Academic journal article Academy of Entrepreneurship Journal

Measuring Sustainability and Effectiveness of Social Value Creation by Social Sector Actors/social Enterprises, within Developing Countries

Academic journal article Academy of Entrepreneurship Journal

Measuring Sustainability and Effectiveness of Social Value Creation by Social Sector Actors/social Enterprises, within Developing Countries

Article excerpt

ABSTRACT

There has been proliferation of endowments, foundations, NGOs and other organisations operating within many developing countries over the past 20 years as social entrepreneurs/enterprises. These organisations have been supporting and working in developing countries, attempting to transform the quality of lives of their beneficiaries; essentially creating social value. While there is evidence on output and outcome from programmes, there is little evidence of meaningful, sustained impact and hence effectiveness, despite millions of dollars being spent. The lack of this evidence begs the question of the justification for continued funding, state benefits and tax exemptions for the programmes. Additionally, it raises the issue of sustainability of the intervention process, given that the primary source of funding for many of these organisations is grants and/or philanthropic contributions. The paper adopts the Ashoka Foundation 's lead, which measures sustainability/vulnerability of supporting organisations and the effectiveness of these entities in creating and sustaining social value. It employs Kushner 's Model of 'An Open Systems Model of Organisational Effectiveness' to inform the empirical methodology and develops the instrument used. It furthers the process by employing regression analysis in identifying the significant variables in determining organizational effectiveness. The results show that the organisations 'Ability to Adapt' and 'Resource Adequacy' are significant determinants for organizational effectiveness. The results thus present meaningful insights for funders (foundations, endowments, corporations), policy makers and organizations on how they can improve their effectiveness and justify the financial support they received from their donors.

Key Word: Social Entrepreneurship, Social Value creation, Developing Countries, Social Enterprises, Logit and Probit models

INTRODUCTION

Resulting from a number of factors including poor governance and ineffective strategic planning, numerous developing countries have found themselves on a downward spiraling development trajectory. A resulting effect has been the disempowerment of their population manifesting itself in the breakdown of social cohesion, increasing crime and violence. Ultimately this results in decreasing social, political and economic capital amongst the population. In response to this, numerous institutions, which can be classified as social sector actors (SSA) (including foundations, endowments, NGOs and faith-based institutions1), have established social intervention programmes with the aim of improving the quality of lives of the targeted beneficiaries. This is to essentially create sustained social value among their constituents.

Millions of dollars has been spent on these endeavors, yet the evidence of meaningful change is not forthcoming (The UNDP Caribbean HDR (2012) and The UNODC (2010)). The question, which arises, is why. One recurring explanation given is that many of these institutions, while receiving funds to develop intervention strategies, have no clear understanding and methodology of measuring their effectiveness in social value creation. Worse yet there are questions about how sustainable these organisations are in generating and maintaining the value creation strategy. It is this concern, which has motivated this research.

Many of these organisations in developing countries have not examined and identified what are the significant elements that drive social value creation within their organization; and how to effectively develop their intervention strategies. They are locked into an output and outcome mode; failing to focus on impact. The Ashoka Institute, emerged in the 1980s as a response to some of these societal needs that were not addressed by the government and business sector (Brooks 2008), has led the process in measuring social value creation. Over the years they have developed tools to measure the effectiveness of their partners in doing so (Leviner 2006). …

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