Social Enterprise, Accountability and Social Accounting

Abstract

There is a growing consensus that current social accounting measures are not adequate and need to support a more ethical approach towards social and ecological matters within business (Bebbington, Unerman & O'Dwyer, 2014). These measures are still anchored to a conventional accounting framework and thus primarily reflect the need of stockholders to be informed of the organization's economic and financial performance. Social accounting research shows that the current measures for accounting for sustainability build on the basis of the profit-maximising principle and therefore need to be profoundly rethought (Shearer, 2002;Bebbington et al., 2014).In in this context, where business organizations still have difficulties to seriously face the challenge of the 'sustainability agenda', social enterprises can provide useful examples of a stronger basis for measuring, assessing, accounting and reporting on both economic and social performance simultaneously. These organisations face on a daily basis the tension between their mission and margin (Chetkovich and Frumkin, 2003) and can therefore assist other organisations in how to deal with the definition of metrics and measurement which combine the economic impact with the social (and societal) impact.Social enterprise as a concept has various meanings, but in general it refers to a business organisation with a dual goal: a social goal as its primary purpose and a profit-making goal to remain financially viable (Defourny and Nyssen, 2010). Social enterprises and other valuesbased organisations are closely connected to the interests of their members, and often firmly rooted in the contexts in which they operate. The criteria (EMES, 2015) of a social enterprise include having a social (or ecological) purpose and an explicit profit distribution constraint, as well as the principles of transparency and democratic governance. Secondary criteria include employee engagement and measurement for social impact. The definition emphasises the business-like nature of these organisations and their competitiveness within a market. But,

Roles of Accounting for the Contested Terrain of Social Enterprises

“…A 'striking lack' of accounting and reporting research and practices for SEs has been noticed (André, Cho, and Laine 2018;Hall and O'Dwyer 2017;Nicholls 2009;Vik 2017). Social accounting research, which is generally interested in how to best account for and report on corporate societal performance and impact, tends to focus its attention on large multinational companies at the expense of marginalising knowledge on alternative types of economic organisation (Hall and O'Dwyer 2017;Mäkelä, Gibbon, and Costa 2017). Conventional accounting, as practiced by multinational corporations following international accounting standards, is also claimed to support the business case for sustainable development, consistent with corporate agendas of shareholder wealth maximisation (Larrinaga-Gonzalez and Bebbington 2001;O'Dwyer 2003).…”

“…Social enterprises currently face global pressure to start measuring their societal impacts, and one of the key issues in the institutionalisation of the field is how to account for and report the social impact of SEs (Ebrahim 2003;Ebrahim and Rangan 2014;Hall and O'Dwyer 2017). Despite the growing popularity of studies on SEs, there is a need of research focusing on accounting within this field (Gibbon 2012;Hall and O'Dwyer 2017;Mäkelä, Gibbon, and Costa 2017). Because the purpose of SEs is to create social impact rather than economic value for shareholders, conventional accounting measures are often not suitable for SEs.…”

Editorial

“…The questions addressed in this special issue lie at the heart of the social accounting project (the reason of SEAJ's existence). The articles in this special issue explored how accounting can be mobilised to measure, assess, understand, protect and challenge organisations sitting at the margins of financial orthodoxy, considering that those organisations can enable a better understanding of the interplay between economic, social and ecological accounts (Mäkelä, Gibbon, and Costa 2017).…”

The effect of social and ethical practices on environmental disclosure: evidence from an international ESG data

“…Indeed, the commitment to business ethics requires large companies to be more transparent and thus to disclose more information. Moreover, in the current business context, it is essential to set a benchmark for social and ethical practices, namely, environmental disclosure (Mäkelä et al , 2017).…”