Roles of Accounting for the Contested Terrain of Social Enterprises

Abstract

Social enterprises are organisations that employ commercial strategies to deliver societal impact, rather than shareholder value, and may play an important role in the transition to a more socially sustainable society. However, social entrepreneurship has become a contested terrain due to its ambiguous identity and ideology. This study maintains that accounting plays a role in the development of social enterprises due to its ability to shape the domain of economic operation. Using interview data obtained from the key actors in Finland, this study identifies and analyses perceptions of the roles of accounting for social enterprises. Overall, the study highlights the ambiguities related to accounting for social enterprises and draws attention to the plural roles of accounting. It encourages opening up the processes of defining the principles and tools for accounting for social enterprises, arguing that such decisions may have broader organisational and societal implications.

Accounting for Emotional Value: A Review in Disability Organizations

“…Cost-effectiveness and cost-benefit analyzes have been frequently used by social entities to evaluate their interventions (Krlev et al, 2013). However, these methodologies have been widely criticized for not being able to reflect the multitude of intangible benefits derived from the strong mission of social entities Rangan, 2010, 2014;Bagnoli and Megali, 2011;Gibbon and Dey, 2011;Arvidson et al, 2013;Grieco et al, 2015;Mäkelä, 2021). In addition, these methodologies do not have a holistic vision of that allows visualizing all the changes generated by the interventions, nor do they take into account the long-term effects (Edwards et al, 2013;Banke-Thomas et al, 2015).…”

“…Third sector organizations not only need to incorporate social benefits in their measurement systems, but also to evaluate compliance with the expectations of their stakeholders (Gibbon and Dey, 2011;Luke et al, 2013;Costa et al, 2014;Grieco et al, 2015;Mäkelä, 2021). This requires to analyze the social value creation in a context that differs from that of commercial companies operating in the market, and at different levels including individuals (beneficiaries, family members, employees and volunteers), organizations, community and wider society (Becker, 2001;Mook et al, 2003;Luke et al, 2013).…”

“…In third sector organizations, social accounting must fulfill two major functions. On the one hand, it is a complex, dynamic, multidimensional and multi-stakeholder accounting system (Costa et al, 2014;Mäkelä, 2021) that holds a humanistic vision of the value created by the entity, in order to improve the well-being of people and face social challenges (Aguado et al, 2015). On the other hand, it must be an instrument that favors improvements in internal management Rangan, 2010, 2014;Gibbon and Dey, 2011;Ormiston, 2019;Mäkelä, 2021) and organizational legitimation (Gibbon and Dey, 2011;Luke et al, 2013;Lazkano and Beraza, 2019;Retolaza and San-Jose, 2021).…”

“…On the one hand, it is a complex, dynamic, multidimensional and multi-stakeholder accounting system (Costa et al, 2014;Mäkelä, 2021) that holds a humanistic vision of the value created by the entity, in order to improve the well-being of people and face social challenges (Aguado et al, 2015). On the other hand, it must be an instrument that favors improvements in internal management Rangan, 2010, 2014;Gibbon and Dey, 2011;Ormiston, 2019;Mäkelä, 2021) and organizational legitimation (Gibbon and Dey, 2011;Luke et al, 2013;Lazkano and Beraza, 2019;Retolaza and San-Jose, 2021). In addition, Mäkelä (2021) argues that the social accounting of these entities should be an instrument for socialization, and not a purely organizational phenomenon that responds to pressures from funders.…”

“…This value transcends the economic-financial market criteria of traditional financial statements (Mook et al, 2003;Richmond et al, 2003;Retolaza and San-Jose, 2021) and is essential to demonstrate the social contribution and progress toward the fulfillment of the mission of third sector entities (Sawhill and Williamson, 2001;Ebrahim and Rangan, 2014). Furthermore, in an environment of crisis and austerity, social value measurement can be a valid instrument of institutional legitimation for entities that are dependent on financial aid (Bagnoli and Megali, 2011;Luke et al, 2013;Mäkelä, 2021), justify the efficient use of the funds received (Millar and Hall, 2013;Arvidson and Lyon, 2014;Ebrahim and Rangan, 2014;Mook et al, 2015;Lazkano and Beraza, 2019; and help to improve the performance of social organizations Rangan, 2010, 2014;Gibbon and Dey, 2011;Cordery and Sinclair, 2013;Grieco et al, 2015;Mook et al, 2015). Particularly, in the field of organizations that work with people with disabilities, an important part of the social value is generated by its impact on improving the quality of life (QOL) and the emotional well-being of both service users and other stakeholders such as families, caregivers and staff .…”