Abstract
Due to a growing societal concern, organizations are increasingly expected to disclose non-financial information. In response to these concerns, Social Return on Investment (SROI) has emerged as a method of measuring and monetizing social value. SROI is a performance measurement framework that measures how efficiently organizations utilize available resources to create social value. In contrast to traditional cost-benefit analyses, the SROI provides a more holistic view of impact. SROI translates social results into a monetary value, which helps organizations create a broader picture of the results from their time and money invested. This, in turn, assists organizations in identifying opportunities for generating future social and financial value. This chapter examines the applications and limitations of measuring social value, focusing on the challenges organizations face in attempting to report a reliable, valid, and relevant measure of SROI. The challenges in the reliable measurement of SROI include identifying stakeholders, proxies, data, time horizons, and deadweight factors. Challenges involve comparability, subjectivity, legitimacy, and resource utility. Whether SROI is a correct and appropriate method of measuring social value depends on the specific organization and its social activities. Therefore, managers must thoroughly examine the possible pros and cons of the technique before applying SROI.
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Damtoft, N.F., Lueg, R., van Liempd, D., Nielsen, J.G. (2023). A Critical Perspective on the Measurement of Social Value Through SROI. In: Nikolakis, W., Moura da Veiga, R. (eds) Social Value, Climate Change and Environmental Stewardship: Insights from Theory and Practice. Springer, Cham. https://doi.org/10.1007/978-3-031-23145-2_2
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