enable these firms to implement
desired ideas and solutions in the pursuit of social improvements. Such levers form an
infrastructure for innovation known as the innovation ecology, and entrepreneurs’

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perceptions of the degree to which their environment is favorable to the generation and
evaluation of new ideas and opportunities.
In summary, social entrepreneurs discover and enact social improvements that benefit
their communities, including attractive return on social and financial investments to their
key stakeholders.
3.3. The Greek SE Landscape
It is estimated that in Greece they are active3
:
i. 8,400 traditional cooperatives
ii. 71 women cooperatives, producing traditional products; food and / or operation
of tourist accommodation
iii. 17 KoiSPE (SE legal entity) on the inclusion of mentally ill patients in the labor
market
iv. 1,500-2,000 volunteer organizations, of which 200-300 have active activity
v. An unknown number of joint organizations, voluntary organizations, associations
specially recognized as charitable, non-urban profit organizations, foundations
etc. of associations of persons, organizations and / or corporate
3
i. Social Economy Registry: http://www.ypakp.gr/
ii. Community Network: http://koinsep.org
iii. Institute of Social Economy: http://www.startupgreece.gov.gr/el/content

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vi. 1000+ Communes: mainly collective productive purpose to meet collegiality needs
(culture, environment, ecology, education, utilities, local development products,
maintaining traditional activities and professions).
A SE in Greece can raise funds from the following sources:
i. Grants from the Public Investment Program and from other institutional national
and Community resources
ii. Have access to funding from the Social Fund Economy, from the National
Entrepreneurship and Development Fund, and may be included in the Investment
Law 3908/2011
iii. They can be included in entrepreneurship support programs, as well as OAED
programs for support work.
The Greek state allows social entrepreneurs to distribute 35% of profits4
with the low tax
scale to their own employees. The remaining amount is reinvested untaxed. Also, SEs are
co-operatives of limited liability of at least 5 people with a parity regardless of the
percentage of their capital. Participation in the form of a partner only does not confer a
commercial status but does not allow the distribution of profits to that member. There
are three types of SEs in Greece:
4
http://www.epixeiro.gr/article/1598

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i. Integration, which involves the inclusion of people belonging to vulnerable
population groups in the economic and social life;
ii. Social Care relating to the production and supply of products and services to
specific population groups; and
iii. Collective action, which concern various actions that promote local and collective
interest.
Developing a framework for effective SE development in Greece is crucial. More specific
the following recommendations can lead to this:
i. Provide the necessary startup funds for support of the Commonwealth of
Commons in their first steps.
ii. Securing financial support services to term and long - term horizons, with a view
to further expansion and development of the Commonwealth of Independent
States
iii. Removal of legal and administrative barriers and creation favorable conditions for
the development of the Common Agricultural Policy.
iv. Informing and raising awareness of local communities about benefits from social
entrepreneurship
v. Developing transnational actions for better exploitation the experience of other
Member States

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The governmental mindset toward SE during the recent years can be summarized in what
Prime Minister Alexis Tsipras5
declared about SEs. “SE is a different philosophy of
economy, production, a different perception of life itself (...) a different way of
entrepreneurship, contributing to job creation and productivity growth and a new
alternative division of labor”
The reality shows that social enterprises are more sustainable, resist and absorb any
crunching vibrations that cause accumulated capital. But the question is can they be so
without any friendly legal framework, political and governmental support. It is crucial to
see the model of a SE as sustainable in the free economy?
Α critical question among Greek Society regarding SEs is the following:
"What will happen when donations and subsidies are over? What will happen to those
who rely on the organization? "
In enterprises that are founded from the start with the Social Business Model, you notice
that they do not have difficulty in using profit-making to finance social purposes (B. Smith
et al, 2010). To the contrary, existing third-party organizations operating and wishing to
gain financial independence and develop through their transition to the new hybrid
model, notice that they have difficulty adapting to the duality of their mission (Dees,
1998), resulting from the integration of the speculative nature in the organization's rule
of business.
5
https://left.gr/news/stin-ekthesi-kalo-tin-paraskeyi-o-alexis-tsipras

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3.4. SEs Hybridity
The mixture of goals in the SEs world produces a hybridization, in the form of an increase
in dilemmas and paradoxical injunctions for these types of firms. It is generally acceptable
that SEs are intermediate forms between pure for-profit and non-profit organizations.
The concept of hybridity is a key issue in organizational theory since 1970s where there
were partly private and partly public enterprises that intrigued the academia. However,
the emergence of the SE created a number of different approaches, definitions and
applications currently in use. Moreover, to connect this with the core theme of our thesis,
hybridity creates challenges in finding effective measurement tools that reflect the
response from the SEs to this hybridity.
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.
Hybridity for SEs means an attempt to balance and use such practices and strategic
choices to prevent from being dragged on either side. It is a conscious effort to remain in

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the middle as it wants to mitigate the negative consequences of the two alters. The utopia
of an NGO and financial cynicism of a private enterprise.
Another interesting approach in hybridity is defining it as strategic choice and not as an
intrinsic situation. Smith (2018) claims that nonprofit organizations should see hybrid
structures as a strategic choice rather than an intermediate form. They can have the
maximum benefits of this elastic form as it is connected with resilience and agility which
is a key for SEs to respond to rapidly changing environment and to create sustainable,
long-lasting social impact. Nothing is more constant or pervasive than change. Building a
change-able culture – one that allows anyone to initiate change, recruit co-workers,
suggest solutions and launch experiments, is the bet especially for SEs. Organizations with
a high receptive context are those with the capacity to continually change and adapt
throughout the organization; They can quickly adopt innovative concepts in order to meet
the challenges they experience. Change is built-in to the core processes of the
organization. In a dynamically stable, change-able culture, people are ready and willing to
embrace change as the norm; to innovate, learn and produce high performance even
while things are changing around them.

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Figure 3 The Hybrids: Balancing between profit seeking and social mission.
The dichotomy that is described in the above scheme reflects the ideological substance
of social enterprises which struggle to set themselves apart from the 2 dominant
ideologies of profit and social mission by creating not a mixture but a unique new
ideological movement.
Hybrid enterprise has itself been classified according to several types depending on
business models (Dees, 1998; Aspen Institute, 2005; Alter, 2006; Nyssens, 2006; Ridley-
Duff, 2008; Makadok & Coff, 2009; Brožek, 2009; Landes et al., 2009; Westall, 2009;
Ridley-Duff & Bull, 2011). Within these, social enterprises in their various forms are the
most prominent manifestations of hybridity by the following ways:
i. by ultimate ends: for-profit versus non-profit (or: profit vs. fraternity vs. order)
(Brožek 2009; Boyd et al. 2009);
ii. by societal sector: market versus civil society versus State (Brandsen et al. 2005;
Defourny & yssens 2010; Billis 2010);

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iii. by type of integration: external versus integrated versus embedded (Alter 2006;
Malki 2009);
iv. by goods produced: private versus relational versus public (Bruni & Zamagni 2007
[2004], pp. 239-245; Becchetti et al. 2008; Bruni 2009);
v. by product status: goods versus services (Lusch & Vargo 2011);
vi. by agents of value creation: producers versus consumers (Ramirez, 1999; Payne
et al. 2008; Bauwens 2008; Lessig 2008);
vii. by ownership (corporate governance): private versus cooperative versus public
(Boyd et al. 2009; Billis 2010).
SEs are hybrids that embed conflicting social welfare and commercial logics (Battilana &
Dorado, 2010; Battilana et al., 2012). A social welfare logic focuses on improving the
welfare of society, whereas a commercial logic stresses profit, efficiency, and operational
effectiveness. Each logic is represented and supported by distinct institutional structures.
Whereas a social welfare logic is associated with philanthropic actors and a non-profit
legal form, a commercial logic relies on earned revenues and a for-profit legal form.
We can say that the social organization is the one who successfully achieves both financial
and social results through innovation. It’s an ambidextrous that possible arises through
its ability to "accommodate" multiple, contradictory structures, systems and cultures
within itself. In this way, the complex complexity of the dual-purpose contrasts with a
similar degree of complexity in the structures and systems of the organization.

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The concept of ambiguous organization refers more widely to an organization that is able
to continually adapt successfully. And as we have described above, this ability is basically
a derivative of balancing conflicting demands and challenges. The ambidextrous
organization described by Tushman & O 'Reilly looks very much like the successful SEs
that did not rely on either mechanistic or even fully organic administrative structures or
systems. Instead, they were characterized by clearly defined administrative
responsibilities and clear priorities for their activities, while at the same time allowing
great flexibility in procedures, improvisation and freedom for change. In addition, these
businesses had very well-developed communication systems, including informal
channeling of ideas, which was expressed in particular with the effort to create synergies
between different projects. Brown & Eisenhardt give an interesting name to this
organizational pattern; they call it "limited instability" or "bounded instability". Instability
is instability because it aims at "marrying" opposites (eg clear priorities and
responsibilities on the one hand, and improvisation on the other). At the same time, it is
"within limits" because it is a conscious effort to balance the gap between class and ataxia.
Taken together, this suggests that social ventures are hybrid ventures as they create
varying degrees of social and economic value (Austin et al., 2006; Dees & Anderson, 2006).
The primary distinguishing factor between social and more traditional entrepreneurial
ventures is that success in social ventures is not based principally on financial
performance or economic value creation (Chell, 2007; Dorado, 2006; Peredo & McLean,
2006; Zahra, Gedajlovic, Neubaum, & Shulman, 2009), but rather on social value creation
or benefitting society in some way. Thus, although all ventures might demonstrate some

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degree of hydrides or focus on economic and social goals, social ventures show a greater
focus on social value creation, while traditional ventures show a greater focus on
economic value creation.
With the above discussion in mind the critical question that follows is, hοw can SE
successfully address the tensions that the hybridity causes.
First, by knowing what they stand for and how they are going to achieve its goals. The
recognition of the tensions the hybridity creates is the first step in finding ways to
decrease the risks. The proper dynamic evaluation of the social impact and the financial
healthy operation are critical. A self-aware organizational culture with clear values and
goal can lead to the proper handle of tensions occur without losing the social DNA soul.
Knowing that you are standing as an entity between two powerful forces (for profit and
not for profit) and you do not have the intention to let neither of them to redefine you is
critical.
Spiritual capital is the weapon against the hybridity tensions as it sets the tone for how
economic and social capital is created (Danielson, Robert A., 2015). It is an interesting
approach with theological and sociology extensions on how faith integration throughout
the operation of the organization is so important, author Neal Johnson (2009)
recommends developing a master plan so that the organization can be intentional about
its faith integration.
Another key to effective responsive to hybridity challenges is agility. By constructing a SE
organizational model that is inherently continuously adaptive and rigorously focused on

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new learning and creating value through knowledge you can achieve Obsessed with
providing to the broad stakeholders group value (social and financial) – prepared to put
in significant effort to establish exactly what it is that social want, and then putting those
things first.
A destabilizing perturbation in the purpose and clearly defined mission in the minds and
the hearts of a SE C-Suite can be overlapped by strong leadership and effective, decision
making which did not neglect the foundations ideology and the raison d être of creating
the firm.
3.5. Measurement as a key management Tool
The reason why we need to measure how SEs are performing is to tell us if we need to
take action, and to indicate where that action should be targeted. This is difficult to do
without hard data to support our decisions. Whilst many managers may believe that they
have a general understanding of what is going on, and how well their SE is going, without
making the effort of quantitative analysis which commonly leads to poor decision making.
Measurement gives you the opportunity to handle challenging situations and supports to
decision making. Certain indicators try to manage the abstraction in aspects that can be
tangible and manageable. Measuring the efficiency of an organization from the beginning
is defined as a "multiple, difficult, meaningful and common a well-functioning procedure.”

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Financial measures were the dominant component of the performance measurement
techniques of businesses up to recent past. The flow rates, traffic rates, borrowing costs
and profitability were the top performance indicators.
The exclusive use of finance measures makes the company risking long-term growth in
order to achieve short-term financial targets.
The requirement for an overall view of the outflows of the business and for measuring
various aspects of the business process has led to the awareness of the need of
quantification of non-strictly monetary elements. And within this awareness, the SROI
analysis is extremely tangible example. The philosophy of the overall business
performance view over the profit analysis has boosted the study of new tools and
methodologies.
Criteria for creating performance indicators are:
i. Relevance. Indicators should measure the performance aspects that are important to
society and the entire stakeholder group.
ii. Reliability. The data should be accepted as reliable and accurate by the parties
concerned and must be verifiable. It is important to carefully examine how data is
collected. The involvement of the relevant staff will help ensure the reliability of the
data.
iii. Updating. The time and frequency of data collection is very important.
iv. Clarity. Performance indicators should be simple, well-defined and easy to use. They
also need to provide clear messages.

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v. Emphasis: A limited number of key indicators should be used. To concentrate on the
most important aspects of a service, otherwise, the management of the performance
of a social action is excessively burdensome
Margolis and Walsh (2003), found very few businesses going beyond measuring financial
inputs and/or activities in holistically assessing the performance of social investments.
Considering the needs of a broader range of stakeholders, means that the senior manager
must find ways of systematically assessing and ranking the consequences of corporate
social investments.
3.5.1. The Performance Measurement Cycle
Once it is up and running, the performance measurement cycle moves through the
following phases:
i. Measure: Organizations operating performance measurement systems use
preselected indicators. Such metrics are tracked regularly to assess the results and
scale of their activities and supporting operations.
ii. Report: To compile performance measurement data into a format that is easy to
analyze, organizations use a management dashboard that compiles and compares
data against standards in the field— and against the organization’s past results
and desired future results. Many organizations publish portions of their
dashboards as public report cards to share with social impact investors and other

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stakeholders to establish accountability and demonstrate progress toward their
missions and visions of success.
iii. Learn: From the management dashboard, an organization’s management or
performance review team draws conclusions and identifies opportunities for
course corrections and improvements to the organization’s model.
iv. Improve: The organization implements its decisions to improve its activities and
operations. From there, the performance measurement
Figure 4 The Elements of the performance measurement Cycle
I think is critical to incorporate the performance measurement cycle theory at this thesis
as it is the culture behind measurement. It is a view of continuous improvement and
change in order to be in a stable route to your social impact purpose. We should not forget
that one of the most important ways in which SE can create value is by doing more with

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less. Day to day operations should be sustained by an explicit, balanced understanding of
cost minimization and efficiency and an overall maximization of quality. The assessment
of SEs economic robustness goes hand in hand with the problem of measurability of
results and balanced evaluation of economic and social outcomes.
Establishing a fully integrated, sustainable learning SE is ultimately about cultural change:
the act of moving from an old state of activity-based learning to a new state of results-
based, sustainable learning that is unequivocally part of an organization's DNA. A holistic
change process, each stage in the cycle reflects specific elements of both organizational
change and learning and development process maturity. The focus here is on the
capability and maturity of the whole learning organization, rather than specific initiatives
(good results are possible even with low levels of maturity). "Achieving high levels of
development process maturity is not about creating a single system that does one thing
really well; it is about creating a flexible system that can be used to support a range of
development needs that shift over time" (Hunt, 2014). For our purposes, then,
sustainability is like a wide-angle lens through which you're examining the long-term
endurance and business value of the whole learning organization (or ecosystem)—its
strategies, services, processes, practices, programs, personnel, and results—instead of
the outcomes or strategic value achieved by a single project, program, or initiative.
3.6. SE Specific Measurement Challenges

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All the complexities and issues we analyzed in the above section and especially the dual
need for financial and social outputs makes measuring a challenging process for a SE. The
success of SE cannot be measured only by traditional financial indicators nor only by
descriptive vague, general and qualitative concepts. Performance models of SEs capture
interactions between their inputs, outflows, results and impact (Ebrashi, 2013; Ebrahim
& Rangan, 2010).
In the private sector, performance measurement enables corporations to collect data that
identify potential improvements to their business models. By acting on this data, a
company can ultimately increase its financial performance. Performance measurement
serves a similar purpose when applied to solving social problems. It provides vital
information for assessing an organization’s efficiency, sustainability, and progress toward
achieving its mission. Typically, an organization that has social impact as its primary
mission measures at least some of its work, particularly in response to funder
requirements.
However there have been many attempts at non-financial performance measurement as
early as the tableaux de bord that have been developed by ‘sub-departments’ in French
factories (Innes, 1996). These compromise non-financial measures that managers
identified as critical to success and that were developed and monitored locally rather than
being part of the formal reporting process.

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Many types of performance measures exist including impact measures which has to do
with how outcomes contribute to achieving organizational strategy such as customer
satisfaction or social impact.
However, externally driven measurement does not necessarily serve internal
performance assessment needs. Many organizations collect data relating to a few select
programs and initiatives but have little understanding of their overall progress in
achieving their missions. Alternatively, some organizations feel overwhelmed by a flood
of potentially helpful data that they have not yet linked to management strategy and day
to-day operations. An effective social value performance measurement system offers a
comprehensive, flexible framework for any organization dedicated to social impact. The
system helps simplify an organization’s existing measurement efforts— or it can be built
from the ground up for organizations new to measurement
Measuring success in "pure" commercial entrepreneurship is a simpler process, since
financial performance is the primary and perhaps unique criterion. In contrast, measuring
the impact of a social enterprise is a complex process and is an important element of
differentiation of social than purely commercial entrepreneurship (Vlachos, 2019).
Measuring the impact of a SE is difficult because social problems are endemic "wicked
problems" namely problems that are hard to be eliminated but only reduced.
Generally speaking three aspects of SEs should be measured and combined to produce a
totality, an overall performance. To achieve the impact, it is necessary the outputs and

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outcomes to be valuable for the society (not only direct beneficiaries) and be adopted by
it in long term horizon.
Figure 5 The Three Aspects of SE impact. The significance is gradually increasing
Systems thinking is critical in the last step and in author opinion is a meta-virtue social
entrepreneur should have. Systemic thinking means ability to find and understand the
linkages and interactions between the components that comprise the entirety. Because
of the complexity of modern environment and the many components a person must find
the way changing one component will affect the other. Systems thinking is a timeless
important ability as you should see the wholeness and not have a myopic view. The
"system" appeared in scientific thinking in the 17th century, with Newton the rapporteur
Impact
Long Term
Sustainable
Societal Change
Outcomes
Short Term
benefits stem
from the
operation of SE
Outputs
Directly Produced
Prosucts/Services

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and starting from the dominant question of the scientific thought of that time: the
movement of bodies in space. Technology affects systems and a digital affection in a
single element can have a greater impact in a whole system. You have to be able to predict
and find this impact. Systems thinking assumes that knowledge is interpretive,
recognizing the spiritual quality of life and living (Flood, 1999).
3.7. The Balanced Scorecard
The Balanced Scorecard (BSC) has been developed by Prof. Kaplan (Harvard Business
School) and Mr. Norton (Business Consultant). In 1996 these two authors developed this
model (BSC) based on IT-based technology to help top-management to choose a set of
metrics to provide a complete picture of the business. As this is the first attempt for sifting
to a holistically firm’s outputs evaluation, incorporating this into this thesis is definitely
worthy. Balanced scorecard is the firm attempt of the classical business to evaluate their
performance in a more holistic way. In an effort to find a complete and representative
definition for Balanced Scorecard, through its overview literature, it was soon discovered
that it does not exist. Its nature of the concept under consideration is such that a simple
definition cannot yield, as a whole, its content. All the sources examined are approaching
a specific issue in a descriptive way and each one has its own added value for an in-depth
understanding of the above concept.

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Basically, this model indicates it development of four scorecards, one with economic
indicators and the remaining three with non-economic indicators, as follows:
Figure 6 The Holistically oriented approach of Balanced Scorecard methodology towards an organization outputs
BSC-based approach provides one a clear recipe of what measurements organizations
should carry out in order to balance the financial dimension with non-residents financial
indicators. They argued that to achieve a balance between economic and non-economic
indicators should be considered that the four categories / dimensions of the BSC are
linked together in one cause-and-effect relationship, and that it does not can be
considered separately (synergies effects). However, the four proposed categories should
not limit the BSC - their number depends on the industry in which the business operates

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and, on the strategy, (Veen-Dirks & Wijn, 2002). According to Ahn (2001), Kaplan &
Norton's work with BSC covered the gap between development strategy and its
implementation with support and connectivity four "critical processes critical
management processes:
i. Clarification and translation of vision and strategy,
ii. Communicating and linking strategic objectives with measurements,
iii. Planning, setting goals and aligning strategies initiatives and,
iv. Strengthening feedback and learning strategies.
Veen-Dirks & Wijn in their work "Strategic Control: meshing CFS with BSC "(2002) argued
that businesses must pay special attention to non-financial performance indicators. So,
new frames that expand organizational dimensions beyond traditional finance
measurements began to develop (Maltz, Shenhar & Reilly, 2003).
Balanced scorecards are equally useful in different types of organizations and many
relevant skills are transferable between them. Peter Drucker is on record saying that it
would be a good idea for not-for-profit organizations to acquire the performance
management skills of commercial ones and for for-profit organizations to acquire the
mission-management skills of not-for-profit ones. Whether profit is the main objective or
not, all organizations can benefit from the use of balanced scorecards. The indicators
included in the scorecard are not generic; they should be reviewed periodically to reflect
changes of corporate strategy made in response to the external environment. This is

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facilitated by a flexible management information system, possible based on a unified
relational database used to warehouse both internal and external data.
In summary, the balanced scorecard is driven by organizational strategic objectives rather
than a desire for operational control. It is not constrained by the financial year in the way
that a budgetary control system is. Note that it is not a strategy in itself but a mechanism
designed to help organizations translate their chosen strategies into reality. To summarize
the importance of measurement-based balanced scorecards, I quote Melnyk et al. (2004):
“Strategy without metrics is useless; metrics without a strategy are meaningless”.
3.8. Τhe GIIRS Model6
The Global Impact Investment Rating System (GIIRS) is a formal methodology for
assessing the social and environmental impact of organizations. It represents a tool that
attempts to change the investor's behavior and unlock the marginalized investment
capital through comparable and verified social and environmental performance data,
which are based on high impact funds and companies looking for investment funds. The
different indicators for social impact this tools gives, as well as, the increasing number of
firms using it, make us to incorporate in this thesis.
6
b-analytics.net

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Step 1: Completing a GIIRS assessment: Focuses on the impact on all stakeholders of a SE.
Templates that b-analytics offers change according to size (number of employees),
geographic area and type of SE.
Standards for each of the 5 areas following are existing.
Figure 7 The Five Areas of Impact and Measurement of the GIIRS model
Step 2: Verification: A review of the evaluation with a member of the GIIRS staff.
Step 3: Report GIIRS ranking
EnvironmentCustomers
Goverance
workersCommunity

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The classification of the GIIRS is designed to be comparable and the standardized
approach limits the need for judgments when computed.
3.9. The IRIS Model7
Several SEs and socially conscious investors have joined forces in recent years to develop
the Impact Reporting and Investment Standards (IRIS). This Model is approaching
evaluation in a holistic and high level way and it is well known across the SEs operating
abroad.
The IRIS framework for measuring social impact consists of three categories of impact
measurement indicators, all of which request certain information. Those indicators are
the following:
i. Financial Impact Indicators— request information that focuses on past, present,
and future financial gains and outputs;
ii. Operational Impact Indicators— request information that looks at the
organization’s policies as they are related to employees and governance of the
enterprise; and
iii. Product Impact Indicators— request information that looks at the performance
and reach of the organization’s products and services.
7
https://iris.thegiin.org/

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Additionally, there are two categories of descriptor indicators that are used to gather
general information about the enterprise and its mission. Those indicators are the
following:
i. Organizational Descriptor Indicators— request information describing the
organization’s mission, operational model/structure, and area of operation; and
ii. Product Descriptor Indicators— request information describing the organization’s
products, services, and target markets.
The system, which is still growing, should be used as a comparative tool by socially
conscious investors and other individuals and organizations looking to find the right social
enterprise in which to invest. For our purposes, social enterprises may want to rely on the
IRIS data-gathering and - reporting system to see where they stand among their peers in
achieving social impact.
3.10. The Cost Benefit Analysis8
The Cost-Benefit Analysis (CBA) is a systematic approach to assessing the benefits and
costs of alternatives that satisfy transactions, activities and / or operational requirements
for an enterprise. This is a technique used to determine the choices that provide the best
approach to adoption and practice with regard to benefits in the labor markets, saving
8
«AN INTRODUCTION TO COST BENEFIT ANALYSIS», San Jose State University Department of Economics,
http://www.sjsu.edu/faculty/watkins/cba.htm

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time and cost is also defined as the systematic process for calculating and comparison of
the benefits and costs of a project, a decision or government policy.
Typically, a "baseline scenario" is compared to one or more alternatives (which offers
some significant improvement in comparison with the baseline scenario). The analysis
assesses elementary differences between it scenario and alternative (s). In other words,
a cost-benefit analysis attempts to answer the following question: What are they
additional benefits that will arise if this alternative implemented, and what additional
costs are needed to achieve it?
The goal of the analysis is to translate an investment into monetary terms by calculating
the fact that in general they are benefits arise after a long period of time, while capital
expenditure is mainly incurred in the first years.
Cost benefit analysis is a mindset which has evolved in a performance measurement tool
that can enhance the quality of rational decisions during a decision-making process.
A Key feature of the analysis is the fact that all sizes converted into monetary terms
(quantitative information). Thus, we can say that is closely related to SROI.
3.11. SROI Framework Description
Based on cost-benefit analysis, social accounting and social audit, SROI (social return on
investment), i.e. social return on investment, helps self-improve organizations while

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increasing their potential to raise finance and attract investors to an international
environment where social performance measurement is constantly gaining ground.
"Every day, our actions and our activities create and" destroy "value. Although the value
we create goes far beyond what can be collected from an economic point of view, that is,
for the most part, the only kind of value that is measured. The characteristics of the SROI
methodology seek to reduce inequalities and environmental degradation and improve
prosperity with the integration of social, environmental and economic costs and benefits.
SROI measures change in ways that relate to people or organizations that experience or
contribute to it. It tells the story of how change is created by measuring social,
environmental and economic outcomes and uses the monetary values it represents. This
allows the ratio of benefits to costs to be calculated. For example, a 3:1 ratio indicates
that a 1€ investment delivers 3€ of social value.
SROI is much more than just a number. It is a history of change on which decisions based
on case studies and qualitative, quantitative and economic information will be based. A
SROI analysis can take many different forms. It can embrace the social value produced by
the entire organization or focus only on a specific aspect of the organization's work. It is
a framework for a fuller understanding of how people are affected by an organization's
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3.11.1.SROI Methodology Steps
SROI analysis includes the following 6 steps:
i. Define the organization's (or program's) purpose, the stakeholders and the type
of analysis.
The scope of a SROI analysis is an explicit statement about the limit of what is being
considered. It is often the result of negotiations on what is feasible to measure and what
you would like to be able to improve or communicate.
ii. Mapping desired results
SROI is a result-based measurement tool, as measurement results are the only way to
make sure changes are made to stakeholders. Caution is needed so that there is no
confusion between outputs with results. For example, if a training program aims to give
people jobs, then completing the training is the result, the achievement of the job is the
desirable outcome.
iii. Data Collection for results reporting and return on monetary value.
Indicators are ways to know the extent to which change has occurred (of course through
the results). SROIs are applied to results, as these are the change measures that we are
interested in. The next step is to clarify one or more pointers for each result on your map.
You will need indicators that can show you if the result has happened and how much. A
key point to be emphasized is that each benefit must be translated into a cash equivalent,

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after relevant bibliographic documentation and research. For example, pleasure or self-
confidence can be translated into money with the sum of 10 sessions of a psychologist.
iv. Definition of impacts from other factors.
A focal point that requires particular attention is to clarify if any benefit may come from
the action or from some other action. For example, improving self-confidence can be
attributed to another factor outside of action.
v. SROI index calculation
By following the basic principles, the final social impact indicator is calculated, which is
the ratio of benefits / costs of the action or organization being studied.
The SROI indicator shows the social value generated or destroyed as a consequence of an
activity, taking into account the results / changes experienced by the parties involved, but
converting them into accounting terms.
It is noted that a SROI analysis can take many different forms. It may include the social
value created by an entire organization or focus on only one specific aspect of the
organization's work. It can be done to a large extent as an in-house exercise or
alternatively it can be guided by an outside researcher.
vi. Reporting and integrating results into the organization's strategy.
The final report must include much more than the calculated social earnings. The SROI
report should include qualitative, quantitative and financial aspects to provide the user

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with important information about the social value generated during an activity. Lists the
history of change and explains the decisions you made during your analysis.
The report should include enough information to allow someone else to make sure your
calculations are powerful and accurate. That is, it must include all the decisions and
assumptions you made along the road. To help your organization improve, it should
include all the information you can learn about the organization's performance that may
be useful for strategic planning and how it operates. You need to know the commercial
sensitivities to decide what you include in the report.
Figure 8 The Six Steps process of SROI Methodology
3.11.2.Practical Benefits of SROI Analysis
A SROI analysis can satisfy a number of purposes. It can be used as a tool for strategic
planning and improvement, for impact communication and for attracting investment, or
for making investment decisions. The author believes that SROI is a mindset that lead you

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to a holistic view of the outputs of one company and can help guide the choices faced by
managers when deciding where to spend time and money.
SROI can help a business respond to its social role in the following ways:
i. Facilitating strategic discussions and help understand and maximize the social
value of an activity.
ii. Helping to target the right resources to manage unexpected results.
iii. Demonstrating the importance of working with other organizations and people to
contribute to change.
iv. Identify a common ground between what an organization wants to achieve and
what stakeholders want to achieve, contributing to maximizing social value;
v. Establishing formal dialogue with stakeholders that allows them to maintain the
service account and makes them meaningful in designing the services.
vi. Alignment with other indicators to monitor the implementation of regional and
local targets.
It can be argued that SROI is a methodology that gives you the principles to formulate
your own methodology and adjust measurement and reporting techniques in specific
projects in order to gain valuable insights about your value contribution to the broad
concept of stakeholders.

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3.11.3.The Role of Social Mission and Organizational Culture in Effective Social
Impact Measurement
The culture of the organization is the most critical part of an effective proper use of tools
for evaluating social impact. Socially aware companies that understand their role in the
society are more likely to use techniques, find tools and become game changers. It is the
commitment of senior leadership team to the moral and social imperatives of a viable
model for any enterprise whose outflows will offer multiple value to the wider
stakeholder group. Especially for SEs where social purpose acts as a fuel for driving
momentum organizational culture is the key. It is the introduction into the vision and
mission of the social dimension and principles and values with which the company
chooses to operate. In order a measurement and reporting process be insightful and
valuable the reason and the contribution of all stakeholders is more than necessary. Going
into an evaluation-measurement process means that you are willing to change and
improve things. Means that you are not dogmatically stable in a mindset and you have
flexibility, innovativeness and creative mindset in your DNA. It is crucial for SEs to be built
in foundations which promote a thinking of giving value and benefits to all stakeholders.
This is more critical than in the pure commercial firms where the results and the outcomes
are mainly target the shareholders and the commercial target group. The involvement is
a crucial parameter for effectiveness in SEs measurement.

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Understanding of connections between SEs and their environment influence in a
significant way the nature and the philosophy of measurement. It is crucial that the
leaders of an organization understand their responsibility as agents of change and despite
the challenges and pressures they can find these ways and tactics that will allow at the
end to the establishment of a beneficial change with an impact. It is important for SEs
strategies to become central to business strategy and part of the long-term planning
process. The idea is that the best social business outcomes can be achieved when shared
value approach is adopted, such that there is no conflict or compromise between social
value to the community and economic value to a business. The result is that achieving
business self-interest can create social value.
To be useful the SROI analysis, as everyone other alternative of social impact
measurement, needs to result in change. Such change might be in how those that invest
in your activities understand and support your work, or how those that commission your
services describe specify and manage the contract with you. The SE must be dynamic in
order to successfully lead change. It is the ability to change and meet new requirements
that allows the corporation to invent its own future. The system that is rigid and incapable
of change is doomed to failure. Innovation provides the means to exceed expectations as
changes occur in the business environment. This kind of leadership and success
necessitate an integrated system. Integration of the whole ensures that relationships are
inclusive. It also means that the participants and actions across the enterprise are
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The purpose of using assessments is to evaluate an organization's capability and readiness
to learn and change. They help determine the types and magnitudes of the gaps,
challenges, and opportunities. The understanding enables design of the length and
composition of the roadmap and milestones. Additionally, this helps identify the skills,
quantity of resources required, and the likely impact to organizational performance as
deployment rolls out.
3.12. SROI Similarities with other Methodologies
IRIS provides standard performance indicators for a series of inputs, activities and
outflows as well as results. The IRIS library can be used as a source in the processing and
identification of the above. Also, one SE, may use the IRIS definitions of inputs, activities,
outputs and results to ensure that the meaning and method of measurement are clear
and comparable to other SEs.
In this context, indicators are identified, and it becomes apparent which ones are often
referred to in specific areas. This improves comparability and consistency in reporting and
analyzing performance impact data. The SEs can adopt this approach by selecting a set of
indicators that can be applied to their actions and reporting on performance data that is
consistent with the IRIS definitions for these indicators. IRIS does not specify which
indicators should be used but advises the relevant SE to think of itself.

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SROI does not predetermine either the stakeholders to identify subgroups that can
experience substantial results, nor relevant factors. This means that SROI ratios are not
designed to be comparable. However, the analysis itself may be comparable. On the other
hand, the classification of the GIIRS is designed to be comparable and the standardized
approach limits the need for judgments when it is calculated.
SROI is a method of measuring social, environmental and economic value of a project /
project, considering the experiences of those directly involved in this action. The
difference between the SROI methodology and other assessment methods is that the
SROI analysis provides the framework for assessing the specific results, but for which
there is a relative difficulty in the way in which accounting is measured. The SROI
methodology has been defined in different ways and there are many approaches to the
calculation of SROI (Nicholls, Lawlor, Neitzer, & Goodspeed, 2009).
The holistic evaluation try of balanced scorecard is closed to SROI. The main difference is
found in the effort of monetizing. While in the SROI methodology there is a certain aim
of translating everything in monetary terms balanced scorecard is a more descriptive
technique.
There is an argument that SROI is only a form of cost-benefit analysis. Although both SROI
and CBA requires judgments and assumptions, both involve assessing overall value from
a particular project or course of action, and comparing it with the cost involved. In both
cases, outcomes should be monetized (i.e. measured in pounds and pence), and this
should include valuation of 'soft' outcomes such as health, well-being and environment,

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SROI has its roots both on sustainability accounting as well as in CBA. SROI needs to be
understood from both perspectives. SROI ratio, is just part of the process rather than the
ultimate goal as in CBA.
4. Case Study
4.1. SE “Faros” Description9
SE "Faros" is a new form of cooperative business action especially for people with
psychosocial problems. Its purpose is to socially integrate people with serious
psychosocial problems in order to contribute to their own financial self-sufficiency and
rehabilitation. It was established with the Greek Low N 2716/99.
"FAROS" was founded in 2006 as a result of the collective effort of the Mental Health
Professionals of the Hellenic Center for Mental Health and Research Patras, the
Psychiatric Clinic of the Patras University Hospital "Virgin Assistance" and the Mental
Health Center of the General Hospital of Patras "Saint Andreas ".
The goal of SE Faros is to develop business activities with the ultimate goal of upgrading
the quality of life of people with mental health problems experiencing work exclusion.
9
https://koispe-faros.gr/

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The social pathogen that the SE "faros is trying to cover is the difficulty of mental
ill people to be self-efficient and to harmonically intergrate into the society.
“Faros” Money Generating Activities and at the same time Services to Beneficiaries
(Employment)
Figure 9 The Services portfolio of SE Faros
1st Source:
“The Candle shop of SE ""FAROS"" produces:

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o handmade decorative wax available on the open market
o ecclesiastic candle, which is available in Sacred Church"
2nd Source:
From December 2014, the SE Cleaning Service ""Faros"" has undertaken, after a
competition, the complete cleanliness of the Karamandanian Children's Hospital of Patras
and the Medical and Pediatric Center. This activity involves eight persons, of whom five
are persons with psychosocial problems.
3rd Source:
SE "FAROS" has undertaken the cleaning of hospital clothing after a competition of the
Panayia Aidia General University Hospital of Patras.
4th Source:
Telesecretariat
The Telesecretariat began its operation in August 2009, during the implementation of the
Operational Program “Health – Welfare 2000 – 2006”.
A new phone number is provided to the subscriber of the telesecretariat service, without
the need for installation of additional equipment.

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The telesecretariat answers this number, according to the subscriber’s suggestions, so
that the impression is formed that the caller is talking to the subscriber’s personal
secretary.
4.2. Porter’s 5 Forces Analysis in the SE “Faros”
One main reason that can lead a business to failure is its competitiveness with other
businesses, whether it is the production of a product or the provision of a service. A good
solution for the company to avoid failure and ensure its success is to increase its
competitiveness.
In the longer term, competition leads to greater consumer welfare and due to its potential
beneficial effect on business incentives, to invest in innovations that improve their
competitive position. Competition leads to a comparison of forces which protects the
common interest, i.e. the mere consumer from the creation of monopolies or oligopolies,
which may impose on him products and prices. Competition refers to the extent to which
companies respond to the competitive moves of other companies. Competition between
existing companies can be manifested in a number of ways: price competition, new
products, customer service levels, warranties and warranties, advertising and better
networks of wholesale distributors. It is therefore extremely important to have healthy
conditions of competition in an economy.

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The industry based view of the firm is underpinned by the five forces framework first
advocated by Michael Porter and later extended and strengthened by numerous others,
Especially in the field of SE the competition is sometimes hidden and threats are not
clearly depicted. The Five forces framework which governing the competiveness of an
industry gives a high level view and the big picture reviling possible threats and
opportunities. A key proposition is that firm performance critically depends on the degree
of competiveness of the five forces within an industry.

4.3. SWOT Analysis
SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis on Faros
Organization will help us to get a broader understanding of where the organization is
in terms of developing capacity. As a tool, SWOT analysis is not a complete study of
Competitive rivalry – Medium
 Direct competitors-Low
 Indirect competitors- High-
Private metal illness support
centres may offer a higher
value proposition to achieve
competitive advantage.
Supplier power (service & materials
providers) – Low
 Need to be highly accountable
on expenditures; always looking
for optimization/operational
efficiency
 Suppliers might be turned into
sponsors or partners
(advertising, promotion, and
volunteerism)
 Collaboration with NGOs may
achieve optimization of
resources
Treat of substitutes –Low to Medium
 State may impose regulations with the Law on SE,
thus reducing real income and monopolizing both
educational service and financial support in the
area of social entrepreneurship
 Different forms of supporting people with mental
illness may arise.
Buyer power – High
 High
unemployment
both amongst
broad population
and vulnerable
groups.
 Buyers try to find
the best quality
with the lowest
cost (best value)
 Companies that
offer same
services as SE
Faros are looking
for long-lasting
partnership with
customers
Threat of potential entrants – Medium to high
 Business oriented SE are increasing.
The Movement from NGO to SE is
common due to legal friendly SE
environment
 High social aware entrepreneurs which
combine innovation, creativity, high
technical skills and an altruistic

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an underlying subject matter, but a useful and complementary instrument often used
in combination with other tools to evaluate the success possibilities of an enterprise.
Figure 10 Faros SE SWOT Analysis
Strengths Weakness
i. Experts in the area
ii. Training ability
iii. Society Friendly
i. Difficult of moving beyond the
Patra’s Local Economy
ii. Low Reputation
Opportunities Threats
-
i. Unique Needs of this kind of
services
ii. Government support to the
utilization of social economy
model
-
i. Existence of similar businesses
(Both private, NGOs and public
Institutions)

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4.4. Resourced Based View of Faros
The role of the internal environment is as important as the external environment.
Based on resource and competency theory, we can present the internal structure and
structure of the business to help us make decisions.
Jay Barney10
suggests VRIO Analysis (Valuable, Rare, Imitable, and Organization Analysis).
i. Valuable - Reliability. Reliability of resources is a function of maximizing sales,
market share, and competitive advantage.
ii. Rare. The scarcity of resources leads to the search for sources that originate and
ensures long-term profits and a high level of competitiveness.
iii. Imitable. Due to the competitiveness and high profitability of the business, the use
of benchmarking by competitors must be minimized.
iv. Organization. The above prerequisites require excellent organization of
operations, continuous staff training, robust and decisive management
10
B. Barney (1991) "Firm Resources and Sustained Competitive Advantage," Journal of Management, 17(1): 99-120.

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Figure 11 Vrio Analysis Description
FAROS SE VRIO Analysis
Resources Value Rare Imitation Organization
Competitive
Advantage
Knowledge in the
mental health
issues
Yes, as it can contribute
to the Faros SE mission
accomplishment. Critical
to bring the desirable
social change.
No
Can be imitated
by competitors
All the
capabilities
of the
organization
are not fully
utilized yet
Has
potential

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Networking Skills -
Partnerships
Management
Yes No
Each of the firm
has its own
strategy
Yes,
company has
organization
al skills to
extract the
maximum
out of it.
Still lots of
potential
to build on
it
Legal - Marketing
Expertise within
the SE Greek
Arena
Yes, firms are competing
based on differentiation
in the industry
No, as
most of the
competitor
s also have
decent
know how
Pricing
strategies are
often matched
by competitors
Yes, firm is
leveraging its
in-house
expertise
Temporary
Competitiv
e
Advantage
Brand Positioning
in Comparison to
the Competitors
Yes No
Can be imitated
by competitors
but it will
require time
Yes, the firm
has
positioned
its brands
based on
consumer
behavior
Temporary
Competitiv
e
Advantage
Product Portfolio
and Synergy
among Various
Product Lines
Yes, it is valuable in the
industry given the
various segmentations &
consumer preferences.
Most of the
competitor
s are trying
to enter
Can be imitated
by the
competitors
The firm has
used it to
good effect,
details can
Provide
short term
competitiv

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the
lucrative
segments
be found in
case exhibit
e
advantage
Figure 12 Faros SE Vrio Analysis
4.5. SROI Measurement of Faros SE initiative
Before we start our SROI analysis we need to clarify what we are going to measure and why we
are embarking on a measurement process.
Scope
Activity
Cleaning
hospital
Facilities
Goals - how
the activity
leads to the
desired
impact
By employing people with mental
issues and ensuring necessary funds
for the organization.
Contract /
Funding / Part
of org
What
decisions will
be influenced
by this
analysis?
The portfolio of activities/services
offered by faros SE.
Strategic change and reorientation
towards changing the tactics used for
achieving remarkable social value.

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Figure 13 SROI Measurement Scope and Goals
We consider the main inputs of this specific service Faros propose the following:
INP.1.: General administrative costs. Indirect costs to this specific service Faros SE
provides
INP.2.: Direct costs to this specific service Faros SE provides. The main components of
this type of cost following:
INP.2.1.: Cleaning Materials
INP.2.2.: Training Hours
INP.2.3.: Minimum wage of the workers
INP.2.4.: Partnerships Management Costs
We consider the main outcomes of this specific service Faros propose the following:
OTCΜ.1.: Reduce financial dependency of people with mental health issues
OTCM.2.: Improving social accessibility and functionality of people with mental health
issues

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OTCM.3.: Informing the local community about mental health issues and change social
stereotypes
OTCM.4.: Improving the everyday life of families and relatives of people with mental
health issues.
In the following chart some basic indicators regarding Outcomes are presented.
OTCΜ.1.: Reduce financial dependency of
people with mental health issues i. The salary participants gains
OTCM.2.: Improving social accessibility and
functionality of people with mental health
issues
i. Cost of public services helping
to this
ii. Cost of private centers helping
to this
iii. Governmental budgeting for
such issues
iv. Cost of membership of a social
club/network

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OTCM.3.: Informing the local community
about mental health issues and change
social stereotypes
i. Cost of campaigns, Seminars,
lessons that aims to this
ii. Incensement in donations in
mental health sector
OTCM.4.: Improving the everyday life of
families and relatives of people with mental
health issues.
i. Cost of staying home to help
ii. Cost of free time
Figure 14 Indicative indicators regarding the SE Faros particular service outcomes
The process that follows is assigning a monetary value to things. All the prices we are
using in our everyday life are proxies for the value that the buyer and the seller gain and
loose in the transaction.

Description Quantity Value
How would you describe the changes that result from
activities after involving your stakeholders?
Numberofpeople
What is the value of
the proxy for the
change per person?
OTCΜ.1.: Reduce financial dependency of people with
mental health issues
5
8.000,00
How much each
beneficiary earns.
OTCM.2.: Improving social accessibility and functionality of
people with mental health issues
5
2.000,00
How much sessions
a beneficiary
should have with a
psychologist to
achieve social
integration.
OTCM.3.: Informing the local community about mental
health issues and change social stereotypes
67.446
Local Active
Population
0,50
How much a leaflet
per person would
be cost

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Figure 15 assigning monetary value to outcomes
OTCM.4.: Improving the everyday life of families and
relatives of people with mental health issues.
5
3.000,00
What income could
be gained if these
families had not to
take care their
relatives?

The analysis shows a significant income increase for the mental health patience in the
program. In addition to that, increased personal well-being for the families of these
people is estimated and included in the analysis.
The SROI ratio is calculated to be 4.4311
over a five-year period. Thereby, Faros creates
measurable value for their stakeholders and the society of Patras. This proves that the
program creates a positive return on investment of 4.43 euro for every 1 euro input, and
a donation to faros can be considered a solid investment and not just as charity.
When critically evaluating the SROI results. , it should be considered that it has not been
possible to include all positive outcomes. Also, the impact might last for more than five
years and the participants might gain real income increases over time. In a future analysis,
his perspective can be analyzed further.
In calculating impacts, an organization must recognize the contribution made by others
to the outcomes. Attribution also encompasses deadweight (what would have happened
anyway, calculated through the use of available benchmark data and proxies) and
displacement (when the benefits claimed by a program participant are at the expense of
others outside the program).
11
An Excel template of the value map with formulas helping calculate the social impact is used.
http://www.socialvalueuk.org/resource/blank-value-map/

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4.6. Critique of the Process
From the first steps of applying the method the subjective complexity and aspect was
evident. Views on benefits and results vary according to the views of the various parties
involved. Prudence through a process of delineation of commonly accepted assumptions
is necessary during the implementation of this method. Different actors have different
competencies which lead to different evaluation of the outcomes and the impact. Shaping
the truth in the field is an endless process. The alignment of the different mindsets in a
harmonically defined context is a challenge. From a methodological point of view, the
analysis of the outputs and the overall impact have the aim of individualizing the phases
of the value chain in which the social value is generated.
Although SROI has not yet been sufficiently refined, it does seem to represent a step in
the right direction but, as the survey of Bertotti, Leahy, Sheridan, Tobi and Ren (2011)
shows, only 2.6% of the sample declared to have used SROI for their assessment. Thus,
the first problem is to encourage greater uptake and to make SE rethink and approach
with different mindset a holistic evaluation procedure. Secondly, SROI might benefit from
the wider engagement of academic expertise .Economists have been long engaged in
developing cost utility analysis and measures (e.g. QALYs) which could conceivably offer
a direction for the development of SROI (and vice-versa) particularly in the health sector
where commissioning decisions are often driven by cost utility measures. However, whilst
the engagement of academic expertise could contribute to further development of SROI

Measuring Social Impact – A Key to High Performing Social Enterprises

Measuring Social Impact – A Key to High Performing Social Enterprises

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