Benefit of the Doubt Performance Measurement of Social Enterprises: Mission Lock-in or drift?

Abstract

Performance analysis plays a crucial role for our understanding of the effectiveness of social enterprises. However, the accurate measurement of both social and economic performance is one of the most prominent challenges of social entrepreneurship and current attempts to measure performance face practical and methodological issues. Especially the distinctive hybrid nature of social enterprises has complicated the empirical analysis of the performance. As a result of their hybridity, performance measurement techniques are required to both recognize the dual bottom-line objective (i.e. social and financial value creation) and reflect the relative idiosyncratic importance of these goals. This paper endorse the use of Data Envelopment Analysis (DEA) which allows for varying measurement units and firm-specific weighting of the different objectives. These calculated weights then act as proxies for the true mission orientation. Drawing on a longitudinal dataset, this paper shows how DEA can be applied to measure the overall performance and to track the potential mission drifts of Flemish Work-Integration Social Enterprises. Based on our findings, one can infer that low performers are facing a case of ‘reversed’ mission drift, meaning that they are systematically overemphasizing their attention on the social objectives and have lost sight on the financial aspects. Consequently, they are not able to improve both their social and financial performance over time. Further, our result suggest that the level of professionalization and economies of scale are important determinants for the overall efficiency and for avoiding the risk of mission drifts.