A framework for measuring the performance and sustainability of social enterprises

Abstract

Social Enterprises are becoming a key economic sector globally, which has led to increased interest from scholars, policymakers, investors, regulators and practitioners alike. There has however not been any consensus and consistency on how to measure their performance. This study aims to address these challenges by proposing a framework that could be used to measure the performance and sustainability of Social Enterprises. The study was conducted by initially reviewing the literature, selecting the most relevant performance criteria from the literature to form the performance measurement framework and finally testing the framework through a qualitative descriptive study of a sample of eight Social Enterprises listed on the Social Stock Exchange in the United Kingdom for the period 1 January 2008 to 31 December 2012. The research further proved that it is possible to measure the performance of Social Enterprises and to standardise those measurements for the sector. In this light the financial performance and sustainability criteria were found to provide meaningful results whereas the social performance criteria were prejudiced to an extent by the absence of standardised social reporting in the sector. Further to this the research study found that: (1) the Social Enterprise sector yielded more stable but lower financial returns relative to the stock market, (2) there were no correlations between the sector, GDP and stock market, (3) the social aims have not been achieved in full and (4) the sector was becoming progressively unhealthier with time.