Measuring social performance: reconciling the tension between commercial and social logics

Abstract

Purpose The purpose of this paper is to explore the implementation of microfinance programs in three Malaysian development finance institutions (DFIs). Its main concerns revolve around how these DFIs measure and manage their social performance and how they reconcile their competing social and commercial objectives which are driven by particular logics. Design/methodology/approach This paper analyzes the ways in which the DFIs selected for this study measure and manage their social performance. The data were acquired from two sessions of focus group interviews, a series of semi-structured interviews, and extensive reviews of documentaries. The institutional logics perspective is used to explore the interplay between social and commercial logics in shaping the view and use of social performance measures in the three studied DFIs. Findings Although these DFIs have consistently offered formal microfinance programs to designated target groups, their ultimate focus has been on measuring financial as opposed to social performance. Hence, performance appraisal is mainly aligned with the breadth of outreach, rather than its depth. Nevertheless, there appear to be conflicts between the need to accommodate both breadth and depth, due to the competing demands of the two objectives. The rivalry between these two competing demands, which represents the interplay between social and commercial logics, is resolved through reconciliation, that is, by making one objective compatible with the other. Originality/value This paper examines the ways in which the DFIs in the study measure and manage their social performance, a topic that is, currently, not widely explored. This study contributes to advancing the knowledge on the link between institutional logics and organizational practices, particularly in understanding the extent to which the Malaysian DFIs assign importance to social performance when designing and offering microfinance programs.

Corporate governance, market orientation and performance of Iran’s upscale hotels

“…Literature has been vastly devoted to determining the impacts of corporate governance on organisational performance (Al Mamun et al., 2017; Armstrong et al., 2015; Ortiz‐de‐Mandojana et al., 2016; Siti-Nabiha et al., 2018; Van Grembergen and De Haes, 2017). Corporate governance affects firm performance and leads to sustainable growth.…”

Does Environmental Sustainability Impact Innovation, Ecological and Social Measures of Firm Performance of SMEs? Evidence from South Africa

“…This is a result of the challenges that are associated with measuring the social outcomes of a firm's activities. Unfortunately, firms that do so are susceptible to being derailed by firms that seldom pay attention social issues [42]. Thus, the following hypothesis is proposed: Hypothesis 3 (H3).…”

Management Control for Microfinance: An Examination of the Belief System of A Malaysian Microfinance Provider

“…It can be argued that the power of a control system lies in how it is used to balance the competing demands faced by an organisation (Heinicke, Guenther, & Widener, 2016;Simons, 1995). In microfinancing, the tension or competing demands faced by microfinance providers are between economic and social considerations (Siti-Nabiha et al, 2018). In the case of Banco, there has been a push for this DFI to support the government's call to accommodate the needs of the poor, and to operate its microfinance business profitably.…”

“…Lending to the poor is labour intensive, risky and incurs higher transaction costs (Battilana & Dorado, 2010). To compensate for this risk, microfinance loans require a higher return, which might lead to the prioritisation of economic over social considerations (Siti-Nabiha, Azhar, Mohd Isa, & Siti-Nazariah, 2018). Thus, many researchers doubt the longrun feasibility of achieving this double bottom line and suggest a potential tradeoff between social and financial objectives (Dehejia, Montgomery, & Morduch, 2012;Hermes, Lensink, & Meesters, 2011).…”