Impact Measurement Tools and Social Value Creation: A Strategic Perspective

Recent research in management has examined how organizations, public or private, can generate positive externalities and minimize negative effects to society and the environment. The purpose of this chapter is to discuss the conceptual bases of the operationalization of social value, with particular emphasis on the merits and limitations of the diverse impact measurement tools that have been used in practice. We start by identifying four channels through which impact measurement connects with social value creation: signaling an impact purpose or orientation, creating management tools to monitor the performance of the target populations, assessing causality, and computing welfare gains across various types of interventions and activities. We then argue that tools related to each channel differ according to three central attributes: precision in the assessment of causal impact, comparability across projects, and measurement cost. We posit that it is difficult to combine high precision, high comparability, and low cost. For instance, tools that seek to monetize social outcomes may increase comparability, but they may also reduce precision in cases where there is no concurrent causal assessment of impact. We then suggest potential research areas to advance the analysis of impact measurement and its connection with management practice, including the need to achieve higher transparency and avoid misleading claims of positive impact, the role of organizational capabilities, the use of measurement techniques in tandem with other complementary organizational practices (such as outcome-based contracts), and dynamic effects arising as organizations progressively learn from their adoption of multiple measurement tools.