Description
This paper presents an exploratory analysis of the emergent reporting practices used by
social entrepreneurs in terms of their institutional settings and strategic objectives. These
reporting practices not only account for financial performance but also disclose more
nuanced and contingent social and environmental impacts and outcomes. Furthermore,
they act as symbolic objects expressing the market orientation of many socially entrepreneurial
organizations in that they aim to provide more complete and transparent disclosure
of a variety of performance impacts. Conceptually, this paper draws upon
approaches developed within the sociology of accounting as institutional practice and uses
three theoretical interpretations to conceptualize the function and effects of reporting, disclosure,
and audit in social entrepreneurship: positivist; critical theorist; and interpretative.
‘We do good things, don’t we?’: ‘Blended Value Accounting’
in social entrepreneurship
Alex Nicholls
Said Business School, University of Oxford, United Kingdom
a r t i c l e i n f o a b s t r a c t
This paper presents an exploratory analysis of the emergent reporting practices used by
social entrepreneurs in terms of their institutional settings and strategic objectives. These
reporting practices not only account for ?nancial performance but also disclose more
nuanced and contingent social and environmental impacts and outcomes. Furthermore,
they act as symbolic objects expressing the market orientation of many socially entrepre-
neurial organizations in that they aim to provide more complete and transparent disclo-
sure of a variety of performance impacts. Conceptually, this paper draws upon
approaches developed within the sociology of accounting as institutional practice and uses
three theoretical interpretations to conceptualize the function and effects of reporting, dis-
closure, and audit in social entrepreneurship: positivist; critical theorist; and interpreta-
tive. A discussion of ?ve case studies leads to the development of a new theoretical
construct – ‘Blended Value Accounting’ – that constitutes a spectrum of disclosure logics
used by social entrepreneurs to access resources and realize organizational mission objec-
tives with key stakeholders. Conclusions consider some further questions around socially
entrepreneurial reporting practices and strategies and suggest some new lines of research
going forward.
Ó 2009 Published by Elsevier Ltd.
Introduction
Over the past 10 years, ‘social entrepreneurship’ has
emerged as an important set of actions and discourses
for social activists, policy makers, academics and the media
(Economist, 2005a, 2005b, 2005c, 2006a, 2006b, 2006c,
2006d, 2007a, 2007b, 2009; Nicholls, 2006, 2009a). More-
over, the number of social entrepreneurs and social enter-
prises is rising globally, as is their in?uence and impact
(Bornstein, 2004; Drayton, 2002; Harding, 2004; Nicholls
& Young, 2008). In both the USA and UK such organizations
are increasingly being portrayed as having a key role to
play in welfare and environmental policy innovation going
forward, as well as in helping to restore economic activity
post the global recession (Hutton & Schneider, 2008; Mair
& Seelos, 2007; Prahalad, 2005). In the global south, social
entrepreneurship is also well-established as playing an
important role in the provision of public goods on a spec-
trum from small-scale, local solutions to poverty and social
deprivation (i.e. co-operatives) to functioning as a quasi-
government in terms of welfare provision and employment
(i.e. Grameen and BRAC in Bangladesh: see Yunus, 1998).
However, despite the importance of social entrepreneur-
ship at the ?eld level, scholarly interest in the subject has
been limited and, as a result, social entrepreneurship re-
mains distinctly undertheorized (Dees & Battle Anderson,
2006; Mair & Marti, 2006; Nicholls, 2009a; Nyssens, 2006).
Social entrepreneurship is de?ned here as any innova-
tive action that individuals, organizations, or networks
conduct to enhance or recon?gure existing institutional
arrangements to address the inadequate provision, or un-
equal distribution, of social and environmental goods
(Dees, 1994, 1998a, 1998b; Light, 2008; Nicholls, 2008a).
Social entrepreneurship ranges from macro-level interven-
tions that ?ll ‘institutional voids’ in existing societal struc-
tures and arrangements (such Grameen Bank’s and BRAC’s
work in addressing the lack of ?nancial services for the
0361-3682/$ - see front matter Ó 2009 Published by Elsevier Ltd.
doi:10.1016/j.aos.2009.04.008
E-mail address: [email protected]
Accounting, Organizations and Society 34 (2009) 755–769
Contents lists available at ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
poor in Bangladesh) to micro-level technological solutions
to local market failures (such as Kickstart’s development
and marketing of a new, low cost, foot pump for agricul-
tural irrigation in East Africa). It is also typi?ed by creativ-
ity and bricolage – the use of available resources, practices,
cultural artefacts or institutions in new combinations to
achieve change (Mair & Marti, 2006; Nicholls & Cho, 2006).
The exploratory study presented here aims to address
one important gap in social entrepreneurship research by
offering a theoretical analysis of its social impact reporting
practices in terms of their institutional settings and strate-
gic objectives (see Nicholls, 2008b, in press for some initial
work in this area). The reporting practices evident in an
analysis of social entrepreneurship are emergent and dy-
namic – drawing upon existing practice but also, in the
process, innovating and reshaping these practices. The
developments in social impact reporting seen in social
entrepreneurship are generating innovations over time
and are consistent with the bricolage evident in social
entrepreneurs’ attitude to problem-solving more generally
and, to go further, represent one of the unique features that
set such action apart from other social sector organiza-
tions. It is argued below that these emergent reporting
practices constitute a spectrum of disclosure logics that so-
cial entrepreneurs exploit strategically to support their
various mission objectives with key stakeholders. Such
reporting practices not only account for ?nancial perfor-
mance but also report more nuanced and contingent social
and environmental impacts and outcomes. Furthermore,
the new social reporting practices themselves act as sym-
bolic objects (Meyer & Rowan, 1977) demonstrating the
core ethos of many socially entrepreneurial organizations:
‘we do good things: don’t we?’ (FRC, 2004). This competi-
tive self-interrogation of social performance and impact
has been summarized as the ‘moral obligation’ of social
entrepreneurs to perform better and be more accountable
than other social purpose organizations (Black, 2003). Such
competitive behaviour re?ects the more market orientated
institutional logics typical of much of social entrepreneur-
ship (Nicholls & Cho, 2006).
Conceptually, the analysis here draws upon approaches
developed within the sociology of accounting as an institu-
tional practice that has demonstrated that the objectivity
and impartially of reporting systems is open to contesta-
tion (Hopwood, 1978, 1983). From this perspective, report-
ing data is a contingent phenomenon that is the product as
much of institutional structures as of rationalist processes
(Power, 1994a, 1994b, 2003). Of particularly signi?cance
here is Palmer and Vinten’s (1998) analysis of a range of
theoretical interpretations applied to charity reporting in
the UK. Their research identi?ed three approaches to con-
ceptualizing the function and effects of charity reporting,
disclosure, and audit: positivist (i.e. reporting data repre-
sents empirical reality: Whittington, 1986); critical theo-
rist (i.e. reporting data enacts control mechanisms: Chua,
1986; Power & Laughlin, 1996; see also Lukes, 1974); and
interpretative (i.e. reporting data acts as a symbolic medi-
ator or space for discussion between organizational prac-
tice and stakeholders: Gambling, Jones, & Karim, 1993;
Ryan, Scapens, & Theobald, 1992). Social entrepreneurs
recognize, and make strategic use of, all three interpreta-
tions to achieve different strategic objectives. At the con-
ceptual level this may seem theoretically chaotic, but on
the ground it ?ts well with the innovation, boundary blur-
ring, strategic instrumentalism, and bricolage typical of so-
cial entrepreneurship in general. Thus, social impact
reporting practices in social entrepreneurship attempt
self-re?exively to enhance social mission rather than
merely to respond to regulation, convention, or other iso-
morphic pressures. There are echoes here with Kantian
(1978; Power, 2007) notions of the ‘regulative’ use of pro-
cesses of enquiry in natural science – namely that, for so-
cial entrepreneurs, social impact reporting does not so
much attempt to capture empirical reality as to act as an
analytic methodology by which social impact can be better
understood and, therefore, more effective operational re-
sponses designed.
With respect to the rationalist/positivist interpretation
on disclosure and audit, social entrepreneurs typically
use reporting practices within internal command and con-
trol structures to enhance performance and improve the
ef?ciency and effectiveness of their delivery of mission
objectives (Nicholls & Cho, 2006). Social entrepreneurs
typically recognize the sub-optimal institutional practices
and structures that create and perpetuate social and envi-
ronmental failure and degradation at both the systemic
and organizational level. Whilst the former requires social
entrepreneurship to act as social movements that trans-
form sub-optimal societal cognitive frames by innovation
at the macro-political level (Zald, 2000; Zald & Davis,
2005), the latter focuses on micro-internal change at the
level of organizational practices and action. In both cases,
the market orientation of social entrepreneurship provides
a competitive strategic impetus to improve performance
impact.
With respect to the critical realist interpretation,
changes in the resource landscape have been important
drivers of some new social impact reporting practices.
Increasingly, foundations, governments, and high net
worth individuals have demanded more reliable monitor-
ing of the outcomes of their grant inputs (increasingly seen
as social ‘investment’ or contractual obligation within a
quasi-market context: John, 2006, 2007). Traditional mod-
els of transactional philanthropy, that reported perfor-
mance success by the number and variety of grants
allocated, have been replaced by a new investment philan-
thropy that measures success as a function of maximizing
the impact of the donor’s capital ‘investment’ by the total
(social) value created (Anheier & Leat, 2006; Bernholz,
2004; Bishop & Green, 2008). This latter approach is also
being extended in a venture philanthropy model that not
only pays great attention to the impact ‘return’ on philan-
thropic investment, but also has a highly engaged, even
interventionist, approach to the strategic management of
the recipient organization (John, 2006). The philanthropic
perspective on performance has, therefore, moved from a
focus on reporting philanthropic inputs to an emphasis
on disclosing grantee organizational outputs and outcomes.
Second, as a consequence of the grant scarcity that fol-
lowed the stock market crash of early 2000 (when many
philanthropic funds had to cut back on capital spending),
more and more social purpose organizations have turned
756 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
to earned income strategies to survive thus engaging – in
many cases for the ?rst time – with market competition.
This produced the social enterprise model that combines
a social purpose with a clear business proposition (Bos-
chee, 1995; Boschee & McClurg, 2003; Dees, Emerson, &
Economy, 2001). As social enterprises adapted competitive
market models to their social purpose, regulation and
investor pressure required them to go beyond charity
reporting and adopt the reporting practices found in com-
mercial organizations. Typically this increased the report-
ing burden on the organizations, but also offered the
opportunity to assess some aspects of performance – nota-
bly ?nancial sustainability – in a more rigorous way.
Finally, the interpretive conceptualization of the pur-
pose of reporting practices corresponds to social entrepre-
neurs’ heightened attention to their external
accountability and stakeholder engagement framed by a
more social constructivist view of social impact and in?u-
ence (Dart, 2004; Gray, 2002; Kendall & Knapp, 2000; Pa-
ton, 2003). Under conditions of late modernity (Giddens,
1990), systems of performance reporting, audit, and risk
management have been recognized as key legitimating
features of all successfully functioning organizations (Aus-
tin, 1996; Power, 1994a, 1994b, 2007; Rousseau, 2006).
Disclosure practices thus build an argument for (or
against) society granting the reporting organization a man-
date to operate by creating (or destroying) perceptions of
its accountability and legitimacy (Jepson, 2005; Nicholls,
2008b, in press; Suchman, 1995). In social entrepreneur-
ship, increased attention to accountability re?ects the
changing institutional context within which its organiza-
tional legitimacy is constructed. There are two quite differ-
ent trends underpinning these changes.
On the one hand, there is a ‘top down’ movement to-
wards adopting business models and reporting practices
in the social sector based on the assumption that they en-
hance stakeholder accountability, improve transparency,
and, therefore, offer better performance legitimacy. This
rationale is evident on the UK government’s approach to
supporting the growth of social enterprise within a mixed
market for the delivery for welfare services (OTS, 2006). On
the other hand, there is a ‘bottom up’ trend towards facil-
itating greater stakeholder engagement in designing the
reporting practices that affect them (e.g. Keystone; see Ja-
cobs, 2006). The interpretive context of the new social im-
pact reporting as accountability enhancement can be seen
as being characterized by a tension between these two ap-
proaches. This tension contrasts business logics that aim
for the marketization of social objectives and an attendant
?nancialization of their social outputs/outcomes with non-
for-pro?t logics that give primacy to the development of
more nuanced and bespoke reporting practices that re?ect
bene?ciaries and their speci?c contexts. This dichotomy
re?ects a larger debate within social entrepreneurship cen-
tred on the role and value of business and enterprise as the
preferred normative models for action across society as a
whole (Dart, 2004).
Following this introductory section, the current land-
scape of performance reporting in the social sector is pre-
sented. The range of social impact reporting practices
available to social entrepreneurs is then set out. Following
this, ?ve brief case studies are presented that highlight dif-
ferent strategic approaches to social impact reporting in
terms of the available disclosure practices. Case study
methodology is used here to allow comparative analysis
to be carried out at the organizational level (Miles &
Huberman, 1994; Ritchie & Lewis, 2003). Given the lack
of existing research on social impact reporting in the social
entrepreneurship area, the case approach is also appropri-
ate to this exploratory study of reporting phenomena
embedded in their context. A discussion of the cases leads
to the development of a new theoretical construct –
‘Blended Value Accounting’ – that is used to illustrate
howsocial entrepreneurs use reporting practices creatively
as strategic tools to access resources and realize organiza-
tional mission objectives. Finally, conclusions consider
some further questions around the new social impact
reporting practices and strategies and suggest some lines
of research going forward.
The primary empirical focus here will be on the UK,
since this represents one of the most developed institu-
tional settings for social entrepreneurship (OTS, 2006). Fur-
thermore, a discussion across multiple geographies would
present signi?cant analytic challenges in terms of country
speci?c legal structures and regulatory regimes. Neverthe-
less, the conceptual discussion developed here has rele-
vance across many other cultural settings and this is
considered further in the conclusions. Moreover, the con-
ceptualization of Blended Value Accounting in social entre-
preneurship developed here offers a rich set of
opportunities for future research of relevance not only to
social sector organizations, but also to the wider reporting
and accounting community. As commercial ?rms and gov-
ernments attempt increasingly to capture their social and
environmental impacts social entrepreneurs and their
innovative reporting practices offer new models of how
such objectives may be more effectively achieved.
Performance reporting in the social sector
In commercial settings, the main systems of perfor-
mance reporting have become established in accounting
standards via a combination of common practice and reg-
ulation that has largely evolved over the last hundred years
(Hopwood, 1983; Hopwood & Miller, 1994). The universal
unit of performance measurement is ?nancial, and
accounting conventions have stabilized over time to sup-
port the production of regular, comparative, and longitudi-
nal data (see Miller, 1994). In the public sector, welfare
economics (Arrow, 1951; Chipman & Moore, 1978; Feld-
man, 1980; Little, 1950; O’Connell, 1982) has developed
to inform public expenditure decision-making with quan-
titative analysis of performance and impact and has sup-
ported a trend within New Public Management for
reporting on more evidence-based policy (Bevan & Hood,
2006; Hood, 1991; Osbourne & Gaebler, 1992). Since the
1980s market economics – and its attendant performance
reporting logics – has also entered the mainstream of pub-
lic policy discourses with the consequence that league ta-
bles and other quasi-market reporting mechanisms have
been created to make public sector performance informa-
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 757
tion more generally available (see, for example, LeGrand,
2003; LeGrand & Bartlett, 1993).
In contrast, the social sector has largely operated under
conditions of limited performance reporting with few
accounting conventions and the minimum of regulation
around disclosure (Clotfelter, 1992; DiMaggio & Anheier,
1990; Edwards & Hulme, 1995, 1996; Forbes, 1998). For
example, whilst the ‘social’ accounting movement has at-
temptedto(re)connect corporate ?nancial performance with
its social and environmental context over the last decade
(Elkington, 1997; Gray, 2002), charityregulationintheUKre-
mains largelyunchangedfromits original eighteenthcentury
model (see, for example, Connolly & Hyndman, 2000). The
?rst comprehensive account of UKcharity reporting revealed
this regulationtobe hardly?t for purpose whenit catalogued
a fragmented and inconsistent approach to charity account-
ing (Bird & Morgan-Jones, 1981) with non-mandatory
reporting requirements resulting inwidespread non-compli-
ance (Hines &Jones, 1992). Morerecent regulationwithinthe
Charity Law Act (1996) standardized charity reporting prac-
tices and stressed the need for compliance, but there has yet
to be any comprehensive review of its impact. The striking
lack of rigorous reporting practices across much of the social
sector can be explained by a number of factors.
First, there is the question of what is to be measured and
reported. There is a widespread perceived dif?culty in
establishing the relationship between complex input fac-
tors (grants, volunteers, market income, social capital,
etc.) and the social impacts that correspond to the mission
objectives of such organizations (Kendall & Knapp, 2000).
Unlike businesses that operate in narrow and well-de?ned
commercial spaces structured around markets, social sec-
tor organizations operate across all areas of society and,
as a consequence, engage with a wide diversity of resource
inputs (actual and ‘in kind’: e.g. donations, grants, member-
ship fees, volunteer time, government subsidies, commer-
cial income, etc.), function in a plethora of institutional
settings (market and non-market) and generate multiple,
distinctive, non-comparable outputs. The institutional
complexity of social sector action also makes deadweight
calculations formidably dif?cult (Nicholls, 2004a).
Second, there is the question of how to measure what is
to be reported. As yet, there are no standardized calculative
mechanisms for social value creation, nor any comparative
unit of measurement (Paton, 2003). Within welfare eco-
nomics it has been suggested that the value of a social good
may be priced at what a bene?ciary or consumer would be
willing to pay for it (Clotfelter, 1992; Kendall, 2003) and
this allows performance outputs to be compared with re-
source inputs. Yet, such valuation fails to support the gen-
eration of effective performance data in contexts where
there are no comparable or proxy goods or services avail-
able to the market. Since social purpose organizations typ-
ically operate in these ‘market failure’ spaces (Nicholls,
2006), welfare economics has proved to be of limited help
in providing performance measures. Similarly, since they
also work across a broad spectrum of heterogeneous activ-
ity, it is very dif?cult to demonstrate comparable perfor-
mance reporting measures. How, for example, can a
reduction in social exclusion via employment creation be
quantitatively compared to the rehabilitation of a drug
user? The importance of longitudinal reporting is also
problematic: for example, the assessment of the perfor-
mance of an ex-offender rehabilitation unit is unlikely to
be valid in time frames less than several years. Similarly,
the value of life-saving interventions – such as those pro-
vided by many international aid agencies – could be seen
as being priceless. The historic result of these reporting dif-
?culties has been that resources are typically allocated to
social purpose organizations based on trust, reputation,
market positioning, or mission alignment between the
source and recipient of the resources, rather than on dis-
closed performance (Foster & Bradach, 2005).
Third, there is the issue of what is the purpose of mea-
surement and reporting. Giddens (1990) noted that mod-
ern economic interactions are complex and increasingly
dehumanized and in this context ‘systems trust’ has
emerged to provide proxies for personalized interactions.
Power (2007) suggested that the rise of these new trust-
based relationships has generated an ecosystem of actors
and systems that can act for the principals in economic set-
tings and, thus, reduce their risk. These include internal
control systems, public disclosures and regulation, and a
third party audit ‘industry’. Social purpose organizations
have typically been accorded signi?cant levels of trust
based on their stated objectives rather than their perfor-
mance reporting: the social impact of such organizations
was taken as largely self-evident due to their stated public
mission focus and non-distribution requirement (DiMag-
gio & Anheier, 1990). As a consequence, statements of so-
cial mission and organizational form have traditionally
acted as risk mitigation proxies for the ef?ciency and effec-
tiveness of management and operations and detailed per-
formance reporting has typically been absent from the
social sector (Edwards & Hulme, 1995, 1996). For example,
the adoption of charitable status has acted as a proxy for
the effective use of donor money and government subsidy.
Similarly, non-governmental organizations are usually
granted a societal mandate to represent the public interest
on speci?c issues by virtue of their stated independence
and – sometimes – membership/supporter numbers. In
both cases the actual social impact of such organizations
is often unmeasured and is typically subject to limited dis-
closure. This cognitive legitimacy ‘surplus’ (Jepson, 2005;
Lister, 2003; Nicholls, 2008b; Suchman, 1995) convention-
ally accorded by society to social purpose organizations
has resulted in less demanding reporting regulations than
for commercial organizations (that lack such a surplus)
and has modi?ed perceptions of agency risk for resource
providers and other stakeholders such that more stringent
performance measurement and disclosure has been con-
sidered unnecessary. This legitimacy surplus has had two
effects. First, it has reduced the public accountability of
charities, non-governmental organizations, and other so-
cial purpose actors (Jacobs, 2006; Jepson, 2005). Second,
it threatens to undermine their performance impact since
there is a reduced incentive to generate the data that could
help shape strategic innovation and future operational
improvements (Nicholls, 2008b, in press). The conse-
quence of such a (perhaps unjusti?ed) cognitive legitimacy
surplus has been a range of sub-optimal performance out-
comes across the social sector (Bishop & Green, 2008; Col-
758 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
lier, 2007; Moyo, 2009) and the emerging potential for a
legitimacy and performance ‘crisis’ in many parts of the so-
cial sector that could, ultimately, have serious negative re-
source implications (Jepson, 2005).
Social entrepreneurs recognize that existing models of
social impact reporting are inadequate for social purpose
organizations that aim to innovate in the context of long-
standing institutional failures. This is because conventional
reporting practices have contributed to the persistence of
these dysfunctions by failing to demonstrate the full value
creation opportunities offered by such institutional voids
(Mair & Marti, 2006). As a consequence, incentive struc-
tures are skewed such that, on the one hand, they discour-
age new organizations from entering the empty
institutional spaces and, on the other, fail to drive perfor-
mance improvement or innovations in any incumbent
(and de facto failing) organizations. Elsewhere, this type
of reporting dysfunction can be seen in the failure of stan-
dard accounting practices to capture environmental exter-
nalities or properly to account for the real value of public
goods (the so-called Tragedy of the Commons).
In this context, social entrepreneurship represents –
amongst other things – a disruptive response to this sub-
optimal reporting status quo by innovating its accounting
practices and disclosure techniques around a set of compet-
itive market orientations and logics to address social or
environmental mission objectives (Alvord, Brown, & Letts,
2004; Dees, 1994, 1998a, 1998b; Leadbeater, 1997; Light,
2008; Nicholls, 2004a, 2006, 2008a). Social entrepreneurs
innovate both in their use of existing reporting practices
and by creating entirely new approaches that go signi?-
cantly beyond regulatory requirements. In tandem with
these practice innovations, larger conversations about the
structure of impact reporting and accountability have also
been evident in development NGOs (e.g. the BOND, 2006),
environmental organizations (Jepson, 2005) and charitable
foundations (Edwards & Hulme, 1995, 1996: for a summary
see Nicholls, 2008b). The new – often hybrid – operational
models of social entrepreneurship blur sector boundaries
(often, but not exclusively, between business and the social
sector: Dees, 1994) and are re?ected in newreporting prac-
tices that go beyond the requirements of regulation to act
as strategic innovations designed to drive improved perfor-
mance impact and better functioning stakeholder account-
ability (Nicholls, 2008b). Moreover, reporting innovations
in social entrepreneurship aimto give equal strategic atten-
tion to capturing and disclosing social and ?nancial value
creation in combination. The cases below illustrate a range
of responses to the challenges of disclosing ?nancial and so-
cial value creation, but, ?rst, to provide an analytic context
for the subsequent empirical data, the larger landscape of
social impact reporting practices is set out.
Social impact reporting practices
Social entrepreneurs are highly innovative in their orga-
nizational strategies (Nicholls, 2006). In many cases their
willingness to explore new hybrid organizational forms –
including partnerships across the public, private, and social
sectors – generates the innovation that allows intractable
social and environmental problems to be successfully ad-
dressed. By rejecting the conventional boundaries be-
tween, for example, charity and the market, social
entrepreneurs are able to ?ll the institutional voids so typ-
ical of social and environmental market failure (Mair &
Marti, 2006). As a consequence, social entrepreneurship
is present in a wide variety of organizational forms and
incorporations, each of which has its own reporting con-
ventions and regulations. In the UK these include: charities
(trading or otherwise); industrial and provident societies;
companies limited by guarantee; companies limited by
shares (perhaps the most common non-charitable form);
public limited companies; and unincorporated voluntary
organizations. In addition, new legislation in the UK in
2005 established a distinct legal form especially for social
enterprise: the Community Interest Company (CIC). To
date over 2500 CICs have been established. Elsewhere in
the world, social entrepreneurship is found across a range
of legal forms such as Social Co-operatives in Italy, the
501(c)(3) and L3C forms in the USA, the Section 25 Com-
pany in India, and the Sole Proprietorship Company in Uk-
raine that appoints a board member as the ‘owner’ rather
than the original entrepreneur to ensure against mission
drift. The range of options for social entrepreneurship
incorporation in the UK and their attendant reporting
requirements are set out in Table 1.
In the case of each form of incorporation different an-
nual reporting and disclosure regulations apply including:
annual report of audited ?nancial accounts; CIC34 activity
report; Trustees’ Report of charity objectives. Furthermore,
social entrepreneurs have added two important elements
to the landscape of regulated reporting: a quantitative so-
cial return on investment assessment (SROI) model; and a
qualitative enhanced social audit report. Taken together
these reporting models constitute a spectrum of reporting
options that social entrepreneurs use strategically to en-
hance performance and accountability. Each is brie?y de-
scribed next: they are ordered in a sequence from those
that focus on quantitative ?nancial data to those that are
more qualitative and focus on capturing social value
creation. The logic of this sequencing is discussed further
below in terms of Blended Value Accounting and its
attendant conceptual logics.
Annual report of audited ?nancial accounts
All socially entrepreneurial organizations (including
charities) that are registered as companies are required
to produce annual ?nancial accounts and ?le them with
Companies House. The accounts are usually audited
(dependent on turnover) and typically include a balance
sheet, a consolidated statement of ?nancial activities (typ-
ically a pro?t and loss account), and a cash-?ow statement.
In addition, larger organizations may report on the ?nan-
cial statements with detailed notes including further infor-
mation about voluntary income and grants (if appropriate),
stakeholder investments, staff costs, and directors’ remu-
neration. Often the ?nancial accounts are included as part
of a larger, more descriptive, company annual report that
can include details of the organization’s (positive) social
interventions and sustainability practices.
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 759
Social return on investment (SROI)
The social return on investment (SROI) framework
was ?rst devised by the Roberts Enterprise Development
Fund (Emerson, 1999, chap. 8, 2003; REDF, 2000) as an
attempt to capture and monetize the full value creation
of their employment services programmes in San Fran-
cisco. The objective was to develop a credible methodol-
ogy for the ?nancial calculation of the often unreported
bene?ts of work integration activities that could then be
set against programme investments to form a more
holistic (and, therefore, realistic) cost-bene?t analysis.
More recently the methodology has been extended fur-
ther by the New Economics Foundation (Nicholls,
2004b). The SROI model is in three parts: the ?rst cal-
culates the full Blended Value of a project (combining
its enterprise/?nancial value creation and a monetized
representation of its social impact value); the second
establishes the ?nancial investment in the project; the
third then calculates the blended return on investment
(combining the enterprise and social returns). In order
to follow the SROI methodology effectively, a number
of other issues must also be considered (Nicholls,
2004b, p. 11). First, the organizational boundaries must
be set – this allows a clearer picture of the range of
stakeholders to be established and the key social objec-
tives to be identi?ed (and helps identify the materiality
of outcomes). Second, an ‘impact map’ should be drawn
– this clari?es how impact is intended to be achieved.
Typically, this process is conceptualized as linking in-
puts to outputs to outcomes to impacts. In this model,
inputs represent the total costs of the project, outputs
the simple quantitative effects (such as sales, number
of jobs created, etc.), outcomes the direct and indirect
changes in target stakeholders and their communities
(improved education, better levels of health, longitudi-
nal factors, etc.), and impacts the changes discounted
by a ‘deadweight analysis’ (the extent to which out-
comes would have happened without any interventions
by the organization). Finally, appropriate indicators or
?nancial proxies must be identi?ed to capture the ele-
ments within the impact map and monetized values
for them determined.
CIC34
The Community Interest Company legal form was intro-
duced by the UK government with new legislation on July
1st 2005 (The Companies Act – Audit, Investigations and
Community Enterprise – 2004). The primary policy objec-
tive was to provide a unique form of incorporation for so-
cial enterprises as a means of more clearly identifying such
organizations to potential customers and investors. Specif-
ically with respect to the latter, CICs are permitted to offer
equity (subject to an ‘assess lock’ that protects against
take-over and, thus, secures the CIC’s public bene?t focus)
and (capped) dividends designed to attract new invest-
ment into the sector. CIC’s are required annually to submit
to Companies House their ?nancial accounts (the level of
detail of which is dependent on their turnover) and a be-
spoke Community Interest Company Report (CIC34). The
latter sets out their general activities, how they have con-
sulted their stakeholders during the year, details of direc-
tors’ remuneration, as well as information about any
transfer of assets, dividends offered, and interest paid. CICs
are subject to the attention of a speci?c Regulator within
Companies House. The reporting requirements of CICs mir-
ror those of charities and are best described as ‘light touch’.
To February 2009, over 2500 CICs have been registered in
the UK. Of the 845 CICs that were registered by December
2007 and, therefore, were required to submit an annual re-
port for 2007/8, 771 have so far sent returns to Companies
House. This represents a good level of compliance (91%).
Enhanced social audit
In contrast to the ‘social’ reporting typically carried out
by businesses as part of their Corporate Social Responsibil-
ity (CSR) activities that aims to addresses non-core organi-
zational process issues and some of the externalities of
strategic actions (Power, 2007), enhanced social audit in
social sector organizations focuses on reporting progress
Table 1
Social entrepreneurship: forms of incorporation and reporting requirements in the UK.
Form of incorporation Annual reporting requirements Social entrepreneurship examples
Charity Annual report to Charity Commission to
include public bene?t statement and
consolidated ?nancial accounts
a
Hackney Community Transport
Industrial and Provident Society (IPS) Financial accounts to companies house
c,b
Baywind Energy Co-op.
Company limited by guarantee Financial accounts to companies house
c
Oxfam
Company limited by shares Financial accounts to companies house
c
Divine Chocolate Ltd.
Public limited company Financial accounts to companies house
c
Cafedirect
Unincorporated voluntary organization None Oxford Fair Trade coalition
Community Interest Company (CIC) Financial accounts + and CIC34
report on activities to companies house
Develop Your Child
a
There is some variation depending on turnover: see Table 2.
b
IPSs can also be charities and would then be required to submit a Trustees’ Report as well as ?nancial accounts.
c
Registered companies can submit unaudited ?nancial accounts if they satisfy two or more of the following: (i) aggregate turnover must be £5.6 million
net (£6.72 million gross) or less; (ii) the aggregate balance sheet total must be £2.8 million net (£3.36 million gross) or less; (iii) the aggregate average
number of employees must be 50 or few.
760 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
towards mission objectives within core activities. Such so-
cial audit reporting typically acts as a longitudinal assess-
ment of internal performance and tends to use
descriptive metrics – such as pro?les of target populations
or stakeholder characteristics – as well as some ?nancial
information. Such reports largely conform to Zadek’s
(1998) principles of social accountability. This audit infor-
mation provides a narrative of particular actions and objec-
tives and can be used to demonstrate progress over time.
Social audit is usually qualitative in approach. This means
that it focusses on impact measurement through account-
ing for speci?c – and, therefore, often partial – descriptive
outcomes of strategic action. Such metrics are typically hu-
man in scale, looking at individual or community level
changes or developments, and largely non-comparative.
Qualitative metrics have an organizational focus, address-
ing the issue of ‘what is it we do?’ One of the most prob-
lematic areas for such metrics is de?ning the appropriate
focus of measurement. For example, in one venture it
may be a community account of the health effects of new
wells sunk with developmental money, for another it
may be the individual economic impact of providing shel-
ter to the homeless. Clearly, such reporting is highly indi-
vidualistic and rarely comparative.
Trustees’ Report
All registered charities are required to ?le an annual
Trustees’ Report that sets out the organization’s principal
aims and objectives (and the progress made in ful?lling
them during the past year) as well as its structure, gover-
nance and management arrangements (including a state-
ment of the trustees’ responsibilities). It may also include
a brief ?nancial review and a note of future plans and
objectives. The level of reporting is determined by the
turnover of the charity, with the smaller organizations only
required to submit a short statement of their objectives
and activities (see Table 2).
Case studies
Having established the range of social impact reporting
practices available to social entrepreneurs, ?ve short case
studies are set out next to illustrate how social entrepre-
neurs are using social impact reporting strategically. The
cases are sequenced to correspond to the previous section.
Whilst new social impact reporting practices are emerging
across the world (indeed, SROI originated in the USA), the
UK represents, perhaps, the most developed social report-
ing context in the world.
1
As a consequence – and to avoid
getting lost in a fog of de?nitional and legal confusion – all
?ve cases come from this single cultural context. Despite
this limitation, it is suggested here that the conceptual
points raised by the analysis of UK practice have interna-
tional relevance.
Annual report of audited ?nancial accounts: Cafédirect
(www.cafédirect.co.uk)
Cafédirect was founded in 1991 by four UK-based char-
ities: Equal Exchange UK; Traidcraft; Twin; and Oxfam.
Since then, it has grown into the UK’s largest Fair Trade
only company. The founders’ aim was to get small produc-
ers a better price for their crops and greater opportunities
for their communities. Cafédirect’s range has expanded
from a single coffee product in 1991 to a portfolio of over
twenty products, including gourmet coffees, speciality
teas, and drinking chocolate. Its turnover in 2008 was
£22.3 million with pre-tax pro?ts of £901,000. Cafédirect
works with 39 grower organizations across thirteen devel-
oping countries and engages with 260,000 farmers to im-
prove the lives of more than 1.4 million people. Since
2000, Cafédirect has invested more than £3.3 million of
its pro?ts directly into the businesses and communities
of growers paying more than £13 million over and above
market prices for raw materials.
Cafédirect was ?nancially supported by its founders for
over twelve years and initially operated as a charity. How-
ever, with sales growth averaging between 20% and 30%
per annum, the company’s need for working capital and
new investment in marketing increased rapidly. In 2002/
2003, Cafédirect’s board explored the possibility of raising
venture capital, but some of the founders were concerned
about engaging with a venture capitalist. In 2003, the com-
pany decided to raise capital through an alternative share
issue in order to invest in its brand, repay borrowings, fund
working capital, and invest in computer systems. Having
changed its form of incorporation to a PLC, Cafédirect suc-
cessfully raised £5 million of equity (at £1 per share) from
4500 new investors in the ?rst half of 2004. The share issue
was oversubscribed. The dividend for 2008 was set at 2p
per share.
Table 2
Charity Annual Return: Summary of Requirements.
Income in the ?nancial period
reported upon
Part A RSI Part B Part C
Charity Information (basic register
information/annual update)
Reporting serious
incidents declaration
Financial
information
Summary information
return (SIR)
£10 K or less
*
>£10 K–£25 K
*
>£25 K–£500 K
* *
>£500 K–£1 M
* * *
>£1 million
* * * *
1
This parallels the development of social investment which is also most
advanced in the UK. In both cases the involvement of an engaged and
sympathetic government for over a decade has been an important
contributory factor (OTS, 2006).
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 761
As a PLC, Cafédirect is required to ?le detailed ?nancial
accounts with Companies House annually. The 2007 an-
nual report was carefully structured to re?ect the mission
objectives of the social enterprise and its market position-
ing: ?nancial results are discussed only after a long section
devoted to producer stories and details of the producer
partnership programme’s achievements and expenses
(£1.4 million of pro?ts spent on the programme). Before
the audited ?nancial statements, the remainder of the an-
nual report focused on product quality, environmental
stewardship, outreach and education activities, account-
ability and governance, and producer networks. In the nar-
rative section of the annual report only 8 pages out of 53
are devoted to discussing the business activities of Cafédi-
rect directly and only 39 out of the total of the 84 pages of
the full report concern ?nancial disclosure. Despite being a
social enterprise with shareholders, the annual report
sends a clear message that the organization’s social mis-
sion objectives are a priority above its ?nancial
achievements.
SROI: Wise Group (www.thewisegroup.co.uk)
The Wise Group is a trading charity that aims to provide
training and job opportunities for the long-term unem-
ployed by building intermediate labour markets (ILMs). It
was formed in 1983 in Glasgow originally as an energy
conservation initiative, that later diversi?ed into employ-
ment and training services across a range of sectors includ-
ing childcare, recycling, of?ce work and call centres. Since
1983 the Group has helped over 28,000 people into work.
In 2008 it created employment opportunities for 3337 peo-
ple, its highest ever ?gure in a single year. The Wise Group
currently has a staff of 420 and operates in Scotland and
the North East of England. Much of its work is done in part-
nership with other organizations and agencies, including
the Scottish Government, the Energy Saving Trust, and
the Northern Rock Foundation. It turnover in 2008 was
£21 million.
In accordance with charity law, the Wise Group pub-
lishes an annual Trustees’ Report and full ?nancial ac-
counts. However, it also aims for a range of further social
impact disclosures and reporting. In 2004 the Group pub-
lished its ?rst detailed analysis of its social impact – ‘Com-
munity Impact Statistics’ – in terms of jobs and training,
community and resident impact, and the ?nancial value
creation of its investment in communities, additional ILM
wages, the reduction in bene?t claims, and energy savings.
In 2007, the Wise Group published its ?rst social return on
investment report (SROI) as part of a pilot programme
managed by Forth Sector and funded by the European Un-
ion EQUAL programme together with the Communities
Scotland’s Social Economy Unit. The aim was to test how
far SROI methodology could be used to measure and com-
municate the full range of impacts and value creation in
social sector projects. The SROI analysis focused on one
speci?c project based in Cadder – north of Glasgow – that
aimed to combine environmental regeneration of run
down housing stock with employment creation in the local
economy. The research demonstrated that a range of
monetizable impacts were created including: increased
training and employability opportunities; reduced state
welfare spending; increased income tax; reduced mainte-
nance costs of improved areas; improved sustainability of
regeneration projects. Twelve ?nancial indicators were
used to measure and report on these impacts. These in-
cluded: welfare bene?t savings from temporary employ-
ment; increased income for the participants; increased
employability of those not entering employment; in-
creased future earning potential arising from quali?cations
achieved; drugs and mental health outcomes. The SROI
analysis suggested that for every £1 spent, £4.65 had been
realized in added value and that this equated to £14,989
per participant. The Wise Group published its ?ndings in
a SROI report that is publicly available.
2
CIC34: Develop Your Child (www.developyourchild.co.uk)
Originally founded in 2002 as Rebus B2B Ltd. by Alan
Wilson, Develop Your Child (DYC) was incorporated as a
Community Interest Company (CIC) in 2006. The organiza-
tion provides a range of services to support families in
helping develop young people to reach their full potential
through family coaching that improves communication be-
tween parents and their children. The organization also of-
fers supporting literature and video materials. Courses
include one-to-one parent coaching and step-by-step
courses that aim to empower parents via ‘positive parent-
ing’, to assist children in maximizing their potential, to im-
prove intra-family communication, and to increase
children’s self-esteem and con?dence. These services are
designed to be delivered by teachers, educationalists,
youth leaders, or family support workers and all actively
involve parents and/or carers. DYC is based in Kent, UK,
and has a local staff of ?ve coaches and a network of fran-
chized Associates around the world that use its models (in
France, New Zealand, Singapore, Sweden, and USA). The
CIC has created a separate charity – Family Matters (origi-
nally the Develop Your Child Foundation) – that engages
with families in the community.
The majority of DYC’s services and materials are offered
free to its clients, since it gets most of its income from pub-
lic sector contracts to provide parenting services. It is in-
cluded in the UK government’s Commissioners’ Toolkit
database that provides a list of preferred service providers
to every UK local authority.
To date DYC has ?led one set of annual reports to Feb-
ruary 2008. These provide ?nancial information in terms
of an abbreviated balance sheet (DYC’s income is below
the threshold that requires full ?nancial disclosure) and a
CIC 34 report. The latter gives details of services offered
and mission objectives (‘to create personal empowerment’,
‘to change the relationships within families’) as well as
underlining a commitment to stakeholder consultation
after every course offered (‘we are continually reviewing
and revising our material from the feedback we got during
and on completion of our courses’). The latter also func-
tions as a statement of quality control. It is recorded that
2http://www.sroi-uk.org/index.php?option=com_docman&task=cat_
view&gid=23&Itemid=38.
762 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
the CIC’s directors did not take any remuneration during
the year and that there were no issues concerning assets
or share capital. DYC uses the CIC34 to establish its legiti-
macy as a CIC both in terms of the information given
(emphasising how it delivers upon its social mission in
an enterprising manner) and in the act of ?ling the form it-
self (by publicly conforming to the CIC regulations). This
re?ects one of the policy objectives set for CICs, namely
that the legal form would act as a self-identifying brand
to distinguish social enterprises from other organizations.
Enhanced social audit: Furniture Resource Centre Group
(www.frcgroup.co.uk)
The Furniture Resource Centre (FRC) Group is a trading
charity that aims to use business solutions to address so-
cial and environmental problems. The group consists of
four related businesses: a furnishing and removals busi-
ness that provides goods and services to thousands of peo-
ple throughout the UK (Furniture Resource Centre); a
furniture retailer that supplies goods to low income fami-
lies in Merseyside (Revive); a waste management and recy-
cling business that serves over 100,000 households a year
(Bulky Bob’s); a consultancy and training organization that
helps others learn from FRC Groups’s experiences and
those of leading social businesses throughout the world
(the Cat’s Pyjamas). In addition to providing socially and
environmentally positive goods and services, FRC Group
also adds further value by acting as a work integration so-
cial enterprise offering a salary and training to the long-
term unemployed.
FRC Group was originally set up in 1987 as a charity at
the request of the churches in Liverpool. It aimed to pro-
vide furniture to families who had accommodation, but lit-
tle furniture. Initially it was reliant on grant income.
However, in the early 1990s the organization moved from
a charity model to one that more closely resembled a tra-
ditional company creating and selling products and ser-
vices into the competitive market. In 1994, a one-stop
commercial furnishing service for registered social land-
lords was launched and by 2004 a reliance on grant income
had all but been phased out.
FRC Group’s management is explicit about its strate-
gic focus on balancing ?nancial and social value crea-
tion and the tensions this can create. The result is
that overall pro?tability is often reduced by the costs
of its social objectives (for example, the group’s ‘Uni-
versity for the People’, through which its staff can ac-
cess a range of in-work and out-of-work courses and
support activities). The former CEO, Liam Black, com-
mented on the need to develop a ‘shared vocabulary
and management culture that is very much focused
on trying to make sense of this perpetual balancing
act’ (Black, 2003). An important element in this strate-
gic balance has been paying close attention to reporting
social impact. This has been driven by a sense of what
Black has called the ‘moral obligation’ of social enter-
prises to demonstrate their speci?c value-added contri-
butions given their particular advantages (for example,
access to grants) compared to the conventional busi-
ness with which they often compete. FRC Group also
sees the process of social ‘auditing’ as a quality man-
agement system for their operations, raising issues
and exposing mission failures.
In accordance with charity law, FRC Group publishes an
annual Trustees’ Report and full ?nancial statements, but
goes signi?cantly beyond this in its reporting and disclo-
sure practices. Each year the group publishes a detailed
sustainability report that covers not only commercial per-
formance (tellingly called ‘our business’), but also human
resource issues (‘our people’), and environmental perfor-
mance (‘our environmental impact’). FRC Group’s 2005/6
Sustainability Report was shortlisted in ACCA’s UK Awards
for Sustainability Reporting 2006. The 2007/8 annual re-
port also included a SROI assessment to measure and re-
port the full added value generated by the Revive
furniture store. This analysis calculated that every £1 spent
in the store produced a social return of £2.25 by providing
lower cost or discounted furniture to low-income house-
holds that otherwise would rely upon more expensive cat-
alogue or credit options to purchase goods.
In addition, since 2001, FRC Group has published an an-
nual enhanced social audit report that – amongst other
measures – canvasses a range of internal and external
stakeholder assessments of its success in meeting mission
objectives. The group makes a particular point of testing
the impact of its core values – ‘bravery’, ‘creativity’, ‘pas-
sion’, ‘professionalism’ – as part of its reporting. Initially,
this report was titled ‘We Do Good Things: Don’t We?’
deliberately to challenge the legitimacy surplus accorded
to it as a charity (see above). More recently, FRC Group
has introduced a new form of internal performance moni-
toring and reporting in the form of an annual survey titled
– in typical style – ‘How’s It Going? (HiG)’. This aims to
provide a mechanism for staff to discuss their individual
training and career progress. The group’s Social Audit Re-
port won best Social Report at the ACCA UK Sustainability
Reporting Awards in February 2005.
Trustees’ Report: Hackney Community Transport
(www.hctgroup.org)
Hackney Community Transport (HCT) was founded in
1982 by a number of local community groups in the Lon-
don Borough of Hackney with the aim of providing afford-
able community transport services for the use of local
voluntary organizations, charities, and community groups.
Initially HCT offered community transport removals, Dial-
A-Ride, and minibus services to the local disabled popula-
tion (as well as others). However, in 2001, HCT secured the
contract to operate the 153 London red bus route which
runs from Islington to Homerton Hospital for Transport
for London. In 2003, HCT added the 388 and 394 London
red bus routes. In 2004, the organization expanded its
operations to the neighbouring London Borough of Wal-
tham Forest when it was contracted to deliver ?ve hundred
local special needs children to school and back each day.
2005 saw further expansion, this time outside London,
when HCT started running the My Bus school routes ser-
vice in and around Wake?eld, West Yorkshire. In 2006,
HCT merged with Lambeth and Southwark Community
Transport to access bus routes south of the Thames for
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 763
the ?rst time and added the W13 red bus service between
Leytonstone bus station and Woodford Wells under con-
tract. The 816 red bus service was added the following
year.
HCT has evolved into a complicated hybrid structure.
HCT Group is the holding company for all operations. It is
a company limited by guarantee (and, therefore, has no
shareholders), which is registered in England and Wales.
The company is also a registered charity. HCT Group owns
a limited company – Hackney Community Transport Lim-
ited – that, in turn, owns all of the share capital in a trading
subsidiary called CT Plus. CT Plus runs the majority of
transport and training services of the Group and owns
the CT Plus trading brand. It became a Community Interest
Company (CIC) in 2007. CT Plus also owns the share capital
in a further subsidiary CT Plus (Yorkshire) C.I.C. that runs
all the services offered in Yorkshire.
In accordance with charity law, HCT ?les an annual
Trustees’ Report and full ?nancial statements. However,
it uses its reporting to underline its organizational culture
as a commercially competitive social enterprise with the
emphasis very much on its ?nancial performance with lit-
tle additional information about its social impact beyond
stating its principle aims and objectives and recording
key output measures (‘increase the provision of red bus
services in London’).
The case studies suggest that social entrepreneurs use
social impact reporting creatively to enhance their per-
formance in terms of both internal and external perspec-
tives. Thus, Cafédirect subverts the annual report of
audited ?nancial accounts format to stress its social mis-
sion impacts in the context of a trading PLC model. This
approach balances a self-legitimation project (social im-
pact reporting gains legitimacy from integration with au-
dited ?nancial accounts) with a wider objective to
demonstrate that a business can also trade for a social
purpose. This is strategically designed to appeal to their
core customers and investors for whom the market-driven
model of Fair Trade is particularly appealing (Nicholls &
Opal, 2005). With HCT Group the situation is reversed.
In this case, the Trustees’ Report is subverted by detailed
?nancial accounts to suggest that HCT is, above all, a
serious and credible business. The strategic objective
here is to present the Group as credible to public sector
transport services procurement of?cers who are condi-
tioned to contract with the private sector. The Wise
Group and DYC both use social impact reporting as a
mechanism to demonstrate their performance to other
key institutional players (both resource providers and
regulators) and also as a project to establish distinct
self-identity as a social enterprise and CIC respectively.
This has an important signalling value outside and inside
the organizations. Finally, FRC Group focuses speci?cally
on performance enhancement via stakeholder engage-
ment in its reporting practices. This constitutes the most
challenging of all the approaches since it requires all
operational systems to be tested and discussed and the
resultant data made public and actioned. This resource
intensive approach is only possible in the context of an
organizational culture that prioritizes ‘bravery’ and
‘creativity’.
Blended Value Accounting
Emerson (2003) ?rst coined the notion of Blended Value
as a conceptualization of the combination of ?nancial and
social outputs and impacts generated by all organizations.
The logic of a Blended Value analysis suggests that, ?rst, all
organizations create both ?nancial and social value, and
that, second, the two types of value creation are intrinsi-
cally connected rather than being in opposition in a zero
sum equation (i.e. to generate more social value an organi-
zation must sacri?ce its ?nancial performance). Emerson
suggested that such zero sum analysis allowed corpora-
tions to ignore their wider impacts (for example environ-
mental externalities). Conversely, it also reduced the
incentives for social purpose organizations to innovate, im-
prove their social impacts, and learn positive lessons from
competitive market models (for example, in terms of re-
source strategies). As part of the Blended Value model,
Emerson suggested that organizations needed to develop
more holistic accounting practices that re?ected their full
value creation (and destruction) activities. Such an ap-
proach has been operationalized by Generation Investment
Management and can also be seen in some of the recom-
mendations of the Enhanced Analytics Initiative.
3
Building on Emerson, the range of social impact report-
ing practices detailed above can be conceptualized as a
spectrum of disclosure logics constituting a Blended Value
Accounting that is used by social entrepreneurs to access
resources and realize organizational mission objectives
with key stakeholders. Blended Value Accounting captures
an important element of the experimentation and learning
across time demonstrated by social entrepreneurs as they
have combined, adapted, and developed new reporting
practices and then tested the strategic value of each option
against their mission objectives. Blended Value Accounting
approaches stimulate and encourage innovation by not
imposing a prescriptive and simple solution to capturing
multiple values for multiple stakeholders. Rather it enables
different combinations of practices to be explored and
tested over time. This is an ongoing project: for example,
HCT Group, having proved successful in using its disclosure
practices to underline its reputation as ‘business-like’, is
now looking to develop an enhanced social audit report
with which it can access new resources from social
investors.
Blended Value Accounting can be concretized within a
spectrum of reporting practices that do not represent a
prescriptive set of logics or a static overall reporting sche-
ma, but, rather, a conceptual space in which reporting
innovations that allow experimentation and new learning
can emerge (see Fig. 1). Re?ecting Emerson (2003), this
spectrum has as its two poles reporting quantitative ?nan-
cial value creation and reporting more qualitative social
value creation. The Blended Value Accounting spectrum
presents a range of social impact reporting options located
between ?nancial and social accounting as distinct sets of
practices that can be combined to capture the holistic com-
plexity of organizational outputs and impacts. This spec-
3
www.enhancedanalytics.com.
764 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
trum also positions these reporting practices in terms of
the three conceptualizations of the functions of disclosure
noted above (the rationalist/positivist, critical theorist, and
the interpretive/democratic).
As was noted above, these three conceptualizations cor-
respond to different strategic objectives for social entre-
preneurs: positivist reporting practices aim to enhance
operational performance and drive innovation; critical the-
orist practices support resource acquisition; interpretive
reporting builds and maintains organizational legitimacy
(both cognitive and normative: Suchman, 1995). It has al-
ready been noted that social entrepreneurship is character-
ized by a range of market oriented logics that drive
relentless performance improvement and enhanced
accountabilities. Social entrepreneurs map Blended Value
Accounting approaches against these two strategic objec-
tives and the three conceptual manifestations of disclosure
and audit to determine the strategic opportunities they of-
fer (see Table 3). For example, enhanced social audit has a
strategic value in the positivistic reporting context in order
to improve stakeholder accountability. Similarly, social re-
turn on investment has a strategic role to play in the crit-
ical theorist conceptualization of reporting as control
mechanism – namely it supports resource seeking from
powerful resource holders such as foundations or venture
philanthropists. Finally, ?ling a CIC34 reports ful?ls a stra-
tegic requirement to demonstrate community bene?t to
key stakeholders (here the state regulator) within the
interpretive theoretical tradition of democratic
accountability.
In this way social entrepreneurs interpret the Blended
Value Accounting spectrum according to the strategic as
well as regulatory contexts in which they operate. This
can lead to the formation of various ‘dashboards’ or more
heuristic combinations of metrics that aim to provide an
agreed set of credible and comparable social performance
data to address multiple strategic ends and various audi-
ences (Acumen., 2006; Cunningham & Harris, 2001; Ken-
dall & Knapp, 2000). Conceptualizing emergent reporting
practices as elements of strategic innovation to support so-
cial mission objectives is a striking feature of social entre-
preneurship. Such ‘institutional entrepreneurship’ (e.g.
Lawrence & Phillips, 2004) sees social entrepreneurs
manipulating institutional structures and narratives to cre-
ate new legitimacies and logics of action. Such action is
also having a wider in?uence as part of a new reporting
landscape in the social sector populated by intermediary
organizations such as New Philanthropy Capital and the
New Economics Foundation. The UK government is also
exploring using social return on investment to assess im-
pact across a range of departments including health.
A ?nal, and signi?cant, strategic objective of the new
social impact reporting is organizational self-legitimation.
It is clear that the drive publicly to address the question
set itself by Furniture Resource Centre Group – ‘we do good
things, don’t we?’ – represents a powerful element within
the socially entrepreneurial mindset. It is a manifestation
of a market oriented and competitive approach that both
drives operational improvement in social entrepreneurship
and demands that it be put to the public test. Thus, the
‘moral vocabulary’ of Blended Value Accounting in practice
combines two modes of control – managerial and demo-
cratic (Drori, 2006) – in one logic of governance. Socially
entrepreneurial organizations aim simultaneously to im-
prove the existing provision of public goods and to demon-
strate their performance impacts to the world at large by
developing a meaningful and relevant reporting
vocabulary.
The conceptual logic here has striking parallels with
Habermassian ‘communicative rationality’. Habermas
(1981) argued – in opposition to Foucault – that human-
kind naturally strives to achieve a consensus on the com-
mon rules of discourse to create a democratic and
transparent dialogue leading to ‘emancipation’ via the in-
nate human capacity to deliberate and pursue rational
interests. This theory distinguishes itself from traditional
rationalist views of the world by suggesting that rational-
ity itself is based on interpersonal and interpretive com-
munication not external structural referents. Habermas
believed that humanity was capable of developing a more
just and equal global order via such discourse ethics. From
this perspective, social entrepreneurs use social impact
reporting practices strategically to build a space for critical
Critical Theorist Positivist Interpretive
Financial
Value
Social
Value
Trustee’s
Report
Annual Report Of Audited
Financial Accounts
CIC 34
Enhanced Social
Audit SROI
(Quantitative Data) (Qualitative Data)
Fig. 1. The spectrum of Blended Value Accounting.
Table 3
Strategic functions of reporting in social entrepreneurship.
Strategic
function
Internal
command
and control
Stakeholder
accountability
Positivist Performance
enhancement
Audited ?nancial
accounts
Enhanced social
audit
Social return on
investment
Critical
theorist
Resource
acquisition
Audited ?nancial
accounts
Social return on
investment
Interpretive Organizational
legitimacy
Enhanced social
audit
Trustees’ Report
CIC34
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 765
and dynamic communication processes in which innova-
tive types of social and environmental value creation can
be negotiated and actioned to better represent the ‘life-
world’ (see also Power & Laughlin, 1996). This process pro-
vides a conceptual unity to the Blended Value Accounting
spectrum and explains the ease with which social entre-
preneurs exploit (and hybridize) multiple organizational
forms and types of disclosure: legal form and reporting
practices are pliable and serve the larger mission rather
than the other way around.
Conclusion
The research presented here has provided a theoretical
and empirical analysis of social impact reporting in social
entrepreneurship for the ?rst time. It has suggested that
social entrepreneurs use social impact reporting in a num-
ber of strategic ways to enhance their performance, access
resources, and build organizational legitimacy. A new con-
ceptual model of social impact reporting has been estab-
lished – the Blended Value Accounting spectrum – and
some further theoretical issues explored. In conclusion,
some of the wider implications of these social impact
reporting innovations are considered.
First, reporting social impact represents a multi-dimen-
sional aggregation of perspectives (often emergent, devel-
oping, and changing), each of which can be ?uid,
contingent, and contested (for analogous interpretive is-
sues in public sector performance measurement see, for
example, Bovaird & Loef?er, 2003; Meyer & Scott, 1992).
Power (2007) noted that all organizations exist within a
‘reputation constellation’ – namely the ‘conceptual, legal
and ethical dynamic in which the boundary between orga-
nizations, their environments, and society as a whole is
negotiated’ (Power, 2007, p. 133). From this perspective
there have been major changes in recent times for social
purpose organizations with new demands being placed
upon them by government, resource providers, and society
more broadly. As has already been noted, Blended Value
Accounting offers a dynamic and multi-layered space for
negotiating reporting practices, but it does not constitute
an agreed calculative mechanism. As a consequence, the
interpretive context of a given stakeholder’s perspective
on social impact performance can directly affect the mode
of calculation and this may require a recalibration of
reporting practice. For example, government procurement
of?cers can ?nd it dif?cult to interpret social enterprise ac-
counts that allocate pro?t to their social mission objec-
tives. When judged from standard accounting
perspectives many successful social enterprises, therefore,
appear to be barely pro?table and, consequently, risky con-
tractual partners compared with other private sector
companies.
Second, whilst the account of the Blended Value
Accounting actions of social entrepreneurs has been taken
here to constitute a largely positive public good in a nor-
mative sense, there may, however, be a dark side to these
reporting innovations. Dart (2004) argued that normative
pressures from the dominant logics of business have lead
many social entrepreneurs to borrow and adapt organiza-
tional models from the commercial sector rather than de-
velop their own unique forms (particularly in the case of
social enterprises). The notion that the imposition of social
impact disclosure on social entrepreneurship represents
the coercive effect of external forces is consistent with
other analyses of the isomorphic pressures inherent in
institutional systems that in?uence measures of perfor-
mance to be con?gured to support external perceptions
of legitimacy rather than to represent a source of organiza-
tional innovation, learning, or effectiveness (Dart, 2004;
DiMaggio & Anheier, 1990; DiMaggio & Powell, 1983). As
a result, they often re?ect larger power structures and nor-
mative social pressures rather than internal processes
(Brunsson & Olsen, 1993; Meyer & Rowan, 1977; Suchman,
1995). This has, in part, been the product of the institu-
tional logic of the competitive, information rich, market
as the best driver of organizational ef?ciency and account-
ability, irrespective of sectoral differences (Bevan & Hood,
2006; Lee 2004; Offer, 2001; though see LeGrand, 2003,
for a more nuanced approach). In a different, but con-
nected, tradition of analysis, it has also been widely argued
that metrics and audit regimes are the product of a positiv-
ist conception of management control, re?ecting socially
constructed power relations and regulatory fashion, rather
than a means of capturing a rationalist ‘reality’ (Power,
1994a, 1994b; Neely, 1998; LeGrand, 2003). Established
critiques of the sometimes dysfunctional role of audit
and performance metrics in the public sector (e.g. Power,
1994a, 1994b, 2003; Rahaman, Lawrence, & Roper, 2004;
Bevan & Hood, 2006) and re?ections on the chequered his-
tory of ‘social’ accounting in the private sector (see Gray,
2002, for a useful review) underline the limitations of con-
ventional measurement processes in capturing social
value.
One interpretation of the new social impact metrics,
then, is as an example of the creeping ‘?nancialization’ of
society. Some see this as part of a larger process of the
‘privatization’ of the social that is also evidenced in the
quasi-market models now commonly used to distribute
social goods in many countries (Osbourne & Gaebler,
1992; LeGrand & Bartlett, 1993; Walsh, 1995; Bovaird,
2006). This take on social entrepreneurs’ activity corre-
sponds to a broader set of democratic concerns around
the increasing normative value given to business and
enterprise as transformative cultural objects within the so-
cial sector (e.g. Collier, 2007; Bishop & Green, 2008; Moyo,
2009). The suggestion that by adopting business practices
the social sector can signi?cantly improve its performance
is controversial but is clearly evident in calls for a signi?-
cant shift in the reporting demands put on the sector
voiced by government and others. The logic of business ap-
plied to the social demands clear representation of perfor-
mance (and return on investment) in comparable ?nancial
terms. Yet, whilst comparability of this sort may look
attractive to some investors or donors, the Blended Value
Accounting spectrum reminds us that a degree of bespoke
reporting is required if social impacts are to be fully ex-
pressed within their appropriate context. The failure of
conventional accounting to capture and value social and
environmental goods to date further demonstrates the
problematic nature of this approach. As a consequence,
766 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
there is a danger that the equivalent of Lukes’ (1974) third
dimension of power may be enacted in social impact
reporting. Namely, that the range of social impact report-
ing options may be limited by a larger ‘manipulation of de-
sires’ or preference shaping by powerful institutional logics
(and the self-interested elites that use them as tools of
domination) that aim to control the values and ideologies
that frame and shape discourses.
Despite these caveats, the Blended Value Accounting
approach appears to have a value beyond social entrepre-
neurship alone. The Blended Value Accounting spectrum
explicitly suggests that there are a range of reporting prac-
tices available to managers that can be used creatively and
adaptively in different contexts and to different strategic
ends. From this perspective, the function and value of such
reporting is ?uid, contingent, and dynamic: but not passive
or unstrategic. This emphasis on diversity and contingency
is in contrast to the institutionalization of many reporting
practices across all three sectors of society that are static
and resistant to reform. Given the recent history of stan-
dardized accounting systems proving un?t for purpose as
risk management/control systems in ?nance either at the
micro- (the Enron scandal of 2001) or macro-levels (the
current global ?nancial crisis), introducing increased diver-
sity of reporting systems into organizations seems an ur-
gent objective (Power, 2007). The use of SROI by
corporations such as Philips in the Netherlands demon-
strates the broader applications of reporting practices ?rst
developed in the social sector.
The discussion developed above has attempted to con-
ceptualize the new landscape of social impact reporting
being pioneered by social entrepreneurs in its institutional
and strategic context for the ?rst time. Inevitably this has
only been a partial account, limited most notably by the
UK focus in terms of case data. However, the theoretical
observations drawn from the cases have wider interna-
tional relevance: Blended Value Accounting methodologies
are evident across the world. For example, SROI originated
in the USA and continues to be used and re?ned there
(Emerson, 1999, chap. 8), as well as in continental Europe
(Scholten & Franssen, 2008) In Africa, Kickstart has devel-
oped a range of bespoke reporting practices to capture its
social and environmental performance that include de-
tailed marketing surveys of the customers for its irrigation
products (Fisher, 2009). In Asia, Aravind Hospital publishes
highly detailed qualitative and quantitative reports on the
performance of its eye hospitals and associated projects
that take the standard corporate annual report form and
develop it to include discussions of the organization’s spiri-
tual and cultural objectives and activities. In Latin America,
a social investment fund, NESsT, publishes case studies of
its investees both to explore and demonstrate its impact
and to act as good practice teaching and learning tools
for the wider social enterprise community (Davis, Etchart,
Jara, & Milder, 2003).
Other limitations include the use of case study data and
early stage theorization that clearly needs further re?ning
and empirical testing. Despite these limitations, the analy-
sis here suggests a number of future lines of research. For
example, a larger empirical survey of the social impact
reporting practices of one type of social entrepreneurship
could test some of the assertions made here concerning
the strategic use of Blended Value Accounting. The obvious
starting point here is Community Interest Companies since
they represent a large – but not huge – sample and their
reporting data is relatively easy to identify, isolate, and
analyse. It would also be valuable to use a range of theoret-
ical approaches to conceptualize further social impact
reporting, perhaps in terms of its broader organizational
functions and institutional settings. This work could broad-
en the empirical base beyond the UK. Finally, qualitative
data could be collected from social entrepreneurs and their
key stakeholders to allow a more ?ne tuned analysis of the
role and ethos of social impact reporting in context.
Despite these limitations, it is hoped that the research
presented here constitutes the start of a larger project to
both understand the ?eld-level reality of social impact
reporting innovation and to learn wider lessons from the
social entrepreneurs that are pushing forward the bound-
aries of such action. The ‘moral obligation’ to use reporting
practices strategically to drive improved internal perfor-
mance and better external accountability surely applies
to all organizations social, commercial, and public sector.
Acknowledgement
My thanks go to the anonymous reviewers for their use-
ful and important observations concerning earlier drafts of
this paper.
References
Acumen. (2006). Our impact. .
Alvord, S., Brown, L., & Letts, C. (2004). Social entrepreneurship and
societal transformation: An exploratory study. Journal of Applied
Behavioral Science, 40.3, 260–283.
Anheier, H., & Leat, D. (2006). Creative philanthropy. London: Routledge.
Arrow, K. (1951). Social choice and individual values. New Haven: Yale
University Press.
Austin, R. (1996). Measuring and managing performance in organisations.
New York: Dorset House.
Bernholz, L. (2004). Creating philanthropic capital markets. Hoboken: John
Wiley.
Bevan, C., & Hood, C. (2006). What’s measured is what matters: Targets
and gaming in the English public health care system. Public
Administration, 84.3, 517–538.
Bird, P., & Morgan-Jones, P. (1981). Financial reporting by charities. England
and Wales: Institute of Chartered Accountants.
Bishop, M., & Green, M. (2008). Philanthrocapitalism: How the rich can save
the world and why we should let them. London: A and C Black.
Black, L. (2003). Archive: Liam black. Ethical corporation, May 20th.
.
BOND – British Overseas NGOs for Development. (2006). A BOND approach
to quality in non-governmental organization: Putting bene?ciaries ?rst.
London.
Bornstein, D. (2004). How to change the world: Social entrepreneurs and the
power of new ideas. Oxford: Oxford University Press.
Boschee, J. (1995). Social entrepreneurship. Across the Board, 32.3, 20–25.
Boschee, J., & McClurg, D. (2003). Toward a better understanding of social
entrepreneurship: Some important distinctions. Minnesota: Institute for
Social Entrepreneurs.
Bovaird, T. (2006). Developing new relationships with the ‘Market’ in the
procurement of public services. Public Administration, 84.1, 81–102.
Bovaird, T., & Loef?er, E. (2003). Evaluating the quality of public
governance: Indicators, models and methodologies. International
Review of Administrative Sciences, 69.3, 313–328.
Brunsson, N., & Olsen, J. (1993). The reforming organisation. London:
Routledge.
Chipman, J., & Moore, J. (1978). The new welfare economics 1939–1974.
International Economic Review, 19.3, 547–584.
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 767
Chua, W. (1986). Radical developments in accounting thought. The
Accounting Review, LX1.4, 601–632.
Clotfelter, C. (1992). The distributional consequences of nonpro?t
activities. In C. Clotfelter (Ed.), Who bene?ts from the nonpro?t
sector? (pp 1–23). Chicago: University of Chicago Press.
Collier, P. (2007). The bottom billion. Oxford: Oxford University Press.
Connolly, C., & Hyndman, N. (2000). Charity accounting: An empirical
analysis of the impact of recent changes. The British Accounting
Review, 32.1, 77–100.
Cunningham, G., & Harris, J. (2001). A heuristic framework for
accountability of governmental subunits. Public Management Review,
2, 145–165.
Dart, R. (2004). The legitimacy of social enterprise. Nonpro?t Management
and Leadership, 14.4, 411–424.
Davis, L., Etchart, N., Jara, M., & Milder, B. (2003). Risky business: The
impacts of merging mission and market. Santiago, Chile: NESsT.
Dees, J. G. (1994). Social enterprise: Private initiatives for common good.
Harvard: Harvard Business School Press.
Dees, J. G. (1998a). The meaning of social entrepreneurship. .
Dees, J. G. (1998b). Enterprising nonpro?ts. Harvard Business Review,
76.1(January–February), 54–67.
Dees, J. G., & Battle Anderson, B. (2006). Rhetoric, reality, and research:
Building a solid foundation for the practice of social entrepreneurship.
In A. Nicholls (Ed.), Social entrepreneurship: New models of sustainable
social change (pp. 144–168). Oxford: Oxford University Press.
Dees, J. G., Emerson, J., & Economy, P. (2001). Enterprising non-pro?ts: A
toolkit for social entrepreneurs. New York: Wiley Non-Pro?t Series.
DiMaggio, P., & Anheier, H. (1990). The sociology of nonpro?t
organizations and sectors. Annual Review of Sociology, 16, 137–159.
DiMaggio, P., & Powell, W. (1983). The iron cage revisited: Institutional
isomorphism and collective rationality in organizational ?elds.
American Sociological Review, 48, 147–160.
Drayton, W. (2002). The citizen sector: Becoming as entrepreneurial and
competitive as business. California Management Review, 44.3,
120–132.
Drori, G. (2006). Governed by governance: The new prism for
organizational change. In G. Drori, J. Meyer, & H. Hwang (Eds.),
Globalization and organization: World society and organizational change
(pp. 91–118). Oxford: Oxford University Press.
Economist. (2005a). Hale and healthy, April 14th.
Economist. (2005b). Calling an end to poverty, July 7th.
Economist. (2005c). Good for me, good for my party. November 24th.
Economist. (2006a). The rise of the social entrepreneur, February 23rd.
Economist. (2006b). Special topic: The business of giving, February 23rd.
Economist. (2006c). The new powers in giving, June 29th
Economist. (2006d). The ?ght over a big idea, July 20th.
Economist. (2007a). Fish versus AIDS, August 30th.
Economist. (2007b). The Clinton factor, September 25th.
Economist. (2009). Saving the world, Special Report on Entrepreneurship,
March 14th.
Edwards, M., & Hulme, D. (1995). Introduction: NGO performance and
accountability. In M. Edwards & D. Hulme (Eds.), Beyond the magic
bullet: NGO performance and accountability in the post cold war world
(pp. 1–20). London: Earthscan.
Edwards, M., & Hulme, D. (1996). Too close for comfort: The impact of
of?cial aid on non-governmental organisations. World Development,
24.6, 961–973.
Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st
century business. London: Capstone.
Emerson, J. (1999). Social return on investment: Exploring aspects of value
creation. REDF box set (vol. 2). San Francisco: Roberts Enterprise
Development Foundation.
Emerson, J. (2003). The blended value proposition: Integrating social and
?nancial returns. California Management Review, 45.4, 35–51.
Feldman, A. (1980). Welfare economics and social choice theory. London:
Martinus Press.
Fisher, M. (2009). Income is development: Kickstart’s pumps help Kenyan
farmers transition to a cash economy. Innovations: Special Edition
Social Entrepreneurship, 139–163.
Forbes, D. (1998). Measuring the unmeasurable. Nonpro?t and Voluntary
Sector Quarterly, 27.2, 183–202.
Foster, W., & Bradach, J. (2005). Should nonpro?ts seeks pro?ts? Harvard
Business Review, 1(February–March), 92–100.
FRC (Furniture Resource Centre). (2004). Annual sustainability report.
Liverpool.
Gambling, T., Jones, R., & Karim, R. (1993). Credible organizations: Self
regulation vs. external standard setting in Islamic banks and English
charities. Financial Accountability and Management, 9.3, 195–207.
Giddens, A. (1990). The consequences of modernity. UK: Polity Press.
Gray, R. (2002). The social accounting project and accounting organizations
and society: Privileging engagement, imaginings, new accountings
and pragmatism over critique? Accounting Organizations and Society,
27, 687–708.
Habermas, J. (1981). The theory of communicative action (vols. 1–3).
London: Polity Press.
Harding, R. (2004). Social enterprise: The new economic engine? Business
Strategy Review, 15.4, 39–43.
Hines, A., & Jones, M. (1992). The impact of SORP2 on the UK charitable
sector: An empirical study. Financial Accountability and Management,
8.1, 49–67.
Hood, C. (1991). A public management for all seasons? Public
Administration, 69.1, 3–19.
Hopwood, A. (1978). Towards an organizational perspective for the study
of accounting and information systems. Accounting, Organizations and
Society, 3.1, 3–13.
Hopwood, A. (1983). On trying to study accounting in the contexts in
which it operates. Accounting, Organizations and Society, 8.3, 287–305.
Hopwood, A., & Miller, P. (1994). Accounting as social and institutional
practice. Cambridge: Cambridge Studies in Management.
Hutton, W., & Schneider, P. (2008). The failure of market failure. Towards a
21st century keynesianism, NESTA.
Jacobs, A. (2006). Helping people is dif?cult: Growth and performance in
social enterprises working for international relief and development.
In A. Nicholls (Ed.), Social entrepreneurship: New paradigms of
sustainable social change (pp. 247–270). Oxford: Oxford University
Press.
Jepson, P. (2005). Governance and accountability of environmental NGOs.
Environmental Science and Policy, 8, 515–524.
John, R. (2006). Venture philanthropy: The evolution of high engagement
philanthropy in Europe. Skoll Centre for Social Entrepreneurship.
.
John, R. (2007). Beyond the cheque: How venture philanthropists add value.
Skoll Centre for Social Entrepreneurship. .
Kant, E. (1978). [1787] Critique of pure reason, trans. Kemp-Smith, N.
London: Macmillan.
Kendall, J. (2003). The voluntary sector: Comparative perspectives in the UK.
London: Routledge.
Kendall, J., & Knapp, M. (2000). Measuring the performance of voluntary
organizations. Public Management, 2.1, 105–132.
Lawrence, T., & Phillips, N. (2004). From Moby Dick to free Willy: Macro-
cultural discourse and institutional entrepreneurship in emerging
institutional ?elds. Organization, 11.5, 689–711.
Leadbeater, C. (1997). The rise of the social entrepreneur. London: Demos.
LeGrand, J., & Bartlett, W. (Eds.). (1993). Quasi-markets and social policy.
London: Palgrave Macmillan.
Lee, P. (2004). Public service productivity: Health. Economic Trends, 613,
38–59.
LeGrand, J. (2003). Motivation, agency, and public policy: Of knights and
knaves, pawns and queens. Oxford: Oxford University Press.
Light, P. (2008). The search for social entrepreneurship. Washington, DC:
Brookings Institute.
Lister, S. (2003). NGO legitimacy – Technical issue or social construct.
Critique of Anthropology, 23, 175–192.
Little, I. (1950). A critique of welfare economics. Oxford: Oxford University
Press.
Lukes, S. (1974). Power: A radical view. London: MacMillan.
Mair, J., & Marti, I. (2006). Social entrepreneurship research: A source of
explanation, prediction and delight. Journal of World Business, 41.1,
36–44.
Mair, J., & Seelos, C. (2007). Pro?table business models and market
creation in the context of deep poverty: A strategic view. Academy of
Management Perspectives, 21.4, 49–63.
Meyer, J., & Rowan, B. (1977). Institutionalised organisations: Formal
structure as myth and ceremony. American Journal of Sociology, 83,
340–363.
Meyer, J., & Scott, W. (1992). Centralization and the legitimacy problems
of local government. In J. W. Meyer & W. R. Scott (Eds.), Organizational
environments: Ritual and rationality (pp. 199–215). London: Sage.
Miles, M., & Huberman, A. (1994). Qualitative data analysis: An expanded
sourcebook (2nd ed.). Thousand Oaks: Sage.
Miller, P. (1994). Accounting as social and institutional practice: An
introduction. In Accounting as social and institutional practice
(pp. 1–39). Cambridge: Cambridge Studies in Management.
Moyo, D. (2009). Dead aid: Why aid is not working and how there is another
way for Africa. London: Allen Lane.
768 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
Neely, A. (1998). Performance measurement: Why, what and how. London:
Economist Books.
Nicholls, A. (2004). Social entrepreneurship: The emerging landscape. In
S. Crainer & D. Dearlove (Eds.), The ?nancial times handbook of
management (3rd ed., pp. 636–643). Harlow: FT Prentice Hall.
Nicholls, J. (2004b). Social return on investment: Valuing what matters.
London: New Economics Foundation.
Nicholls, A. (2006). Social entrepreneurship. In D. Jones-Evans & S. Carter
(Eds.), Enterprise and small business: Principles, practice and policy (2nd
ed., pp. 220–242). Harlow: FT Prentice Hall.
Nicholls, A. (Ed.). (2008a). Social entrepreneurship: New models of
sustainable social change (Paperback ed.). Oxford: Oxford University
Press.
Nicholls, A. (2008b). Capturing the performance of the socially
entrepreneurial organisation (SEO): An organisational legitimacy
approach. In J. Robinson, J. Mair, & K. Hockerts (Eds.), International
perspectives on social entrepreneurship research (pp. 27–74). London:
Palgrave MacMillan.
Nicholls, A. (2009a). Learning to walk: Social entrepreneurship – A
research review. Innovations: Special Edition Social Entrepreneurship,
209–222.
Nicholls, A. (in press). The functions of measurement in social
entrepreneurship. In Hockerts, K., Robinson, J., & Mair, J. (Eds.),
Handbook of social entrepreneurship research. Palgrave MacMillan.
Nicholls, A., & Cho, A. (2006). Social entrepreneurship: The structuration
of a ?eld. In A. Nicholls (Ed.), Social entrepreneurship: New paradigms of
sustainable social change (pp. 99–118). Oxford: Oxford University
Press.
Nicholls, A., & Opal, C. (2005). Fair trade: Market-driven ethical
consumption. London: Sage.
Nicholls, A., & Young, R. (2008). Introduction: The changing landscape of
social entrepreneurship. In A. Nicholls (Ed.), Social entrepreneurship:
New paradigms of sustainable social change (Paperback ed.,
pp. vii–xxiii). Oxford: Oxford University Press.
Nyssens, M. (2006), Social Enterprise. London: Routledge.
O’Connell, J. (1982). Welfare economic theory. Boston: Auburn House
Publishing.
Offer, A. (2001). Why has the public sector grown so large in market
societies? Oxford: Oxford University Press.
Osbourne, D., & Gaebler, T. (1992). Reinventing government. Reading,
Mass.: Addison-Wesley.
OTS (Of?ce of the Third Sector). (2006). Social enterprise action plan:
Scaling new heights. Cabinet Of?ce.
Palmer, P., & Vinten, G. (1998). Accounting, auditing and regulating
charities – Towards a theoretical underpinning. Managerial Auditing
Journal, 13.6, 346–355.
Paton, R. (2003). Managing and measuring social enterprises. London: Sage.
Power, M. (1994a). The audit society. In A. Hopwood & P. Miller (Eds.),
Accounting as social and institutional practice (pp. 299–316).
Cambridge: Cambridge Studies in Management.
Power, M. (1994b). The audit explosion. London: Demos.
Power, M. (2003). Auditing and the production of legitimacy. Accounting,
Organizations and Society, 28, 379–394.
Power, M. (2007). Organized uncertainty: Designing a world of risk
management. Oxford: Oxford University Press.
Power, M., & Laughlin, R. (1996). Habermas, law and accounting.
Accounting, Organisations, and Society, 21.5, 441–465.
Prahalad, C. K. (2005). The fortune at the bottom of the pyramid. New
Jersey: Wharton Publishing.
Rahaman, A., Lawrence, S., & Roper, J. (2004). Social and environmental
reporting at the VRA: Institutionalised legitimacy or legitimation
crisis? Critical Perspectives on Accounting, 15, 35–56.
REDF – Roberts Enterprise Development Fund (2000). SROI methodology.
San Francisco: Roberts Enterprise Development Fund.
Ritchie, J., & Lewis, J. (Eds.). (2003). Qualitative research practice: A guide for
Social Science students and researchers. London: Sage.
Rousseau, D. (2006). Is there such a thing as ‘‘Evidenced-based
Management”? Academy of Management Review, 31.2,
256–269.
Ryan, B., Scapens, R., & Theobald, M. (1992). Research method and
methodology in accounting. London: Academic Press.
Scholten, P., & Franssen, B. (2008). Handbuch für Sozialunternehmertum.
Assen: Van Gorcum.
Suchman, M. (1995). Managing legitimacy: Strategic and
institutional approaches. Academy of Management Review, 20,
517–610.
Walsh, K. (1995). Public services and market mechanisms. Competition,
contracting, and the new public management. London: Palgrave
MacMillan.
Whittington, G. (1986). Financial accounting theory: An over-view. The
British Accounting Review, 18.1, 4–41.
Yunus, M. (1998). Banker to the poor. London: Aurum Press.
Zadek, S. (1998). Balancing performance, ethics, and accountability.
Journal of Business Ethics, 17, 1421–1441.
Zald, M. (2000). Ideologically structured action: An enlarged agenda for
social movement research. Mobilization, 5, 1–17.
Zald, M., & Davis, G. (2005). Social change, social theory, and the
convergence of movements and organisations. In G. Davis, D.
McAdam, W. Scott, & M. Zald (Eds.), Social movements and
organization theory (pp. 335–350). Cambridge: Cambridge University
Press.
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 769
doc_565719916.pdf
This paper presents an exploratory analysis of the emergent reporting practices used by
social entrepreneurs in terms of their institutional settings and strategic objectives. These
reporting practices not only account for financial performance but also disclose more
nuanced and contingent social and environmental impacts and outcomes. Furthermore,
they act as symbolic objects expressing the market orientation of many socially entrepreneurial
organizations in that they aim to provide more complete and transparent disclosure
of a variety of performance impacts. Conceptually, this paper draws upon
approaches developed within the sociology of accounting as institutional practice and uses
three theoretical interpretations to conceptualize the function and effects of reporting, disclosure,
and audit in social entrepreneurship: positivist; critical theorist; and interpretative.
‘We do good things, don’t we?’: ‘Blended Value Accounting’
in social entrepreneurship
Alex Nicholls
Said Business School, University of Oxford, United Kingdom
a r t i c l e i n f o a b s t r a c t
This paper presents an exploratory analysis of the emergent reporting practices used by
social entrepreneurs in terms of their institutional settings and strategic objectives. These
reporting practices not only account for ?nancial performance but also disclose more
nuanced and contingent social and environmental impacts and outcomes. Furthermore,
they act as symbolic objects expressing the market orientation of many socially entrepre-
neurial organizations in that they aim to provide more complete and transparent disclo-
sure of a variety of performance impacts. Conceptually, this paper draws upon
approaches developed within the sociology of accounting as institutional practice and uses
three theoretical interpretations to conceptualize the function and effects of reporting, dis-
closure, and audit in social entrepreneurship: positivist; critical theorist; and interpreta-
tive. A discussion of ?ve case studies leads to the development of a new theoretical
construct – ‘Blended Value Accounting’ – that constitutes a spectrum of disclosure logics
used by social entrepreneurs to access resources and realize organizational mission objec-
tives with key stakeholders. Conclusions consider some further questions around socially
entrepreneurial reporting practices and strategies and suggest some new lines of research
going forward.
Ó 2009 Published by Elsevier Ltd.
Introduction
Over the past 10 years, ‘social entrepreneurship’ has
emerged as an important set of actions and discourses
for social activists, policy makers, academics and the media
(Economist, 2005a, 2005b, 2005c, 2006a, 2006b, 2006c,
2006d, 2007a, 2007b, 2009; Nicholls, 2006, 2009a). More-
over, the number of social entrepreneurs and social enter-
prises is rising globally, as is their in?uence and impact
(Bornstein, 2004; Drayton, 2002; Harding, 2004; Nicholls
& Young, 2008). In both the USA and UK such organizations
are increasingly being portrayed as having a key role to
play in welfare and environmental policy innovation going
forward, as well as in helping to restore economic activity
post the global recession (Hutton & Schneider, 2008; Mair
& Seelos, 2007; Prahalad, 2005). In the global south, social
entrepreneurship is also well-established as playing an
important role in the provision of public goods on a spec-
trum from small-scale, local solutions to poverty and social
deprivation (i.e. co-operatives) to functioning as a quasi-
government in terms of welfare provision and employment
(i.e. Grameen and BRAC in Bangladesh: see Yunus, 1998).
However, despite the importance of social entrepreneur-
ship at the ?eld level, scholarly interest in the subject has
been limited and, as a result, social entrepreneurship re-
mains distinctly undertheorized (Dees & Battle Anderson,
2006; Mair & Marti, 2006; Nicholls, 2009a; Nyssens, 2006).
Social entrepreneurship is de?ned here as any innova-
tive action that individuals, organizations, or networks
conduct to enhance or recon?gure existing institutional
arrangements to address the inadequate provision, or un-
equal distribution, of social and environmental goods
(Dees, 1994, 1998a, 1998b; Light, 2008; Nicholls, 2008a).
Social entrepreneurship ranges from macro-level interven-
tions that ?ll ‘institutional voids’ in existing societal struc-
tures and arrangements (such Grameen Bank’s and BRAC’s
work in addressing the lack of ?nancial services for the
0361-3682/$ - see front matter Ó 2009 Published by Elsevier Ltd.
doi:10.1016/j.aos.2009.04.008
E-mail address: [email protected]
Accounting, Organizations and Society 34 (2009) 755–769
Contents lists available at ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
poor in Bangladesh) to micro-level technological solutions
to local market failures (such as Kickstart’s development
and marketing of a new, low cost, foot pump for agricul-
tural irrigation in East Africa). It is also typi?ed by creativ-
ity and bricolage – the use of available resources, practices,
cultural artefacts or institutions in new combinations to
achieve change (Mair & Marti, 2006; Nicholls & Cho, 2006).
The exploratory study presented here aims to address
one important gap in social entrepreneurship research by
offering a theoretical analysis of its social impact reporting
practices in terms of their institutional settings and strate-
gic objectives (see Nicholls, 2008b, in press for some initial
work in this area). The reporting practices evident in an
analysis of social entrepreneurship are emergent and dy-
namic – drawing upon existing practice but also, in the
process, innovating and reshaping these practices. The
developments in social impact reporting seen in social
entrepreneurship are generating innovations over time
and are consistent with the bricolage evident in social
entrepreneurs’ attitude to problem-solving more generally
and, to go further, represent one of the unique features that
set such action apart from other social sector organiza-
tions. It is argued below that these emergent reporting
practices constitute a spectrum of disclosure logics that so-
cial entrepreneurs exploit strategically to support their
various mission objectives with key stakeholders. Such
reporting practices not only account for ?nancial perfor-
mance but also report more nuanced and contingent social
and environmental impacts and outcomes. Furthermore,
the new social reporting practices themselves act as sym-
bolic objects (Meyer & Rowan, 1977) demonstrating the
core ethos of many socially entrepreneurial organizations:
‘we do good things: don’t we?’ (FRC, 2004). This competi-
tive self-interrogation of social performance and impact
has been summarized as the ‘moral obligation’ of social
entrepreneurs to perform better and be more accountable
than other social purpose organizations (Black, 2003). Such
competitive behaviour re?ects the more market orientated
institutional logics typical of much of social entrepreneur-
ship (Nicholls & Cho, 2006).
Conceptually, the analysis here draws upon approaches
developed within the sociology of accounting as an institu-
tional practice that has demonstrated that the objectivity
and impartially of reporting systems is open to contesta-
tion (Hopwood, 1978, 1983). From this perspective, report-
ing data is a contingent phenomenon that is the product as
much of institutional structures as of rationalist processes
(Power, 1994a, 1994b, 2003). Of particularly signi?cance
here is Palmer and Vinten’s (1998) analysis of a range of
theoretical interpretations applied to charity reporting in
the UK. Their research identi?ed three approaches to con-
ceptualizing the function and effects of charity reporting,
disclosure, and audit: positivist (i.e. reporting data repre-
sents empirical reality: Whittington, 1986); critical theo-
rist (i.e. reporting data enacts control mechanisms: Chua,
1986; Power & Laughlin, 1996; see also Lukes, 1974); and
interpretative (i.e. reporting data acts as a symbolic medi-
ator or space for discussion between organizational prac-
tice and stakeholders: Gambling, Jones, & Karim, 1993;
Ryan, Scapens, & Theobald, 1992). Social entrepreneurs
recognize, and make strategic use of, all three interpreta-
tions to achieve different strategic objectives. At the con-
ceptual level this may seem theoretically chaotic, but on
the ground it ?ts well with the innovation, boundary blur-
ring, strategic instrumentalism, and bricolage typical of so-
cial entrepreneurship in general. Thus, social impact
reporting practices in social entrepreneurship attempt
self-re?exively to enhance social mission rather than
merely to respond to regulation, convention, or other iso-
morphic pressures. There are echoes here with Kantian
(1978; Power, 2007) notions of the ‘regulative’ use of pro-
cesses of enquiry in natural science – namely that, for so-
cial entrepreneurs, social impact reporting does not so
much attempt to capture empirical reality as to act as an
analytic methodology by which social impact can be better
understood and, therefore, more effective operational re-
sponses designed.
With respect to the rationalist/positivist interpretation
on disclosure and audit, social entrepreneurs typically
use reporting practices within internal command and con-
trol structures to enhance performance and improve the
ef?ciency and effectiveness of their delivery of mission
objectives (Nicholls & Cho, 2006). Social entrepreneurs
typically recognize the sub-optimal institutional practices
and structures that create and perpetuate social and envi-
ronmental failure and degradation at both the systemic
and organizational level. Whilst the former requires social
entrepreneurship to act as social movements that trans-
form sub-optimal societal cognitive frames by innovation
at the macro-political level (Zald, 2000; Zald & Davis,
2005), the latter focuses on micro-internal change at the
level of organizational practices and action. In both cases,
the market orientation of social entrepreneurship provides
a competitive strategic impetus to improve performance
impact.
With respect to the critical realist interpretation,
changes in the resource landscape have been important
drivers of some new social impact reporting practices.
Increasingly, foundations, governments, and high net
worth individuals have demanded more reliable monitor-
ing of the outcomes of their grant inputs (increasingly seen
as social ‘investment’ or contractual obligation within a
quasi-market context: John, 2006, 2007). Traditional mod-
els of transactional philanthropy, that reported perfor-
mance success by the number and variety of grants
allocated, have been replaced by a new investment philan-
thropy that measures success as a function of maximizing
the impact of the donor’s capital ‘investment’ by the total
(social) value created (Anheier & Leat, 2006; Bernholz,
2004; Bishop & Green, 2008). This latter approach is also
being extended in a venture philanthropy model that not
only pays great attention to the impact ‘return’ on philan-
thropic investment, but also has a highly engaged, even
interventionist, approach to the strategic management of
the recipient organization (John, 2006). The philanthropic
perspective on performance has, therefore, moved from a
focus on reporting philanthropic inputs to an emphasis
on disclosing grantee organizational outputs and outcomes.
Second, as a consequence of the grant scarcity that fol-
lowed the stock market crash of early 2000 (when many
philanthropic funds had to cut back on capital spending),
more and more social purpose organizations have turned
756 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
to earned income strategies to survive thus engaging – in
many cases for the ?rst time – with market competition.
This produced the social enterprise model that combines
a social purpose with a clear business proposition (Bos-
chee, 1995; Boschee & McClurg, 2003; Dees, Emerson, &
Economy, 2001). As social enterprises adapted competitive
market models to their social purpose, regulation and
investor pressure required them to go beyond charity
reporting and adopt the reporting practices found in com-
mercial organizations. Typically this increased the report-
ing burden on the organizations, but also offered the
opportunity to assess some aspects of performance – nota-
bly ?nancial sustainability – in a more rigorous way.
Finally, the interpretive conceptualization of the pur-
pose of reporting practices corresponds to social entrepre-
neurs’ heightened attention to their external
accountability and stakeholder engagement framed by a
more social constructivist view of social impact and in?u-
ence (Dart, 2004; Gray, 2002; Kendall & Knapp, 2000; Pa-
ton, 2003). Under conditions of late modernity (Giddens,
1990), systems of performance reporting, audit, and risk
management have been recognized as key legitimating
features of all successfully functioning organizations (Aus-
tin, 1996; Power, 1994a, 1994b, 2007; Rousseau, 2006).
Disclosure practices thus build an argument for (or
against) society granting the reporting organization a man-
date to operate by creating (or destroying) perceptions of
its accountability and legitimacy (Jepson, 2005; Nicholls,
2008b, in press; Suchman, 1995). In social entrepreneur-
ship, increased attention to accountability re?ects the
changing institutional context within which its organiza-
tional legitimacy is constructed. There are two quite differ-
ent trends underpinning these changes.
On the one hand, there is a ‘top down’ movement to-
wards adopting business models and reporting practices
in the social sector based on the assumption that they en-
hance stakeholder accountability, improve transparency,
and, therefore, offer better performance legitimacy. This
rationale is evident on the UK government’s approach to
supporting the growth of social enterprise within a mixed
market for the delivery for welfare services (OTS, 2006). On
the other hand, there is a ‘bottom up’ trend towards facil-
itating greater stakeholder engagement in designing the
reporting practices that affect them (e.g. Keystone; see Ja-
cobs, 2006). The interpretive context of the new social im-
pact reporting as accountability enhancement can be seen
as being characterized by a tension between these two ap-
proaches. This tension contrasts business logics that aim
for the marketization of social objectives and an attendant
?nancialization of their social outputs/outcomes with non-
for-pro?t logics that give primacy to the development of
more nuanced and bespoke reporting practices that re?ect
bene?ciaries and their speci?c contexts. This dichotomy
re?ects a larger debate within social entrepreneurship cen-
tred on the role and value of business and enterprise as the
preferred normative models for action across society as a
whole (Dart, 2004).
Following this introductory section, the current land-
scape of performance reporting in the social sector is pre-
sented. The range of social impact reporting practices
available to social entrepreneurs is then set out. Following
this, ?ve brief case studies are presented that highlight dif-
ferent strategic approaches to social impact reporting in
terms of the available disclosure practices. Case study
methodology is used here to allow comparative analysis
to be carried out at the organizational level (Miles &
Huberman, 1994; Ritchie & Lewis, 2003). Given the lack
of existing research on social impact reporting in the social
entrepreneurship area, the case approach is also appropri-
ate to this exploratory study of reporting phenomena
embedded in their context. A discussion of the cases leads
to the development of a new theoretical construct –
‘Blended Value Accounting’ – that is used to illustrate
howsocial entrepreneurs use reporting practices creatively
as strategic tools to access resources and realize organiza-
tional mission objectives. Finally, conclusions consider
some further questions around the new social impact
reporting practices and strategies and suggest some lines
of research going forward.
The primary empirical focus here will be on the UK,
since this represents one of the most developed institu-
tional settings for social entrepreneurship (OTS, 2006). Fur-
thermore, a discussion across multiple geographies would
present signi?cant analytic challenges in terms of country
speci?c legal structures and regulatory regimes. Neverthe-
less, the conceptual discussion developed here has rele-
vance across many other cultural settings and this is
considered further in the conclusions. Moreover, the con-
ceptualization of Blended Value Accounting in social entre-
preneurship developed here offers a rich set of
opportunities for future research of relevance not only to
social sector organizations, but also to the wider reporting
and accounting community. As commercial ?rms and gov-
ernments attempt increasingly to capture their social and
environmental impacts social entrepreneurs and their
innovative reporting practices offer new models of how
such objectives may be more effectively achieved.
Performance reporting in the social sector
In commercial settings, the main systems of perfor-
mance reporting have become established in accounting
standards via a combination of common practice and reg-
ulation that has largely evolved over the last hundred years
(Hopwood, 1983; Hopwood & Miller, 1994). The universal
unit of performance measurement is ?nancial, and
accounting conventions have stabilized over time to sup-
port the production of regular, comparative, and longitudi-
nal data (see Miller, 1994). In the public sector, welfare
economics (Arrow, 1951; Chipman & Moore, 1978; Feld-
man, 1980; Little, 1950; O’Connell, 1982) has developed
to inform public expenditure decision-making with quan-
titative analysis of performance and impact and has sup-
ported a trend within New Public Management for
reporting on more evidence-based policy (Bevan & Hood,
2006; Hood, 1991; Osbourne & Gaebler, 1992). Since the
1980s market economics – and its attendant performance
reporting logics – has also entered the mainstream of pub-
lic policy discourses with the consequence that league ta-
bles and other quasi-market reporting mechanisms have
been created to make public sector performance informa-
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 757
tion more generally available (see, for example, LeGrand,
2003; LeGrand & Bartlett, 1993).
In contrast, the social sector has largely operated under
conditions of limited performance reporting with few
accounting conventions and the minimum of regulation
around disclosure (Clotfelter, 1992; DiMaggio & Anheier,
1990; Edwards & Hulme, 1995, 1996; Forbes, 1998). For
example, whilst the ‘social’ accounting movement has at-
temptedto(re)connect corporate ?nancial performance with
its social and environmental context over the last decade
(Elkington, 1997; Gray, 2002), charityregulationintheUKre-
mains largelyunchangedfromits original eighteenthcentury
model (see, for example, Connolly & Hyndman, 2000). The
?rst comprehensive account of UKcharity reporting revealed
this regulationtobe hardly?t for purpose whenit catalogued
a fragmented and inconsistent approach to charity account-
ing (Bird & Morgan-Jones, 1981) with non-mandatory
reporting requirements resulting inwidespread non-compli-
ance (Hines &Jones, 1992). Morerecent regulationwithinthe
Charity Law Act (1996) standardized charity reporting prac-
tices and stressed the need for compliance, but there has yet
to be any comprehensive review of its impact. The striking
lack of rigorous reporting practices across much of the social
sector can be explained by a number of factors.
First, there is the question of what is to be measured and
reported. There is a widespread perceived dif?culty in
establishing the relationship between complex input fac-
tors (grants, volunteers, market income, social capital,
etc.) and the social impacts that correspond to the mission
objectives of such organizations (Kendall & Knapp, 2000).
Unlike businesses that operate in narrow and well-de?ned
commercial spaces structured around markets, social sec-
tor organizations operate across all areas of society and,
as a consequence, engage with a wide diversity of resource
inputs (actual and ‘in kind’: e.g. donations, grants, member-
ship fees, volunteer time, government subsidies, commer-
cial income, etc.), function in a plethora of institutional
settings (market and non-market) and generate multiple,
distinctive, non-comparable outputs. The institutional
complexity of social sector action also makes deadweight
calculations formidably dif?cult (Nicholls, 2004a).
Second, there is the question of how to measure what is
to be reported. As yet, there are no standardized calculative
mechanisms for social value creation, nor any comparative
unit of measurement (Paton, 2003). Within welfare eco-
nomics it has been suggested that the value of a social good
may be priced at what a bene?ciary or consumer would be
willing to pay for it (Clotfelter, 1992; Kendall, 2003) and
this allows performance outputs to be compared with re-
source inputs. Yet, such valuation fails to support the gen-
eration of effective performance data in contexts where
there are no comparable or proxy goods or services avail-
able to the market. Since social purpose organizations typ-
ically operate in these ‘market failure’ spaces (Nicholls,
2006), welfare economics has proved to be of limited help
in providing performance measures. Similarly, since they
also work across a broad spectrum of heterogeneous activ-
ity, it is very dif?cult to demonstrate comparable perfor-
mance reporting measures. How, for example, can a
reduction in social exclusion via employment creation be
quantitatively compared to the rehabilitation of a drug
user? The importance of longitudinal reporting is also
problematic: for example, the assessment of the perfor-
mance of an ex-offender rehabilitation unit is unlikely to
be valid in time frames less than several years. Similarly,
the value of life-saving interventions – such as those pro-
vided by many international aid agencies – could be seen
as being priceless. The historic result of these reporting dif-
?culties has been that resources are typically allocated to
social purpose organizations based on trust, reputation,
market positioning, or mission alignment between the
source and recipient of the resources, rather than on dis-
closed performance (Foster & Bradach, 2005).
Third, there is the issue of what is the purpose of mea-
surement and reporting. Giddens (1990) noted that mod-
ern economic interactions are complex and increasingly
dehumanized and in this context ‘systems trust’ has
emerged to provide proxies for personalized interactions.
Power (2007) suggested that the rise of these new trust-
based relationships has generated an ecosystem of actors
and systems that can act for the principals in economic set-
tings and, thus, reduce their risk. These include internal
control systems, public disclosures and regulation, and a
third party audit ‘industry’. Social purpose organizations
have typically been accorded signi?cant levels of trust
based on their stated objectives rather than their perfor-
mance reporting: the social impact of such organizations
was taken as largely self-evident due to their stated public
mission focus and non-distribution requirement (DiMag-
gio & Anheier, 1990). As a consequence, statements of so-
cial mission and organizational form have traditionally
acted as risk mitigation proxies for the ef?ciency and effec-
tiveness of management and operations and detailed per-
formance reporting has typically been absent from the
social sector (Edwards & Hulme, 1995, 1996). For example,
the adoption of charitable status has acted as a proxy for
the effective use of donor money and government subsidy.
Similarly, non-governmental organizations are usually
granted a societal mandate to represent the public interest
on speci?c issues by virtue of their stated independence
and – sometimes – membership/supporter numbers. In
both cases the actual social impact of such organizations
is often unmeasured and is typically subject to limited dis-
closure. This cognitive legitimacy ‘surplus’ (Jepson, 2005;
Lister, 2003; Nicholls, 2008b; Suchman, 1995) convention-
ally accorded by society to social purpose organizations
has resulted in less demanding reporting regulations than
for commercial organizations (that lack such a surplus)
and has modi?ed perceptions of agency risk for resource
providers and other stakeholders such that more stringent
performance measurement and disclosure has been con-
sidered unnecessary. This legitimacy surplus has had two
effects. First, it has reduced the public accountability of
charities, non-governmental organizations, and other so-
cial purpose actors (Jacobs, 2006; Jepson, 2005). Second,
it threatens to undermine their performance impact since
there is a reduced incentive to generate the data that could
help shape strategic innovation and future operational
improvements (Nicholls, 2008b, in press). The conse-
quence of such a (perhaps unjusti?ed) cognitive legitimacy
surplus has been a range of sub-optimal performance out-
comes across the social sector (Bishop & Green, 2008; Col-
758 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
lier, 2007; Moyo, 2009) and the emerging potential for a
legitimacy and performance ‘crisis’ in many parts of the so-
cial sector that could, ultimately, have serious negative re-
source implications (Jepson, 2005).
Social entrepreneurs recognize that existing models of
social impact reporting are inadequate for social purpose
organizations that aim to innovate in the context of long-
standing institutional failures. This is because conventional
reporting practices have contributed to the persistence of
these dysfunctions by failing to demonstrate the full value
creation opportunities offered by such institutional voids
(Mair & Marti, 2006). As a consequence, incentive struc-
tures are skewed such that, on the one hand, they discour-
age new organizations from entering the empty
institutional spaces and, on the other, fail to drive perfor-
mance improvement or innovations in any incumbent
(and de facto failing) organizations. Elsewhere, this type
of reporting dysfunction can be seen in the failure of stan-
dard accounting practices to capture environmental exter-
nalities or properly to account for the real value of public
goods (the so-called Tragedy of the Commons).
In this context, social entrepreneurship represents –
amongst other things – a disruptive response to this sub-
optimal reporting status quo by innovating its accounting
practices and disclosure techniques around a set of compet-
itive market orientations and logics to address social or
environmental mission objectives (Alvord, Brown, & Letts,
2004; Dees, 1994, 1998a, 1998b; Leadbeater, 1997; Light,
2008; Nicholls, 2004a, 2006, 2008a). Social entrepreneurs
innovate both in their use of existing reporting practices
and by creating entirely new approaches that go signi?-
cantly beyond regulatory requirements. In tandem with
these practice innovations, larger conversations about the
structure of impact reporting and accountability have also
been evident in development NGOs (e.g. the BOND, 2006),
environmental organizations (Jepson, 2005) and charitable
foundations (Edwards & Hulme, 1995, 1996: for a summary
see Nicholls, 2008b). The new – often hybrid – operational
models of social entrepreneurship blur sector boundaries
(often, but not exclusively, between business and the social
sector: Dees, 1994) and are re?ected in newreporting prac-
tices that go beyond the requirements of regulation to act
as strategic innovations designed to drive improved perfor-
mance impact and better functioning stakeholder account-
ability (Nicholls, 2008b). Moreover, reporting innovations
in social entrepreneurship aimto give equal strategic atten-
tion to capturing and disclosing social and ?nancial value
creation in combination. The cases below illustrate a range
of responses to the challenges of disclosing ?nancial and so-
cial value creation, but, ?rst, to provide an analytic context
for the subsequent empirical data, the larger landscape of
social impact reporting practices is set out.
Social impact reporting practices
Social entrepreneurs are highly innovative in their orga-
nizational strategies (Nicholls, 2006). In many cases their
willingness to explore new hybrid organizational forms –
including partnerships across the public, private, and social
sectors – generates the innovation that allows intractable
social and environmental problems to be successfully ad-
dressed. By rejecting the conventional boundaries be-
tween, for example, charity and the market, social
entrepreneurs are able to ?ll the institutional voids so typ-
ical of social and environmental market failure (Mair &
Marti, 2006). As a consequence, social entrepreneurship
is present in a wide variety of organizational forms and
incorporations, each of which has its own reporting con-
ventions and regulations. In the UK these include: charities
(trading or otherwise); industrial and provident societies;
companies limited by guarantee; companies limited by
shares (perhaps the most common non-charitable form);
public limited companies; and unincorporated voluntary
organizations. In addition, new legislation in the UK in
2005 established a distinct legal form especially for social
enterprise: the Community Interest Company (CIC). To
date over 2500 CICs have been established. Elsewhere in
the world, social entrepreneurship is found across a range
of legal forms such as Social Co-operatives in Italy, the
501(c)(3) and L3C forms in the USA, the Section 25 Com-
pany in India, and the Sole Proprietorship Company in Uk-
raine that appoints a board member as the ‘owner’ rather
than the original entrepreneur to ensure against mission
drift. The range of options for social entrepreneurship
incorporation in the UK and their attendant reporting
requirements are set out in Table 1.
In the case of each form of incorporation different an-
nual reporting and disclosure regulations apply including:
annual report of audited ?nancial accounts; CIC34 activity
report; Trustees’ Report of charity objectives. Furthermore,
social entrepreneurs have added two important elements
to the landscape of regulated reporting: a quantitative so-
cial return on investment assessment (SROI) model; and a
qualitative enhanced social audit report. Taken together
these reporting models constitute a spectrum of reporting
options that social entrepreneurs use strategically to en-
hance performance and accountability. Each is brie?y de-
scribed next: they are ordered in a sequence from those
that focus on quantitative ?nancial data to those that are
more qualitative and focus on capturing social value
creation. The logic of this sequencing is discussed further
below in terms of Blended Value Accounting and its
attendant conceptual logics.
Annual report of audited ?nancial accounts
All socially entrepreneurial organizations (including
charities) that are registered as companies are required
to produce annual ?nancial accounts and ?le them with
Companies House. The accounts are usually audited
(dependent on turnover) and typically include a balance
sheet, a consolidated statement of ?nancial activities (typ-
ically a pro?t and loss account), and a cash-?ow statement.
In addition, larger organizations may report on the ?nan-
cial statements with detailed notes including further infor-
mation about voluntary income and grants (if appropriate),
stakeholder investments, staff costs, and directors’ remu-
neration. Often the ?nancial accounts are included as part
of a larger, more descriptive, company annual report that
can include details of the organization’s (positive) social
interventions and sustainability practices.
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 759
Social return on investment (SROI)
The social return on investment (SROI) framework
was ?rst devised by the Roberts Enterprise Development
Fund (Emerson, 1999, chap. 8, 2003; REDF, 2000) as an
attempt to capture and monetize the full value creation
of their employment services programmes in San Fran-
cisco. The objective was to develop a credible methodol-
ogy for the ?nancial calculation of the often unreported
bene?ts of work integration activities that could then be
set against programme investments to form a more
holistic (and, therefore, realistic) cost-bene?t analysis.
More recently the methodology has been extended fur-
ther by the New Economics Foundation (Nicholls,
2004b). The SROI model is in three parts: the ?rst cal-
culates the full Blended Value of a project (combining
its enterprise/?nancial value creation and a monetized
representation of its social impact value); the second
establishes the ?nancial investment in the project; the
third then calculates the blended return on investment
(combining the enterprise and social returns). In order
to follow the SROI methodology effectively, a number
of other issues must also be considered (Nicholls,
2004b, p. 11). First, the organizational boundaries must
be set – this allows a clearer picture of the range of
stakeholders to be established and the key social objec-
tives to be identi?ed (and helps identify the materiality
of outcomes). Second, an ‘impact map’ should be drawn
– this clari?es how impact is intended to be achieved.
Typically, this process is conceptualized as linking in-
puts to outputs to outcomes to impacts. In this model,
inputs represent the total costs of the project, outputs
the simple quantitative effects (such as sales, number
of jobs created, etc.), outcomes the direct and indirect
changes in target stakeholders and their communities
(improved education, better levels of health, longitudi-
nal factors, etc.), and impacts the changes discounted
by a ‘deadweight analysis’ (the extent to which out-
comes would have happened without any interventions
by the organization). Finally, appropriate indicators or
?nancial proxies must be identi?ed to capture the ele-
ments within the impact map and monetized values
for them determined.
CIC34
The Community Interest Company legal form was intro-
duced by the UK government with new legislation on July
1st 2005 (The Companies Act – Audit, Investigations and
Community Enterprise – 2004). The primary policy objec-
tive was to provide a unique form of incorporation for so-
cial enterprises as a means of more clearly identifying such
organizations to potential customers and investors. Specif-
ically with respect to the latter, CICs are permitted to offer
equity (subject to an ‘assess lock’ that protects against
take-over and, thus, secures the CIC’s public bene?t focus)
and (capped) dividends designed to attract new invest-
ment into the sector. CIC’s are required annually to submit
to Companies House their ?nancial accounts (the level of
detail of which is dependent on their turnover) and a be-
spoke Community Interest Company Report (CIC34). The
latter sets out their general activities, how they have con-
sulted their stakeholders during the year, details of direc-
tors’ remuneration, as well as information about any
transfer of assets, dividends offered, and interest paid. CICs
are subject to the attention of a speci?c Regulator within
Companies House. The reporting requirements of CICs mir-
ror those of charities and are best described as ‘light touch’.
To February 2009, over 2500 CICs have been registered in
the UK. Of the 845 CICs that were registered by December
2007 and, therefore, were required to submit an annual re-
port for 2007/8, 771 have so far sent returns to Companies
House. This represents a good level of compliance (91%).
Enhanced social audit
In contrast to the ‘social’ reporting typically carried out
by businesses as part of their Corporate Social Responsibil-
ity (CSR) activities that aims to addresses non-core organi-
zational process issues and some of the externalities of
strategic actions (Power, 2007), enhanced social audit in
social sector organizations focuses on reporting progress
Table 1
Social entrepreneurship: forms of incorporation and reporting requirements in the UK.
Form of incorporation Annual reporting requirements Social entrepreneurship examples
Charity Annual report to Charity Commission to
include public bene?t statement and
consolidated ?nancial accounts
a
Hackney Community Transport
Industrial and Provident Society (IPS) Financial accounts to companies house
c,b
Baywind Energy Co-op.
Company limited by guarantee Financial accounts to companies house
c
Oxfam
Company limited by shares Financial accounts to companies house
c
Divine Chocolate Ltd.
Public limited company Financial accounts to companies house
c
Cafedirect
Unincorporated voluntary organization None Oxford Fair Trade coalition
Community Interest Company (CIC) Financial accounts + and CIC34
report on activities to companies house
Develop Your Child
a
There is some variation depending on turnover: see Table 2.
b
IPSs can also be charities and would then be required to submit a Trustees’ Report as well as ?nancial accounts.
c
Registered companies can submit unaudited ?nancial accounts if they satisfy two or more of the following: (i) aggregate turnover must be £5.6 million
net (£6.72 million gross) or less; (ii) the aggregate balance sheet total must be £2.8 million net (£3.36 million gross) or less; (iii) the aggregate average
number of employees must be 50 or few.
760 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
towards mission objectives within core activities. Such so-
cial audit reporting typically acts as a longitudinal assess-
ment of internal performance and tends to use
descriptive metrics – such as pro?les of target populations
or stakeholder characteristics – as well as some ?nancial
information. Such reports largely conform to Zadek’s
(1998) principles of social accountability. This audit infor-
mation provides a narrative of particular actions and objec-
tives and can be used to demonstrate progress over time.
Social audit is usually qualitative in approach. This means
that it focusses on impact measurement through account-
ing for speci?c – and, therefore, often partial – descriptive
outcomes of strategic action. Such metrics are typically hu-
man in scale, looking at individual or community level
changes or developments, and largely non-comparative.
Qualitative metrics have an organizational focus, address-
ing the issue of ‘what is it we do?’ One of the most prob-
lematic areas for such metrics is de?ning the appropriate
focus of measurement. For example, in one venture it
may be a community account of the health effects of new
wells sunk with developmental money, for another it
may be the individual economic impact of providing shel-
ter to the homeless. Clearly, such reporting is highly indi-
vidualistic and rarely comparative.
Trustees’ Report
All registered charities are required to ?le an annual
Trustees’ Report that sets out the organization’s principal
aims and objectives (and the progress made in ful?lling
them during the past year) as well as its structure, gover-
nance and management arrangements (including a state-
ment of the trustees’ responsibilities). It may also include
a brief ?nancial review and a note of future plans and
objectives. The level of reporting is determined by the
turnover of the charity, with the smaller organizations only
required to submit a short statement of their objectives
and activities (see Table 2).
Case studies
Having established the range of social impact reporting
practices available to social entrepreneurs, ?ve short case
studies are set out next to illustrate how social entrepre-
neurs are using social impact reporting strategically. The
cases are sequenced to correspond to the previous section.
Whilst new social impact reporting practices are emerging
across the world (indeed, SROI originated in the USA), the
UK represents, perhaps, the most developed social report-
ing context in the world.
1
As a consequence – and to avoid
getting lost in a fog of de?nitional and legal confusion – all
?ve cases come from this single cultural context. Despite
this limitation, it is suggested here that the conceptual
points raised by the analysis of UK practice have interna-
tional relevance.
Annual report of audited ?nancial accounts: Cafédirect
(www.cafédirect.co.uk)
Cafédirect was founded in 1991 by four UK-based char-
ities: Equal Exchange UK; Traidcraft; Twin; and Oxfam.
Since then, it has grown into the UK’s largest Fair Trade
only company. The founders’ aim was to get small produc-
ers a better price for their crops and greater opportunities
for their communities. Cafédirect’s range has expanded
from a single coffee product in 1991 to a portfolio of over
twenty products, including gourmet coffees, speciality
teas, and drinking chocolate. Its turnover in 2008 was
£22.3 million with pre-tax pro?ts of £901,000. Cafédirect
works with 39 grower organizations across thirteen devel-
oping countries and engages with 260,000 farmers to im-
prove the lives of more than 1.4 million people. Since
2000, Cafédirect has invested more than £3.3 million of
its pro?ts directly into the businesses and communities
of growers paying more than £13 million over and above
market prices for raw materials.
Cafédirect was ?nancially supported by its founders for
over twelve years and initially operated as a charity. How-
ever, with sales growth averaging between 20% and 30%
per annum, the company’s need for working capital and
new investment in marketing increased rapidly. In 2002/
2003, Cafédirect’s board explored the possibility of raising
venture capital, but some of the founders were concerned
about engaging with a venture capitalist. In 2003, the com-
pany decided to raise capital through an alternative share
issue in order to invest in its brand, repay borrowings, fund
working capital, and invest in computer systems. Having
changed its form of incorporation to a PLC, Cafédirect suc-
cessfully raised £5 million of equity (at £1 per share) from
4500 new investors in the ?rst half of 2004. The share issue
was oversubscribed. The dividend for 2008 was set at 2p
per share.
Table 2
Charity Annual Return: Summary of Requirements.
Income in the ?nancial period
reported upon
Part A RSI Part B Part C
Charity Information (basic register
information/annual update)
Reporting serious
incidents declaration
Financial
information
Summary information
return (SIR)
£10 K or less
*
>£10 K–£25 K
*
>£25 K–£500 K
* *
>£500 K–£1 M
* * *
>£1 million
* * * *
1
This parallels the development of social investment which is also most
advanced in the UK. In both cases the involvement of an engaged and
sympathetic government for over a decade has been an important
contributory factor (OTS, 2006).
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 761
As a PLC, Cafédirect is required to ?le detailed ?nancial
accounts with Companies House annually. The 2007 an-
nual report was carefully structured to re?ect the mission
objectives of the social enterprise and its market position-
ing: ?nancial results are discussed only after a long section
devoted to producer stories and details of the producer
partnership programme’s achievements and expenses
(£1.4 million of pro?ts spent on the programme). Before
the audited ?nancial statements, the remainder of the an-
nual report focused on product quality, environmental
stewardship, outreach and education activities, account-
ability and governance, and producer networks. In the nar-
rative section of the annual report only 8 pages out of 53
are devoted to discussing the business activities of Cafédi-
rect directly and only 39 out of the total of the 84 pages of
the full report concern ?nancial disclosure. Despite being a
social enterprise with shareholders, the annual report
sends a clear message that the organization’s social mis-
sion objectives are a priority above its ?nancial
achievements.
SROI: Wise Group (www.thewisegroup.co.uk)
The Wise Group is a trading charity that aims to provide
training and job opportunities for the long-term unem-
ployed by building intermediate labour markets (ILMs). It
was formed in 1983 in Glasgow originally as an energy
conservation initiative, that later diversi?ed into employ-
ment and training services across a range of sectors includ-
ing childcare, recycling, of?ce work and call centres. Since
1983 the Group has helped over 28,000 people into work.
In 2008 it created employment opportunities for 3337 peo-
ple, its highest ever ?gure in a single year. The Wise Group
currently has a staff of 420 and operates in Scotland and
the North East of England. Much of its work is done in part-
nership with other organizations and agencies, including
the Scottish Government, the Energy Saving Trust, and
the Northern Rock Foundation. It turnover in 2008 was
£21 million.
In accordance with charity law, the Wise Group pub-
lishes an annual Trustees’ Report and full ?nancial ac-
counts. However, it also aims for a range of further social
impact disclosures and reporting. In 2004 the Group pub-
lished its ?rst detailed analysis of its social impact – ‘Com-
munity Impact Statistics’ – in terms of jobs and training,
community and resident impact, and the ?nancial value
creation of its investment in communities, additional ILM
wages, the reduction in bene?t claims, and energy savings.
In 2007, the Wise Group published its ?rst social return on
investment report (SROI) as part of a pilot programme
managed by Forth Sector and funded by the European Un-
ion EQUAL programme together with the Communities
Scotland’s Social Economy Unit. The aim was to test how
far SROI methodology could be used to measure and com-
municate the full range of impacts and value creation in
social sector projects. The SROI analysis focused on one
speci?c project based in Cadder – north of Glasgow – that
aimed to combine environmental regeneration of run
down housing stock with employment creation in the local
economy. The research demonstrated that a range of
monetizable impacts were created including: increased
training and employability opportunities; reduced state
welfare spending; increased income tax; reduced mainte-
nance costs of improved areas; improved sustainability of
regeneration projects. Twelve ?nancial indicators were
used to measure and report on these impacts. These in-
cluded: welfare bene?t savings from temporary employ-
ment; increased income for the participants; increased
employability of those not entering employment; in-
creased future earning potential arising from quali?cations
achieved; drugs and mental health outcomes. The SROI
analysis suggested that for every £1 spent, £4.65 had been
realized in added value and that this equated to £14,989
per participant. The Wise Group published its ?ndings in
a SROI report that is publicly available.
2
CIC34: Develop Your Child (www.developyourchild.co.uk)
Originally founded in 2002 as Rebus B2B Ltd. by Alan
Wilson, Develop Your Child (DYC) was incorporated as a
Community Interest Company (CIC) in 2006. The organiza-
tion provides a range of services to support families in
helping develop young people to reach their full potential
through family coaching that improves communication be-
tween parents and their children. The organization also of-
fers supporting literature and video materials. Courses
include one-to-one parent coaching and step-by-step
courses that aim to empower parents via ‘positive parent-
ing’, to assist children in maximizing their potential, to im-
prove intra-family communication, and to increase
children’s self-esteem and con?dence. These services are
designed to be delivered by teachers, educationalists,
youth leaders, or family support workers and all actively
involve parents and/or carers. DYC is based in Kent, UK,
and has a local staff of ?ve coaches and a network of fran-
chized Associates around the world that use its models (in
France, New Zealand, Singapore, Sweden, and USA). The
CIC has created a separate charity – Family Matters (origi-
nally the Develop Your Child Foundation) – that engages
with families in the community.
The majority of DYC’s services and materials are offered
free to its clients, since it gets most of its income from pub-
lic sector contracts to provide parenting services. It is in-
cluded in the UK government’s Commissioners’ Toolkit
database that provides a list of preferred service providers
to every UK local authority.
To date DYC has ?led one set of annual reports to Feb-
ruary 2008. These provide ?nancial information in terms
of an abbreviated balance sheet (DYC’s income is below
the threshold that requires full ?nancial disclosure) and a
CIC 34 report. The latter gives details of services offered
and mission objectives (‘to create personal empowerment’,
‘to change the relationships within families’) as well as
underlining a commitment to stakeholder consultation
after every course offered (‘we are continually reviewing
and revising our material from the feedback we got during
and on completion of our courses’). The latter also func-
tions as a statement of quality control. It is recorded that
2http://www.sroi-uk.org/index.php?option=com_docman&task=cat_
view&gid=23&Itemid=38.
762 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
the CIC’s directors did not take any remuneration during
the year and that there were no issues concerning assets
or share capital. DYC uses the CIC34 to establish its legiti-
macy as a CIC both in terms of the information given
(emphasising how it delivers upon its social mission in
an enterprising manner) and in the act of ?ling the form it-
self (by publicly conforming to the CIC regulations). This
re?ects one of the policy objectives set for CICs, namely
that the legal form would act as a self-identifying brand
to distinguish social enterprises from other organizations.
Enhanced social audit: Furniture Resource Centre Group
(www.frcgroup.co.uk)
The Furniture Resource Centre (FRC) Group is a trading
charity that aims to use business solutions to address so-
cial and environmental problems. The group consists of
four related businesses: a furnishing and removals busi-
ness that provides goods and services to thousands of peo-
ple throughout the UK (Furniture Resource Centre); a
furniture retailer that supplies goods to low income fami-
lies in Merseyside (Revive); a waste management and recy-
cling business that serves over 100,000 households a year
(Bulky Bob’s); a consultancy and training organization that
helps others learn from FRC Groups’s experiences and
those of leading social businesses throughout the world
(the Cat’s Pyjamas). In addition to providing socially and
environmentally positive goods and services, FRC Group
also adds further value by acting as a work integration so-
cial enterprise offering a salary and training to the long-
term unemployed.
FRC Group was originally set up in 1987 as a charity at
the request of the churches in Liverpool. It aimed to pro-
vide furniture to families who had accommodation, but lit-
tle furniture. Initially it was reliant on grant income.
However, in the early 1990s the organization moved from
a charity model to one that more closely resembled a tra-
ditional company creating and selling products and ser-
vices into the competitive market. In 1994, a one-stop
commercial furnishing service for registered social land-
lords was launched and by 2004 a reliance on grant income
had all but been phased out.
FRC Group’s management is explicit about its strate-
gic focus on balancing ?nancial and social value crea-
tion and the tensions this can create. The result is
that overall pro?tability is often reduced by the costs
of its social objectives (for example, the group’s ‘Uni-
versity for the People’, through which its staff can ac-
cess a range of in-work and out-of-work courses and
support activities). The former CEO, Liam Black, com-
mented on the need to develop a ‘shared vocabulary
and management culture that is very much focused
on trying to make sense of this perpetual balancing
act’ (Black, 2003). An important element in this strate-
gic balance has been paying close attention to reporting
social impact. This has been driven by a sense of what
Black has called the ‘moral obligation’ of social enter-
prises to demonstrate their speci?c value-added contri-
butions given their particular advantages (for example,
access to grants) compared to the conventional busi-
ness with which they often compete. FRC Group also
sees the process of social ‘auditing’ as a quality man-
agement system for their operations, raising issues
and exposing mission failures.
In accordance with charity law, FRC Group publishes an
annual Trustees’ Report and full ?nancial statements, but
goes signi?cantly beyond this in its reporting and disclo-
sure practices. Each year the group publishes a detailed
sustainability report that covers not only commercial per-
formance (tellingly called ‘our business’), but also human
resource issues (‘our people’), and environmental perfor-
mance (‘our environmental impact’). FRC Group’s 2005/6
Sustainability Report was shortlisted in ACCA’s UK Awards
for Sustainability Reporting 2006. The 2007/8 annual re-
port also included a SROI assessment to measure and re-
port the full added value generated by the Revive
furniture store. This analysis calculated that every £1 spent
in the store produced a social return of £2.25 by providing
lower cost or discounted furniture to low-income house-
holds that otherwise would rely upon more expensive cat-
alogue or credit options to purchase goods.
In addition, since 2001, FRC Group has published an an-
nual enhanced social audit report that – amongst other
measures – canvasses a range of internal and external
stakeholder assessments of its success in meeting mission
objectives. The group makes a particular point of testing
the impact of its core values – ‘bravery’, ‘creativity’, ‘pas-
sion’, ‘professionalism’ – as part of its reporting. Initially,
this report was titled ‘We Do Good Things: Don’t We?’
deliberately to challenge the legitimacy surplus accorded
to it as a charity (see above). More recently, FRC Group
has introduced a new form of internal performance moni-
toring and reporting in the form of an annual survey titled
– in typical style – ‘How’s It Going? (HiG)’. This aims to
provide a mechanism for staff to discuss their individual
training and career progress. The group’s Social Audit Re-
port won best Social Report at the ACCA UK Sustainability
Reporting Awards in February 2005.
Trustees’ Report: Hackney Community Transport
(www.hctgroup.org)
Hackney Community Transport (HCT) was founded in
1982 by a number of local community groups in the Lon-
don Borough of Hackney with the aim of providing afford-
able community transport services for the use of local
voluntary organizations, charities, and community groups.
Initially HCT offered community transport removals, Dial-
A-Ride, and minibus services to the local disabled popula-
tion (as well as others). However, in 2001, HCT secured the
contract to operate the 153 London red bus route which
runs from Islington to Homerton Hospital for Transport
for London. In 2003, HCT added the 388 and 394 London
red bus routes. In 2004, the organization expanded its
operations to the neighbouring London Borough of Wal-
tham Forest when it was contracted to deliver ?ve hundred
local special needs children to school and back each day.
2005 saw further expansion, this time outside London,
when HCT started running the My Bus school routes ser-
vice in and around Wake?eld, West Yorkshire. In 2006,
HCT merged with Lambeth and Southwark Community
Transport to access bus routes south of the Thames for
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 763
the ?rst time and added the W13 red bus service between
Leytonstone bus station and Woodford Wells under con-
tract. The 816 red bus service was added the following
year.
HCT has evolved into a complicated hybrid structure.
HCT Group is the holding company for all operations. It is
a company limited by guarantee (and, therefore, has no
shareholders), which is registered in England and Wales.
The company is also a registered charity. HCT Group owns
a limited company – Hackney Community Transport Lim-
ited – that, in turn, owns all of the share capital in a trading
subsidiary called CT Plus. CT Plus runs the majority of
transport and training services of the Group and owns
the CT Plus trading brand. It became a Community Interest
Company (CIC) in 2007. CT Plus also owns the share capital
in a further subsidiary CT Plus (Yorkshire) C.I.C. that runs
all the services offered in Yorkshire.
In accordance with charity law, HCT ?les an annual
Trustees’ Report and full ?nancial statements. However,
it uses its reporting to underline its organizational culture
as a commercially competitive social enterprise with the
emphasis very much on its ?nancial performance with lit-
tle additional information about its social impact beyond
stating its principle aims and objectives and recording
key output measures (‘increase the provision of red bus
services in London’).
The case studies suggest that social entrepreneurs use
social impact reporting creatively to enhance their per-
formance in terms of both internal and external perspec-
tives. Thus, Cafédirect subverts the annual report of
audited ?nancial accounts format to stress its social mis-
sion impacts in the context of a trading PLC model. This
approach balances a self-legitimation project (social im-
pact reporting gains legitimacy from integration with au-
dited ?nancial accounts) with a wider objective to
demonstrate that a business can also trade for a social
purpose. This is strategically designed to appeal to their
core customers and investors for whom the market-driven
model of Fair Trade is particularly appealing (Nicholls &
Opal, 2005). With HCT Group the situation is reversed.
In this case, the Trustees’ Report is subverted by detailed
?nancial accounts to suggest that HCT is, above all, a
serious and credible business. The strategic objective
here is to present the Group as credible to public sector
transport services procurement of?cers who are condi-
tioned to contract with the private sector. The Wise
Group and DYC both use social impact reporting as a
mechanism to demonstrate their performance to other
key institutional players (both resource providers and
regulators) and also as a project to establish distinct
self-identity as a social enterprise and CIC respectively.
This has an important signalling value outside and inside
the organizations. Finally, FRC Group focuses speci?cally
on performance enhancement via stakeholder engage-
ment in its reporting practices. This constitutes the most
challenging of all the approaches since it requires all
operational systems to be tested and discussed and the
resultant data made public and actioned. This resource
intensive approach is only possible in the context of an
organizational culture that prioritizes ‘bravery’ and
‘creativity’.
Blended Value Accounting
Emerson (2003) ?rst coined the notion of Blended Value
as a conceptualization of the combination of ?nancial and
social outputs and impacts generated by all organizations.
The logic of a Blended Value analysis suggests that, ?rst, all
organizations create both ?nancial and social value, and
that, second, the two types of value creation are intrinsi-
cally connected rather than being in opposition in a zero
sum equation (i.e. to generate more social value an organi-
zation must sacri?ce its ?nancial performance). Emerson
suggested that such zero sum analysis allowed corpora-
tions to ignore their wider impacts (for example environ-
mental externalities). Conversely, it also reduced the
incentives for social purpose organizations to innovate, im-
prove their social impacts, and learn positive lessons from
competitive market models (for example, in terms of re-
source strategies). As part of the Blended Value model,
Emerson suggested that organizations needed to develop
more holistic accounting practices that re?ected their full
value creation (and destruction) activities. Such an ap-
proach has been operationalized by Generation Investment
Management and can also be seen in some of the recom-
mendations of the Enhanced Analytics Initiative.
3
Building on Emerson, the range of social impact report-
ing practices detailed above can be conceptualized as a
spectrum of disclosure logics constituting a Blended Value
Accounting that is used by social entrepreneurs to access
resources and realize organizational mission objectives
with key stakeholders. Blended Value Accounting captures
an important element of the experimentation and learning
across time demonstrated by social entrepreneurs as they
have combined, adapted, and developed new reporting
practices and then tested the strategic value of each option
against their mission objectives. Blended Value Accounting
approaches stimulate and encourage innovation by not
imposing a prescriptive and simple solution to capturing
multiple values for multiple stakeholders. Rather it enables
different combinations of practices to be explored and
tested over time. This is an ongoing project: for example,
HCT Group, having proved successful in using its disclosure
practices to underline its reputation as ‘business-like’, is
now looking to develop an enhanced social audit report
with which it can access new resources from social
investors.
Blended Value Accounting can be concretized within a
spectrum of reporting practices that do not represent a
prescriptive set of logics or a static overall reporting sche-
ma, but, rather, a conceptual space in which reporting
innovations that allow experimentation and new learning
can emerge (see Fig. 1). Re?ecting Emerson (2003), this
spectrum has as its two poles reporting quantitative ?nan-
cial value creation and reporting more qualitative social
value creation. The Blended Value Accounting spectrum
presents a range of social impact reporting options located
between ?nancial and social accounting as distinct sets of
practices that can be combined to capture the holistic com-
plexity of organizational outputs and impacts. This spec-
3
www.enhancedanalytics.com.
764 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
trum also positions these reporting practices in terms of
the three conceptualizations of the functions of disclosure
noted above (the rationalist/positivist, critical theorist, and
the interpretive/democratic).
As was noted above, these three conceptualizations cor-
respond to different strategic objectives for social entre-
preneurs: positivist reporting practices aim to enhance
operational performance and drive innovation; critical the-
orist practices support resource acquisition; interpretive
reporting builds and maintains organizational legitimacy
(both cognitive and normative: Suchman, 1995). It has al-
ready been noted that social entrepreneurship is character-
ized by a range of market oriented logics that drive
relentless performance improvement and enhanced
accountabilities. Social entrepreneurs map Blended Value
Accounting approaches against these two strategic objec-
tives and the three conceptual manifestations of disclosure
and audit to determine the strategic opportunities they of-
fer (see Table 3). For example, enhanced social audit has a
strategic value in the positivistic reporting context in order
to improve stakeholder accountability. Similarly, social re-
turn on investment has a strategic role to play in the crit-
ical theorist conceptualization of reporting as control
mechanism – namely it supports resource seeking from
powerful resource holders such as foundations or venture
philanthropists. Finally, ?ling a CIC34 reports ful?ls a stra-
tegic requirement to demonstrate community bene?t to
key stakeholders (here the state regulator) within the
interpretive theoretical tradition of democratic
accountability.
In this way social entrepreneurs interpret the Blended
Value Accounting spectrum according to the strategic as
well as regulatory contexts in which they operate. This
can lead to the formation of various ‘dashboards’ or more
heuristic combinations of metrics that aim to provide an
agreed set of credible and comparable social performance
data to address multiple strategic ends and various audi-
ences (Acumen., 2006; Cunningham & Harris, 2001; Ken-
dall & Knapp, 2000). Conceptualizing emergent reporting
practices as elements of strategic innovation to support so-
cial mission objectives is a striking feature of social entre-
preneurship. Such ‘institutional entrepreneurship’ (e.g.
Lawrence & Phillips, 2004) sees social entrepreneurs
manipulating institutional structures and narratives to cre-
ate new legitimacies and logics of action. Such action is
also having a wider in?uence as part of a new reporting
landscape in the social sector populated by intermediary
organizations such as New Philanthropy Capital and the
New Economics Foundation. The UK government is also
exploring using social return on investment to assess im-
pact across a range of departments including health.
A ?nal, and signi?cant, strategic objective of the new
social impact reporting is organizational self-legitimation.
It is clear that the drive publicly to address the question
set itself by Furniture Resource Centre Group – ‘we do good
things, don’t we?’ – represents a powerful element within
the socially entrepreneurial mindset. It is a manifestation
of a market oriented and competitive approach that both
drives operational improvement in social entrepreneurship
and demands that it be put to the public test. Thus, the
‘moral vocabulary’ of Blended Value Accounting in practice
combines two modes of control – managerial and demo-
cratic (Drori, 2006) – in one logic of governance. Socially
entrepreneurial organizations aim simultaneously to im-
prove the existing provision of public goods and to demon-
strate their performance impacts to the world at large by
developing a meaningful and relevant reporting
vocabulary.
The conceptual logic here has striking parallels with
Habermassian ‘communicative rationality’. Habermas
(1981) argued – in opposition to Foucault – that human-
kind naturally strives to achieve a consensus on the com-
mon rules of discourse to create a democratic and
transparent dialogue leading to ‘emancipation’ via the in-
nate human capacity to deliberate and pursue rational
interests. This theory distinguishes itself from traditional
rationalist views of the world by suggesting that rational-
ity itself is based on interpersonal and interpretive com-
munication not external structural referents. Habermas
believed that humanity was capable of developing a more
just and equal global order via such discourse ethics. From
this perspective, social entrepreneurs use social impact
reporting practices strategically to build a space for critical
Critical Theorist Positivist Interpretive
Financial
Value
Social
Value
Trustee’s
Report
Annual Report Of Audited
Financial Accounts
CIC 34
Enhanced Social
Audit SROI
(Quantitative Data) (Qualitative Data)
Fig. 1. The spectrum of Blended Value Accounting.
Table 3
Strategic functions of reporting in social entrepreneurship.
Strategic
function
Internal
command
and control
Stakeholder
accountability
Positivist Performance
enhancement
Audited ?nancial
accounts
Enhanced social
audit
Social return on
investment
Critical
theorist
Resource
acquisition
Audited ?nancial
accounts
Social return on
investment
Interpretive Organizational
legitimacy
Enhanced social
audit
Trustees’ Report
CIC34
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 765
and dynamic communication processes in which innova-
tive types of social and environmental value creation can
be negotiated and actioned to better represent the ‘life-
world’ (see also Power & Laughlin, 1996). This process pro-
vides a conceptual unity to the Blended Value Accounting
spectrum and explains the ease with which social entre-
preneurs exploit (and hybridize) multiple organizational
forms and types of disclosure: legal form and reporting
practices are pliable and serve the larger mission rather
than the other way around.
Conclusion
The research presented here has provided a theoretical
and empirical analysis of social impact reporting in social
entrepreneurship for the ?rst time. It has suggested that
social entrepreneurs use social impact reporting in a num-
ber of strategic ways to enhance their performance, access
resources, and build organizational legitimacy. A new con-
ceptual model of social impact reporting has been estab-
lished – the Blended Value Accounting spectrum – and
some further theoretical issues explored. In conclusion,
some of the wider implications of these social impact
reporting innovations are considered.
First, reporting social impact represents a multi-dimen-
sional aggregation of perspectives (often emergent, devel-
oping, and changing), each of which can be ?uid,
contingent, and contested (for analogous interpretive is-
sues in public sector performance measurement see, for
example, Bovaird & Loef?er, 2003; Meyer & Scott, 1992).
Power (2007) noted that all organizations exist within a
‘reputation constellation’ – namely the ‘conceptual, legal
and ethical dynamic in which the boundary between orga-
nizations, their environments, and society as a whole is
negotiated’ (Power, 2007, p. 133). From this perspective
there have been major changes in recent times for social
purpose organizations with new demands being placed
upon them by government, resource providers, and society
more broadly. As has already been noted, Blended Value
Accounting offers a dynamic and multi-layered space for
negotiating reporting practices, but it does not constitute
an agreed calculative mechanism. As a consequence, the
interpretive context of a given stakeholder’s perspective
on social impact performance can directly affect the mode
of calculation and this may require a recalibration of
reporting practice. For example, government procurement
of?cers can ?nd it dif?cult to interpret social enterprise ac-
counts that allocate pro?t to their social mission objec-
tives. When judged from standard accounting
perspectives many successful social enterprises, therefore,
appear to be barely pro?table and, consequently, risky con-
tractual partners compared with other private sector
companies.
Second, whilst the account of the Blended Value
Accounting actions of social entrepreneurs has been taken
here to constitute a largely positive public good in a nor-
mative sense, there may, however, be a dark side to these
reporting innovations. Dart (2004) argued that normative
pressures from the dominant logics of business have lead
many social entrepreneurs to borrow and adapt organiza-
tional models from the commercial sector rather than de-
velop their own unique forms (particularly in the case of
social enterprises). The notion that the imposition of social
impact disclosure on social entrepreneurship represents
the coercive effect of external forces is consistent with
other analyses of the isomorphic pressures inherent in
institutional systems that in?uence measures of perfor-
mance to be con?gured to support external perceptions
of legitimacy rather than to represent a source of organiza-
tional innovation, learning, or effectiveness (Dart, 2004;
DiMaggio & Anheier, 1990; DiMaggio & Powell, 1983). As
a result, they often re?ect larger power structures and nor-
mative social pressures rather than internal processes
(Brunsson & Olsen, 1993; Meyer & Rowan, 1977; Suchman,
1995). This has, in part, been the product of the institu-
tional logic of the competitive, information rich, market
as the best driver of organizational ef?ciency and account-
ability, irrespective of sectoral differences (Bevan & Hood,
2006; Lee 2004; Offer, 2001; though see LeGrand, 2003,
for a more nuanced approach). In a different, but con-
nected, tradition of analysis, it has also been widely argued
that metrics and audit regimes are the product of a positiv-
ist conception of management control, re?ecting socially
constructed power relations and regulatory fashion, rather
than a means of capturing a rationalist ‘reality’ (Power,
1994a, 1994b; Neely, 1998; LeGrand, 2003). Established
critiques of the sometimes dysfunctional role of audit
and performance metrics in the public sector (e.g. Power,
1994a, 1994b, 2003; Rahaman, Lawrence, & Roper, 2004;
Bevan & Hood, 2006) and re?ections on the chequered his-
tory of ‘social’ accounting in the private sector (see Gray,
2002, for a useful review) underline the limitations of con-
ventional measurement processes in capturing social
value.
One interpretation of the new social impact metrics,
then, is as an example of the creeping ‘?nancialization’ of
society. Some see this as part of a larger process of the
‘privatization’ of the social that is also evidenced in the
quasi-market models now commonly used to distribute
social goods in many countries (Osbourne & Gaebler,
1992; LeGrand & Bartlett, 1993; Walsh, 1995; Bovaird,
2006). This take on social entrepreneurs’ activity corre-
sponds to a broader set of democratic concerns around
the increasing normative value given to business and
enterprise as transformative cultural objects within the so-
cial sector (e.g. Collier, 2007; Bishop & Green, 2008; Moyo,
2009). The suggestion that by adopting business practices
the social sector can signi?cantly improve its performance
is controversial but is clearly evident in calls for a signi?-
cant shift in the reporting demands put on the sector
voiced by government and others. The logic of business ap-
plied to the social demands clear representation of perfor-
mance (and return on investment) in comparable ?nancial
terms. Yet, whilst comparability of this sort may look
attractive to some investors or donors, the Blended Value
Accounting spectrum reminds us that a degree of bespoke
reporting is required if social impacts are to be fully ex-
pressed within their appropriate context. The failure of
conventional accounting to capture and value social and
environmental goods to date further demonstrates the
problematic nature of this approach. As a consequence,
766 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
there is a danger that the equivalent of Lukes’ (1974) third
dimension of power may be enacted in social impact
reporting. Namely, that the range of social impact report-
ing options may be limited by a larger ‘manipulation of de-
sires’ or preference shaping by powerful institutional logics
(and the self-interested elites that use them as tools of
domination) that aim to control the values and ideologies
that frame and shape discourses.
Despite these caveats, the Blended Value Accounting
approach appears to have a value beyond social entrepre-
neurship alone. The Blended Value Accounting spectrum
explicitly suggests that there are a range of reporting prac-
tices available to managers that can be used creatively and
adaptively in different contexts and to different strategic
ends. From this perspective, the function and value of such
reporting is ?uid, contingent, and dynamic: but not passive
or unstrategic. This emphasis on diversity and contingency
is in contrast to the institutionalization of many reporting
practices across all three sectors of society that are static
and resistant to reform. Given the recent history of stan-
dardized accounting systems proving un?t for purpose as
risk management/control systems in ?nance either at the
micro- (the Enron scandal of 2001) or macro-levels (the
current global ?nancial crisis), introducing increased diver-
sity of reporting systems into organizations seems an ur-
gent objective (Power, 2007). The use of SROI by
corporations such as Philips in the Netherlands demon-
strates the broader applications of reporting practices ?rst
developed in the social sector.
The discussion developed above has attempted to con-
ceptualize the new landscape of social impact reporting
being pioneered by social entrepreneurs in its institutional
and strategic context for the ?rst time. Inevitably this has
only been a partial account, limited most notably by the
UK focus in terms of case data. However, the theoretical
observations drawn from the cases have wider interna-
tional relevance: Blended Value Accounting methodologies
are evident across the world. For example, SROI originated
in the USA and continues to be used and re?ned there
(Emerson, 1999, chap. 8), as well as in continental Europe
(Scholten & Franssen, 2008) In Africa, Kickstart has devel-
oped a range of bespoke reporting practices to capture its
social and environmental performance that include de-
tailed marketing surveys of the customers for its irrigation
products (Fisher, 2009). In Asia, Aravind Hospital publishes
highly detailed qualitative and quantitative reports on the
performance of its eye hospitals and associated projects
that take the standard corporate annual report form and
develop it to include discussions of the organization’s spiri-
tual and cultural objectives and activities. In Latin America,
a social investment fund, NESsT, publishes case studies of
its investees both to explore and demonstrate its impact
and to act as good practice teaching and learning tools
for the wider social enterprise community (Davis, Etchart,
Jara, & Milder, 2003).
Other limitations include the use of case study data and
early stage theorization that clearly needs further re?ning
and empirical testing. Despite these limitations, the analy-
sis here suggests a number of future lines of research. For
example, a larger empirical survey of the social impact
reporting practices of one type of social entrepreneurship
could test some of the assertions made here concerning
the strategic use of Blended Value Accounting. The obvious
starting point here is Community Interest Companies since
they represent a large – but not huge – sample and their
reporting data is relatively easy to identify, isolate, and
analyse. It would also be valuable to use a range of theoret-
ical approaches to conceptualize further social impact
reporting, perhaps in terms of its broader organizational
functions and institutional settings. This work could broad-
en the empirical base beyond the UK. Finally, qualitative
data could be collected from social entrepreneurs and their
key stakeholders to allow a more ?ne tuned analysis of the
role and ethos of social impact reporting in context.
Despite these limitations, it is hoped that the research
presented here constitutes the start of a larger project to
both understand the ?eld-level reality of social impact
reporting innovation and to learn wider lessons from the
social entrepreneurs that are pushing forward the bound-
aries of such action. The ‘moral obligation’ to use reporting
practices strategically to drive improved internal perfor-
mance and better external accountability surely applies
to all organizations social, commercial, and public sector.
Acknowledgement
My thanks go to the anonymous reviewers for their use-
ful and important observations concerning earlier drafts of
this paper.
References
Acumen. (2006). Our impact. .
Alvord, S., Brown, L., & Letts, C. (2004). Social entrepreneurship and
societal transformation: An exploratory study. Journal of Applied
Behavioral Science, 40.3, 260–283.
Anheier, H., & Leat, D. (2006). Creative philanthropy. London: Routledge.
Arrow, K. (1951). Social choice and individual values. New Haven: Yale
University Press.
Austin, R. (1996). Measuring and managing performance in organisations.
New York: Dorset House.
Bernholz, L. (2004). Creating philanthropic capital markets. Hoboken: John
Wiley.
Bevan, C., & Hood, C. (2006). What’s measured is what matters: Targets
and gaming in the English public health care system. Public
Administration, 84.3, 517–538.
Bird, P., & Morgan-Jones, P. (1981). Financial reporting by charities. England
and Wales: Institute of Chartered Accountants.
Bishop, M., & Green, M. (2008). Philanthrocapitalism: How the rich can save
the world and why we should let them. London: A and C Black.
Black, L. (2003). Archive: Liam black. Ethical corporation, May 20th.
.
BOND – British Overseas NGOs for Development. (2006). A BOND approach
to quality in non-governmental organization: Putting bene?ciaries ?rst.
London.
Bornstein, D. (2004). How to change the world: Social entrepreneurs and the
power of new ideas. Oxford: Oxford University Press.
Boschee, J. (1995). Social entrepreneurship. Across the Board, 32.3, 20–25.
Boschee, J., & McClurg, D. (2003). Toward a better understanding of social
entrepreneurship: Some important distinctions. Minnesota: Institute for
Social Entrepreneurs.
Bovaird, T. (2006). Developing new relationships with the ‘Market’ in the
procurement of public services. Public Administration, 84.1, 81–102.
Bovaird, T., & Loef?er, E. (2003). Evaluating the quality of public
governance: Indicators, models and methodologies. International
Review of Administrative Sciences, 69.3, 313–328.
Brunsson, N., & Olsen, J. (1993). The reforming organisation. London:
Routledge.
Chipman, J., & Moore, J. (1978). The new welfare economics 1939–1974.
International Economic Review, 19.3, 547–584.
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 767
Chua, W. (1986). Radical developments in accounting thought. The
Accounting Review, LX1.4, 601–632.
Clotfelter, C. (1992). The distributional consequences of nonpro?t
activities. In C. Clotfelter (Ed.), Who bene?ts from the nonpro?t
sector? (pp 1–23). Chicago: University of Chicago Press.
Collier, P. (2007). The bottom billion. Oxford: Oxford University Press.
Connolly, C., & Hyndman, N. (2000). Charity accounting: An empirical
analysis of the impact of recent changes. The British Accounting
Review, 32.1, 77–100.
Cunningham, G., & Harris, J. (2001). A heuristic framework for
accountability of governmental subunits. Public Management Review,
2, 145–165.
Dart, R. (2004). The legitimacy of social enterprise. Nonpro?t Management
and Leadership, 14.4, 411–424.
Davis, L., Etchart, N., Jara, M., & Milder, B. (2003). Risky business: The
impacts of merging mission and market. Santiago, Chile: NESsT.
Dees, J. G. (1994). Social enterprise: Private initiatives for common good.
Harvard: Harvard Business School Press.
Dees, J. G. (1998a). The meaning of social entrepreneurship. .
Dees, J. G. (1998b). Enterprising nonpro?ts. Harvard Business Review,
76.1(January–February), 54–67.
Dees, J. G., & Battle Anderson, B. (2006). Rhetoric, reality, and research:
Building a solid foundation for the practice of social entrepreneurship.
In A. Nicholls (Ed.), Social entrepreneurship: New models of sustainable
social change (pp. 144–168). Oxford: Oxford University Press.
Dees, J. G., Emerson, J., & Economy, P. (2001). Enterprising non-pro?ts: A
toolkit for social entrepreneurs. New York: Wiley Non-Pro?t Series.
DiMaggio, P., & Anheier, H. (1990). The sociology of nonpro?t
organizations and sectors. Annual Review of Sociology, 16, 137–159.
DiMaggio, P., & Powell, W. (1983). The iron cage revisited: Institutional
isomorphism and collective rationality in organizational ?elds.
American Sociological Review, 48, 147–160.
Drayton, W. (2002). The citizen sector: Becoming as entrepreneurial and
competitive as business. California Management Review, 44.3,
120–132.
Drori, G. (2006). Governed by governance: The new prism for
organizational change. In G. Drori, J. Meyer, & H. Hwang (Eds.),
Globalization and organization: World society and organizational change
(pp. 91–118). Oxford: Oxford University Press.
Economist. (2005a). Hale and healthy, April 14th.
Economist. (2005b). Calling an end to poverty, July 7th.
Economist. (2005c). Good for me, good for my party. November 24th.
Economist. (2006a). The rise of the social entrepreneur, February 23rd.
Economist. (2006b). Special topic: The business of giving, February 23rd.
Economist. (2006c). The new powers in giving, June 29th
Economist. (2006d). The ?ght over a big idea, July 20th.
Economist. (2007a). Fish versus AIDS, August 30th.
Economist. (2007b). The Clinton factor, September 25th.
Economist. (2009). Saving the world, Special Report on Entrepreneurship,
March 14th.
Edwards, M., & Hulme, D. (1995). Introduction: NGO performance and
accountability. In M. Edwards & D. Hulme (Eds.), Beyond the magic
bullet: NGO performance and accountability in the post cold war world
(pp. 1–20). London: Earthscan.
Edwards, M., & Hulme, D. (1996). Too close for comfort: The impact of
of?cial aid on non-governmental organisations. World Development,
24.6, 961–973.
Elkington, J. (1997). Cannibals with forks: The triple bottom line of 21st
century business. London: Capstone.
Emerson, J. (1999). Social return on investment: Exploring aspects of value
creation. REDF box set (vol. 2). San Francisco: Roberts Enterprise
Development Foundation.
Emerson, J. (2003). The blended value proposition: Integrating social and
?nancial returns. California Management Review, 45.4, 35–51.
Feldman, A. (1980). Welfare economics and social choice theory. London:
Martinus Press.
Fisher, M. (2009). Income is development: Kickstart’s pumps help Kenyan
farmers transition to a cash economy. Innovations: Special Edition
Social Entrepreneurship, 139–163.
Forbes, D. (1998). Measuring the unmeasurable. Nonpro?t and Voluntary
Sector Quarterly, 27.2, 183–202.
Foster, W., & Bradach, J. (2005). Should nonpro?ts seeks pro?ts? Harvard
Business Review, 1(February–March), 92–100.
FRC (Furniture Resource Centre). (2004). Annual sustainability report.
Liverpool.
Gambling, T., Jones, R., & Karim, R. (1993). Credible organizations: Self
regulation vs. external standard setting in Islamic banks and English
charities. Financial Accountability and Management, 9.3, 195–207.
Giddens, A. (1990). The consequences of modernity. UK: Polity Press.
Gray, R. (2002). The social accounting project and accounting organizations
and society: Privileging engagement, imaginings, new accountings
and pragmatism over critique? Accounting Organizations and Society,
27, 687–708.
Habermas, J. (1981). The theory of communicative action (vols. 1–3).
London: Polity Press.
Harding, R. (2004). Social enterprise: The new economic engine? Business
Strategy Review, 15.4, 39–43.
Hines, A., & Jones, M. (1992). The impact of SORP2 on the UK charitable
sector: An empirical study. Financial Accountability and Management,
8.1, 49–67.
Hood, C. (1991). A public management for all seasons? Public
Administration, 69.1, 3–19.
Hopwood, A. (1978). Towards an organizational perspective for the study
of accounting and information systems. Accounting, Organizations and
Society, 3.1, 3–13.
Hopwood, A. (1983). On trying to study accounting in the contexts in
which it operates. Accounting, Organizations and Society, 8.3, 287–305.
Hopwood, A., & Miller, P. (1994). Accounting as social and institutional
practice. Cambridge: Cambridge Studies in Management.
Hutton, W., & Schneider, P. (2008). The failure of market failure. Towards a
21st century keynesianism, NESTA.
Jacobs, A. (2006). Helping people is dif?cult: Growth and performance in
social enterprises working for international relief and development.
In A. Nicholls (Ed.), Social entrepreneurship: New paradigms of
sustainable social change (pp. 247–270). Oxford: Oxford University
Press.
Jepson, P. (2005). Governance and accountability of environmental NGOs.
Environmental Science and Policy, 8, 515–524.
John, R. (2006). Venture philanthropy: The evolution of high engagement
philanthropy in Europe. Skoll Centre for Social Entrepreneurship.
.
John, R. (2007). Beyond the cheque: How venture philanthropists add value.
Skoll Centre for Social Entrepreneurship. .
Kant, E. (1978). [1787] Critique of pure reason, trans. Kemp-Smith, N.
London: Macmillan.
Kendall, J. (2003). The voluntary sector: Comparative perspectives in the UK.
London: Routledge.
Kendall, J., & Knapp, M. (2000). Measuring the performance of voluntary
organizations. Public Management, 2.1, 105–132.
Lawrence, T., & Phillips, N. (2004). From Moby Dick to free Willy: Macro-
cultural discourse and institutional entrepreneurship in emerging
institutional ?elds. Organization, 11.5, 689–711.
Leadbeater, C. (1997). The rise of the social entrepreneur. London: Demos.
LeGrand, J., & Bartlett, W. (Eds.). (1993). Quasi-markets and social policy.
London: Palgrave Macmillan.
Lee, P. (2004). Public service productivity: Health. Economic Trends, 613,
38–59.
LeGrand, J. (2003). Motivation, agency, and public policy: Of knights and
knaves, pawns and queens. Oxford: Oxford University Press.
Light, P. (2008). The search for social entrepreneurship. Washington, DC:
Brookings Institute.
Lister, S. (2003). NGO legitimacy – Technical issue or social construct.
Critique of Anthropology, 23, 175–192.
Little, I. (1950). A critique of welfare economics. Oxford: Oxford University
Press.
Lukes, S. (1974). Power: A radical view. London: MacMillan.
Mair, J., & Marti, I. (2006). Social entrepreneurship research: A source of
explanation, prediction and delight. Journal of World Business, 41.1,
36–44.
Mair, J., & Seelos, C. (2007). Pro?table business models and market
creation in the context of deep poverty: A strategic view. Academy of
Management Perspectives, 21.4, 49–63.
Meyer, J., & Rowan, B. (1977). Institutionalised organisations: Formal
structure as myth and ceremony. American Journal of Sociology, 83,
340–363.
Meyer, J., & Scott, W. (1992). Centralization and the legitimacy problems
of local government. In J. W. Meyer & W. R. Scott (Eds.), Organizational
environments: Ritual and rationality (pp. 199–215). London: Sage.
Miles, M., & Huberman, A. (1994). Qualitative data analysis: An expanded
sourcebook (2nd ed.). Thousand Oaks: Sage.
Miller, P. (1994). Accounting as social and institutional practice: An
introduction. In Accounting as social and institutional practice
(pp. 1–39). Cambridge: Cambridge Studies in Management.
Moyo, D. (2009). Dead aid: Why aid is not working and how there is another
way for Africa. London: Allen Lane.
768 A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769
Neely, A. (1998). Performance measurement: Why, what and how. London:
Economist Books.
Nicholls, A. (2004). Social entrepreneurship: The emerging landscape. In
S. Crainer & D. Dearlove (Eds.), The ?nancial times handbook of
management (3rd ed., pp. 636–643). Harlow: FT Prentice Hall.
Nicholls, J. (2004b). Social return on investment: Valuing what matters.
London: New Economics Foundation.
Nicholls, A. (2006). Social entrepreneurship. In D. Jones-Evans & S. Carter
(Eds.), Enterprise and small business: Principles, practice and policy (2nd
ed., pp. 220–242). Harlow: FT Prentice Hall.
Nicholls, A. (Ed.). (2008a). Social entrepreneurship: New models of
sustainable social change (Paperback ed.). Oxford: Oxford University
Press.
Nicholls, A. (2008b). Capturing the performance of the socially
entrepreneurial organisation (SEO): An organisational legitimacy
approach. In J. Robinson, J. Mair, & K. Hockerts (Eds.), International
perspectives on social entrepreneurship research (pp. 27–74). London:
Palgrave MacMillan.
Nicholls, A. (2009a). Learning to walk: Social entrepreneurship – A
research review. Innovations: Special Edition Social Entrepreneurship,
209–222.
Nicholls, A. (in press). The functions of measurement in social
entrepreneurship. In Hockerts, K., Robinson, J., & Mair, J. (Eds.),
Handbook of social entrepreneurship research. Palgrave MacMillan.
Nicholls, A., & Cho, A. (2006). Social entrepreneurship: The structuration
of a ?eld. In A. Nicholls (Ed.), Social entrepreneurship: New paradigms of
sustainable social change (pp. 99–118). Oxford: Oxford University
Press.
Nicholls, A., & Opal, C. (2005). Fair trade: Market-driven ethical
consumption. London: Sage.
Nicholls, A., & Young, R. (2008). Introduction: The changing landscape of
social entrepreneurship. In A. Nicholls (Ed.), Social entrepreneurship:
New paradigms of sustainable social change (Paperback ed.,
pp. vii–xxiii). Oxford: Oxford University Press.
Nyssens, M. (2006), Social Enterprise. London: Routledge.
O’Connell, J. (1982). Welfare economic theory. Boston: Auburn House
Publishing.
Offer, A. (2001). Why has the public sector grown so large in market
societies? Oxford: Oxford University Press.
Osbourne, D., & Gaebler, T. (1992). Reinventing government. Reading,
Mass.: Addison-Wesley.
OTS (Of?ce of the Third Sector). (2006). Social enterprise action plan:
Scaling new heights. Cabinet Of?ce.
Palmer, P., & Vinten, G. (1998). Accounting, auditing and regulating
charities – Towards a theoretical underpinning. Managerial Auditing
Journal, 13.6, 346–355.
Paton, R. (2003). Managing and measuring social enterprises. London: Sage.
Power, M. (1994a). The audit society. In A. Hopwood & P. Miller (Eds.),
Accounting as social and institutional practice (pp. 299–316).
Cambridge: Cambridge Studies in Management.
Power, M. (1994b). The audit explosion. London: Demos.
Power, M. (2003). Auditing and the production of legitimacy. Accounting,
Organizations and Society, 28, 379–394.
Power, M. (2007). Organized uncertainty: Designing a world of risk
management. Oxford: Oxford University Press.
Power, M., & Laughlin, R. (1996). Habermas, law and accounting.
Accounting, Organisations, and Society, 21.5, 441–465.
Prahalad, C. K. (2005). The fortune at the bottom of the pyramid. New
Jersey: Wharton Publishing.
Rahaman, A., Lawrence, S., & Roper, J. (2004). Social and environmental
reporting at the VRA: Institutionalised legitimacy or legitimation
crisis? Critical Perspectives on Accounting, 15, 35–56.
REDF – Roberts Enterprise Development Fund (2000). SROI methodology.
San Francisco: Roberts Enterprise Development Fund.
Ritchie, J., & Lewis, J. (Eds.). (2003). Qualitative research practice: A guide for
Social Science students and researchers. London: Sage.
Rousseau, D. (2006). Is there such a thing as ‘‘Evidenced-based
Management”? Academy of Management Review, 31.2,
256–269.
Ryan, B., Scapens, R., & Theobald, M. (1992). Research method and
methodology in accounting. London: Academic Press.
Scholten, P., & Franssen, B. (2008). Handbuch für Sozialunternehmertum.
Assen: Van Gorcum.
Suchman, M. (1995). Managing legitimacy: Strategic and
institutional approaches. Academy of Management Review, 20,
517–610.
Walsh, K. (1995). Public services and market mechanisms. Competition,
contracting, and the new public management. London: Palgrave
MacMillan.
Whittington, G. (1986). Financial accounting theory: An over-view. The
British Accounting Review, 18.1, 4–41.
Yunus, M. (1998). Banker to the poor. London: Aurum Press.
Zadek, S. (1998). Balancing performance, ethics, and accountability.
Journal of Business Ethics, 17, 1421–1441.
Zald, M. (2000). Ideologically structured action: An enlarged agenda for
social movement research. Mobilization, 5, 1–17.
Zald, M., & Davis, G. (2005). Social change, social theory, and the
convergence of movements and organisations. In G. Davis, D.
McAdam, W. Scott, & M. Zald (Eds.), Social movements and
organization theory (pp. 335–350). Cambridge: Cambridge University
Press.
A. Nicholls / Accounting, Organizations and Society 34 (2009) 755–769 769
doc_565719916.pdf