In 2008, at the World Economic Forum, Microsoft founder Bill Gates famously called for nothing less than an entirely new form of the global economy. This was to be a form of capitalism where the “reach of market forces” would mean “that more people can make a profit, or gain recognition, doing work that eases the world’s inequities.” He was articulating a vision of a new more caring version of the market where corporations pursue both money and mission. Such a dual emphasis on firms making the world a better place while also making a profit is increasingly common. Multinational corporations achieve this by the adoption of inclusive business models and by the sale of socially beneficial goods. Unilever (2010:3), a global consumer goods conglomerate, proclaims a desire “to develop new ways of doing business which will increase the positive social benefits arising from Unilever’s activities.” Poverty is to be addressed by market actors: local firms can provide new entrepreneurial and employment opportunities, microfinance can deliver financial services to the economically disadvantaged, and a growing type of financial investor evaluates companies not just for their production of shareholder return but also for their capacity to effect social change.
I term this newer, supposedly kinder vision of the economy “caring capitalism.” The idea seems simple enough: companies can pursue social impact and they can make profit in so doing.1 Firms do well and do good at the same time. Caring capitalism thus represents a departure from how we have traditionally understood the societal division of labor. It upends the recent belief, one that dominated the global economy for much of the late twentieth century, that businesses should focus on shareholder value while nonprofits should work on social value, and government should deliver public value. Now, what are termed “social purpose organizations,” – private, nongovernmental entities who claim in all or in part to address social inequities – include not only traditional nonprofits, like CARE, Salvation Army, and the United Way, but also “compassionate companies,” which seek not only money but also mission.
Caring capitalism contains a world of possibilities and promises but also raises a host of beguiling and potentially troubling questions. Foremost, what happens to the project of social value – actors’ concerted efforts to address social inequities – when companies take up this mantle?2 What is the consequence when social goods are no longer donated by NGOs to the disadvantaged, both here in the United States and in the global South, but now are sold by firms on the market to paying customers? And what happens to our understanding of social good when it is subject to companies’ quest for economic profit and investors’ desire for shareholder return? Given both commonsense concerns and scholarly expectations over the negative effects of the market on moral action, how does the meaning of social value get modified when the pursuit of mission becomes entangled with the pursuit of money?
Based on an extensive array of data, including interviews, field research, document analysis, and secondary scholarship, this book addresses these questions and concerns. It examines the effect of the rise of caring capitalism for the meaning and measure of social value. Common sense, as well as one strand of academic theory, would make dire predictions. It would lead us to expect that caring capitalism does little else than marketize social value. Money and its pursuit take over, subsuming the very definition of social good to its unwieldy power. But as we will see, what I find is not as simple nor as calamitous in its effects. This book shows that caring capitalism has not resulted in the wholesale marketization of social value. By and large, compassionate corporations are not evaluated by the use of market indicators – to succeed in changing the world has not categorically meant such efforts are monetized and nor are they subject to the criterion of economic profit or shareholder return. And even when these expected outcomes occur, they do not always subjugate the pursuit of social value to that of only monetary gain. To make sense of the unexpectedly limited impact of caring capitalism on social value requires attention to the work of a group of actors I call “value entrepreneurs.” We need to understand their attempts to create tools and techniques for measuring social value and the cultural and material constraints that they face in their efforts. Only in this way can we account for the complexities of caring capitalism and its consequences for the meaning and measure of social value in the market.
The turn to caring capitalism
In his clarion call for companies to take up the mantle of social welfare, Bill Gates was not alone. His comments illustrated a larger movement in the global economy (Roy Reference Roy2010; Porter and Kramer Reference Porter and Kramer2011; Blowfield and Dolan Reference 234Blowfield and Dolan2014). Beginning in the late 1990s, a growing number of powerful public and private actors (including multilateral organizations such as the United Nations and the World Bank, charitable foundations like the Bill and Melinda Gates Foundation and the Omidyar Foundation, and governments in the global North through their development aid agencies) have proposed that market actors, including investors and firms, can produce social value through their business practices as a means to both economic gain and to produce a more just and sustainable society. These proponents of caring capitalism have offered up a number of different envisionings of the project of social value, with each constituting a distinct field.3 First, like Unilever, PepsiCo, and Dell, multinational corporations can organize their production processes and governance policies to ensure their social and environmental responsibility, including respect for the rights of stakeholders, as a means to shareholder value. Responsible Investment (RI) is an emerging financial industry that views firms’ social, environmental, and governance behavior as a strategy to reduce costs, eliminate risks, improve brand appeal, and create new business opportunities for companies (World Economic Forum 2005; Hebb Reference Hebb2012). Alternatively, multinational corporations, often called Inclusive Businesses, purposively can include the poor in the developing world as suppliers, workers, distributors, and include customers in their value chain in ways that both alleviate poverty and increase shareholder return (Prahalad Reference Prahalad2004; UN Global Compact 2012). Coca Cola, for example, not only sells its typical products, including Coke and Fanta Orange, to the rural poor in India, but now also sells Vitingo, an orange drink fortified to address the common problem of iron deficiency (Coca Cola India 2014).
In the developing world, novel types of local companies pursue social change by facilitating individuals’ access to the market and by growing the regional economy. These market-based solutions to poverty are promoted and funded by actors in the global North. A new financial market called Impact Investing has arisen to facilitate innovative investment in this range of double bottom line–entities (Bugg-Levine and Emerson Reference Bugg-Levine and Emerson2011). These investment opportunities include microfinance vehicles that provide financial services to low-income clients – individuals to whom traditional financial institutions have been unwilling to offer banking services. Customers then invest their loans in an entrepreneurial opportunity and repay it to the bank with interest. Most famously, Muhammad Yunus founded the Grameen Bank in 1983 in order to provide microcredit to the poorest residents of Dhaka, Bangladesh (Yunus Reference Yunus1999; Roy Reference Roy2010). Similarly, Impact Investing can be directed to “small and medium enterprises” (SMEs) – locally owned firms in developing regions. In the development literature, and as championed by scholars, policy makers, and funders, SMEs are deemed key to a nation’s economic growth because they provide entrepreneurial and employment opportunities that can mitigate poverty (Halberg Reference Halberg2000; Ferranti and Ody Reference Ferranti and Ody2007). One instance of an SME is Escopil International in Mozambique. Formed in 1998, Escopil is a locally owned company that provides industrial maintenance services to the nation’s technology market and that employs over 200 people (Escopil 2013).
Together, these different fields that make up caring capitalism constitute a small but significant portion of the global economy. Over 8,000 businesses in 145 countries have signed on to a United Nations pledge to incorporate socially responsible practices as of 2013 (UN Global Compact 2014).4 In 2012, the last year for which data was available, over 30 trillion investment dollars worldwide were committed to firms with a social purpose and, in the United States, $3.74 trillion in that same year were oriented around investment in companies with a double or triple bottom line of economic, social, and/or environmental return (US SIF 2012). The provision of “good” has become big business.
These market-based solutions to social problems are heralded as innovative precisely because they undermine traditional expectations about the division of labor in society across the public, private, and nonprofit sectors in terms of each space’s core responsibility. For much of the last century, government and the voluntary sector have been perceived as the primary deliverers of social goods in the United States, while companies have been largely concerned with the pursuit of economic profit or pursued social betterment outside of their business model through corporate philanthropy. Intensifying in the 1980s and 1990s with the growth of a finance economy, firms were asked to refrain from a concern with social welfare altogether in the pursuit of shareholder value (Davis Reference 238Davis2009; Mizruchi Reference Mizruchi2013).5 In contrast, government has been viewed either as a caring welfare state that provides public goods to all citizens or as a vehicle serving the interests of competing social interest groups (Alford Reference Alford and Hall1994).6 And the primary task of the nonprofit sector has been to deliver needed goods and services to clients and communities. Nonprofits are private organizations granted tax-exempt status by the government in exchange for delivering programs that benefit the public interest while withholding the distribution of profits to members (Frumkin Reference Frumkin2002).7
Yet, a number of broader societal changes have disrupted those expectations and paved the way for caring capitalism. For one, a marked decline of public funding of nonprofits in the 1980s led to the formation of new types of mixed, hybrid organizations to pursue the public good. Emerging out of the nonprofit sector in the 1990s, social enterprises employ market methods in order to ensure clients’ equitable participation in the economy while relying on sales revenue for income. Typically, social enterprises ensure the fair procurement of supplies, the employment of disadvantaged populations, and/or the sale of socially beneficial products and services to underserved customers (Kerlin Reference Kerlin2009). One case of a social enterprise is iCater, a firm run by Pine Street Inn, a nonprofit in Boston with a social mission to end homelessness in the community. As an affiliated catering business, iCater offers job training and employment skills in food service and preparation to its employees and it also provides needed income for the nonprofit’s additional programs (Pine Street Inn 2014).
In the private sector, the social responsibility of firms in the United States came under scrutiny in the late 1960s and on. Consumers, investors, civil society actors, and the media criticized corporations for the social harm caused by their business practices and sought to mitigate those ill effects for consumers, employees, and society. In part, a new form of investing arose, called Socially Responsible Investing (SRI), whereby investors were encouraged to direct their investments for both social and stockholder return. Through the tactics of community investment, shareholder activism, and social screening, proponents of SRI viewed financial activity as a means to minimize firms’ sale of harmful products (e.g., the sin stocks of cigarettes, alcohol, and firearms), to divest from businesses operating in countries with human rights abuses, and to facilitate corporations’ adoption of beneficial personnel policies, beyond those required by government guidelines (Bruyn Reference Bruyn1991; Schueth Reference Schueth2003). A second and distinct critique of firms’ social responsibility began in the 1990s with the growth of the global economy. The outsourcing of much of American corporations’ manufacturing to developing countries resulted in low wages, human rights violations, and unsafe working conditions for migrant workers and workers in the global South. Corporate Social Responsibility (CSR) emerged as a strategy by which civil society actors sought to convince multinational corporations to equitably treat its stakeholders, including employees, customers, and suppliers, in their global value chains, through the threat of media attention and consumer boycotts (Bartley Reference Bartley2007a; Soule Reference Soule2009).
In striking contrast, the embrace of caring capitalism over the last decade has seen firms increasingly heralded as the best providers of social goods. Drawing from one long-standing strand of economic thought dating back to Adam Smith’s (1776/Reference Smith2012) belief in the benefits of the “invisible hand” of the free market for societal well-being, the idea of caring capitalism has been based on the claim that companies are equally effective, if not superior, to charity or government agencies in their ability to deliver needed social goods. The assumption of caring capitalism is that firms will pursue the same benefits as nonprofits and government, just in a more successful manner due to their economic self-sufficiency and greater potential scale of delivery. C.K. Prahalad, the author of the highly influential 2004 book, The Fortune at the Bottom of the Pyramid, saw in the market an attractive alternative to nonprofits’ efforts to aid the poor. “Charity might feel good,” he wrote, “but it rarely solves the problem” (Prahalad Reference Prahalad2004:16). The turn to caring capitalism resulted from efforts by a coalition of groups, including market enthusiasts responding to criticisms of the neoliberal agenda in the global economy, actors working to redress the aftermath of the spectacular 2008 crash of the finance market, and those members of the international development arena seeking to end world poverty as part of the United Nation’s Millennium Development goals.
Valuing compassionate companies
The growing embrace of caring capitalism by powerful global actors raises countless new questions about its possible effects and efficacy; its possibly cynical motivations or incredulous claims. But a crucial set of questions also emerges around the question of meaning and measure. Detractors might and should question whether corporations can ever do the job of “doing good” properly.8 But even that denunciation rests upon a notion of how to define and gauge “doing good” in the first place. How do we know when companies are not just making profit but also addressing social inequities? To judge whether caring capitalism “can work,” we need to be able to measure its impact. And this is precisely what is happening now. In each and all of these different forms and practices both inside and outside of the market – Inclusive Businesses, locally owned firms, double bottom line–investments, social enterprises, and nonprofit organizations – social purpose organizations are being asked to demonstrate their results.
In facing this growing pressure to value their efforts, social purpose organizations are not alone; actors, objects, and activities of all types increasingly are being subject to valuation through formal tools and techniques (Power Reference Power1994; Porter Reference Porter1995; Espeland and Stevens Reference Espeland and Stevens2008). In the case of baseball, for instance, the use of statistics has replaced scouts’ judgments of a player’s ability (Lewis Reference Lewis2004). Think “Moneyball.” Similarly, in the field of education, standardized testing, as spurred on by the Common Core requirements, has superseded teachers’ subjective estimation of a student’s capacity (Elmore Reference Elmore2007). This wider turn to performance measurement is commonly understood to result from the dominance of neoliberalism in the private sector and the doctrine of New Public Management in the public sector (Espeland and Sauder Reference Espeland and Sauder2007; Lamont Reference Lamont2012).
Similarly, compassionate companies, as well as other types of social purpose organizations, have been held to a growing and widespread requirement to show the results of their efforts, often by reference to the term of “social value.” Even though this effort is seen as particularly challenging if not impossible given that social value is deemed ambiguous to define and slippery to measure, this move to valuation for social purpose organizations has definitely occurred, as evidenced by the growth of multiple and competing measuring devices of such beguiling and seemingly technical nature as “Outcome Measurement,” the “B Impact Ratings System,” the “Global Impact Investment Ratings System (GIIRS),” the “Global Reporting Initiative (GRI),” and “Social Return on Investment (SROI),” among others.9 In all, over one hundred and fifty different types of tools, techniques, and technologies were available to any organization seeking to assess its social value in 2014.10
The book’s purpose
So, what does it mean to “do well at doing good”? Given the complexity of setting the meaning of social value and the recognized difficulty of appraising it, the first purpose of this book is to identify the types of measuring devices present for social purpose organizations as a lens to understand the question of social value. How is the concept of social value defined and gauged by a field’s prevailing tools, tests, and techniques? Secondly, employing a comparative and historical perspective, this book seeks to determine how the rise of caring capitalism has affected the valuation of social good. What happens to the meaning and measure of social value when it is no longer produced just by nonprofit organizations but now also by a range of hybrid or for-profit actors committed to market-based solutions to social problems? Finally, this book seeks to explain when and why different measuring devices – varying in their use of market indicators such as money and shareholder return – come to prevail across this assortment of social purpose organizations. What factors determine whether and when the pursuit of social value gets subsumed to the pursuit of economic value?
On social value
To date, we know markedly little about how compassionate companies, or indeed other types of social purpose organizations, seek to demonstrate their social value. In order to investigate this topic, it will be helpful to further explore the meaning of the concept of social value. The concept “social value” brings together two terms, each with a long-standing history in the social sciences. The term “social” has been used to refer to a distinct societal space or to a particular orientation of action. And the term “value” has been employed to reference either the possession of a criterion of worth or the assessment of an entity’s merit. More recently, the idea of social value has been employed to describe the distinctive contributions of social purpose organizations to society. Crucially, scholars disagree as to how to define social value, despite its increasingly widespread usage in scholarly discourse and in popular culture.
Take the term “social” first. This term has several different, albeit related, meanings, in the social sciences (Calhoun Reference Calhoun, Powell and Clemens1998; Mansbridge Reference Mansbridge, Powell and Clemens1998; Krause Reference Krause2014). To begin, the concept of social refers to a specific societal space, contingent upon both the horizontal and the vertical partitioning of society. One definition of the term social, emerging in the early nineteenth century, conceives of society as composed of three different realms: the economy, the government, and the social, with the last defined as a realm of autonomous, voluntary interactions among individuals and groups – what also is called “civil society” (Steinmetz Reference Steinmetz1993). In this view, as in the example of the “social sciences,” the social also invokes the notion of a collectivity that stands distinct from and analytically above its constituent members. The social refers to the properties of this third space. It does not constitute an aggregation of individuals’ interests or values but rather possesses autonomous qualities and characteristics of its own (Durkheim 1895/Reference Durkheim2014; Etzioni Reference Etzioni1999).
Relatedly, the term social is often used, as in the instances of “social security” or “social welfare,” to refer to an orientation of action. Drawing from a view of the social as the presence of relationships among individuals (e.g., “social networks”), the social can reference action with positive intent toward and/or beneficial consequences for the well being of others, as opposed to the expectation of individuals’ rational and self-interested behavior in the market. The concept of “social capital” refers to the composition and strength of networks among actors that positively affect individuals’ and groups’ capacities (Coleman Reference Coleman1990; Putnam Reference Putnam2000). Similarly, the social is frequently used to describe the quality of an actor’s relationship with others, as with the example of labeling someone as “anti-social” when they do not enjoy others’ company (Owens Reference Owens2013).
Finally, the notion of the social also can refer to organized efforts, historically by government but also (and predominantly in the United States) by private actors like nonprofits or corporations, to improve the lives of individuals, communities, and/or society. Examples include the concepts of “social welfare” and the “social state,” the latter a term synonymous with the welfare state in Europe. Here, the assumption is that individuals’ material well being is not determined by their own biography or characteristics (e.g., their religious beliefs or moral character) but rather shaped by structural, macro-level conditions, such as the absence of sanitation or education, that cause wide-scale troubles for a community’s residents and so require organized intervention to address (Steinmetz Reference Steinmetz1993; Foucault Reference Foucault1994).
As the second dimension of the concept of “social value,” the term “value” comes with its own genealogy in the social sciences. Value encapsulates both a decision about quality and an act of assessment (Dewey Reference Dewey1939; Stark Reference Stark2011). In their appraisal of the world around them, actors must make a choice about what criteria is of salience for an entity in a specific situation. This is the question of “what counts.” To make a claim about what is of value, actors can select from a range of different qualities available to them. Broadly speaking, an order of worth (also called an “institutional logic” or “regime of justification”) constitutes a claim about the quality by which the merit of the entity should be assessed. Multiple orders of worth exist and each specifies what criterion is of fundamental worth. An emphasis on market value, for example, stresses the primacy of monetary gain, while an aesthetic order of worth underscores the quality of physical beauty, and a concern for religious value is based on faith and spirituality (Lamont 1992; Stark Reference Stark2011; Boltanski and Thévenot Reference Boltanski and Thévenot2006)
Given these options, actors must determine what type of order of worth is salient for the object in question. Contra economics and its attention to the utility function, economic sociology has emphasized that the choice of a salient order of worth is not fixed, but rather shaped by societal context and the process is not always straightforward. Often the selection of the relevant quality results from dialogue or even contestation between actors with different social positions, moral values, and material interests (Stark Reference Stark2011; Boltanski and Thévenot Reference Boltanski and Thévenot2006). Take the simple example of the family heirloom: a piece of jewelry or furniture perhaps. While some members of a family may view the inherited item solely in terms of its economic worth on the market, others may view it as priceless and gauge its merit solely in regard to its sentimental value. Market value confronts sentimental value – and the two may or may not marry happily.
To complicate matters further, “value” refers not just to the issue of what counts but also the act of how to count. Any order of worth contains within it a claim about the criterion of value and also a claim about how to gauge entities according to that criterion. To assess the worth of an entity, actors can either engage in their own personal estimation or they can employ or create a measuring device – a test, tool, or instrument – that contains within it an objective claim about the prevailing order of worth and the appropriate type of information to be used as proof. Measuring devices, such as rankings, ratings, and ratios, perform the act of calculation by assigning a value to an entity on behalf of the actor employing the instrument (Callon Reference Callon1998; Boltanski and Thévenot Reference Boltanski and Thévenot2006; Espeland and Sauder Reference Espeland and Sauder2007; Karpik Reference Karpik2010).11 Any new car, for example, is subject to multiple assessments of its worth: it is not only allocated a price by the car company, but it is also ranked numerically in its segment by JD Powers and Associates, and rated on a scale from one to a hundred in its class by Consumer Reports.
These are helpful ways for thinking about the nature of the social and the question of value but they are limited for addressing the question of social value. The literature on the concept of the social explores how “the social” gets defined and enacted in society but tells us little about it as an order of worth for social purpose organizations. For its part, social science research on the concept of value has been largely discussed in terms of how and why economic value gets assigned to goods in the marketplace and has overlooked how the organized pursuit of social good is defined and assessed.12
So what about social value? Existing scholarship tells us little, even as the discourse of social value proliferates in organizational practice and popular memes. On the one hand, as shown in Figure 1.1, the term “social value” is increasingly employed by scholars to describe a particular type of quality of worth in society. On the other hand, despite the growing popularity of this term, there is strikingly little theorization of the term. When it is discussed, there is marked semantic and conceptual disagreement and little attention to its actual use by those engaged in the production of social value (Auerswald Reference Auerswald2009; Mulgan Reference Mulgan2010).
As with the concept value more broadly, social value is understood as both a noun and a verb.13 Take social value as a noun. Here scholars offer two main ways to define the concept of social value, each of which draws from existing definitions of the idea of the social. In one case, social value is based on the identity and social location of the organizations that produce it. Social value occurs when nonprofit organizations, located in a “third” sector distinct from the public actions of government and from the market’s production of private benefits for individuals, seek to address social inequities. (Auerswald Reference Auerswald2009). Here, social value has been defined as the “value that nongovernmental organizations (NGOs), social enterprises, social ventures, and social programs create” (Mulgan Reference Mulgan2010:38).
Another approach to social value as a noun views social value as consisting of different types of benefits and recipients than that of economic or public value, regardless of the location of the actors who produce it. Most centrally, in this literature, the pursuit of social value is opposed to the pursuit of economic value.14 Social value concerns actors’ purposeful production of collective well being for others. In contrast, economic value is derived from action intended to generate utility for the individual supplier or consumer of a good (Anderson and Dees Reference Anderson, Dees and Nicholls2006; Martin and Osberg Reference Martin and Osberg2007). And, social value also is often contrasted with “public value” – governmental actors’ efforts to identify and pursue the preferences of the collectivity in order to meet the needs of the median voter (Moore Reference Moore1995).15
If disagreement exists about how to define social value, even more uncertainty surrounds the question of how to measure it. Here we come to social value as a verb. Defined in terms of action, social value is perceived of as an inherently challenging task, due to the problems of measurement. The frequently cited challenge is how to assess organizations, situations, or goods in terms of their social worth. One observer has described the goal of assessing a nonprofit’s social value as one of “measuring the unmeasurable” (Forbes 1998). The task of measurement typically is understood to consist of two decisions: conceptualization (the definition of the term to be studied) and operationalization (the selection of procedures used to assign a value to cases).
Several challenges are commonly noted as central to the problem of gauging social value. First, the ambiguous and complex nature of social good makes the task of conceptualization difficult. Different stakeholders in an organization may define the meaning of its social value in different ways (Kanter and Summers Reference Kanter, Summers and Powell1987). As Sawhill and Williamson (Reference Sawhill and Williamson2001:371) propose: “Imagine an organization whose mission is to alleviate human suffering. How can you measure such an abstract notion?” This challenge of conceptualization, secondly, is complicated by the recognized difficulties of operationalization. Among other measurement challenges, many commonly recognized social goods are characterized by “information asymmetry.” These products are hard to evaluate for their worth by consumers, including services that are difficult to judge in terms of their quality (such as education or health care), programs where the typical customer is not in a position to provide such judgment (such as care of the elderly, children, or the mentally disabled), and assistance provided at great distance from the resource provider (such as in international development) (Hansmann Reference Hansmann1980). In result, even if consensus is reached about the meaning of social value, gauging the amount of social good an organization produces remains difficult.
While a genealogy of the concept of social value provides rich empirical insights into how scholars have sought to define the goals of social purpose organizations and how to assess their merit, social scientists have not applied the tools of their trade to make sense of how the criteria of “social value” is actually defined and deployed in practice.16 Further, this literature has yet to investigate the question of how the rise of market solutions to social problems has affected the meaning and measure of the pursuit of social value. These are the issues I take up in the chapters that follow.
The book’s approach
This is a book about the effect of the embrace of market-based solutions to social problems on the meaning and measure of social value. The goal is explanatory, not normative or policy-oriented in nature. Rather than critiquing the assumptions of caring capitalism or evaluating its causal efficacy in solving social inequities, the book’s focus instead is on accounting for the consequences of caring capitalism for how we think about and seek to capture the worth of social purpose organizations as they strive to address societal problems. The study, of course, has normative implications. It also can help policy-makers. But its foremost task is to address the basic underlying questions about the meaning and measure of social value in a time of caring capitalism.
To do so, my methodological approach is to examine the act of valuation (of how social purpose organizations are judged for social value), rather than to examine the question of value (the decision as to which quality is of worth), by analyzing the measuring devices that are present in the fields of study in order to gauge the social value of social purpose organizations. The analysis of the formal tools, techniques, and technologies that are used to count these organizations’ social value allows me to delineate how the rise of caring capitalism has affected what types of social change get to count as social value and by what metrics and indicators they can be counted. A measuring device is central to the allocation of value in any situation because it recognizes and rewards one particular meaning of value over all others. In the study of value, measuring devices are particularly important because they contain both a description of and a prescription for action (Callon Reference Callon1998; Callon and Muniesa Reference Callon and Muniesa2005; McKenzie and Millo Reference MacKenzie and Millo2003; Espeland and Sauder Reference Espeland and Sauder2007).17 Their existence and employment shapes the social world around them. From a technical perspective, a measuring device contains within it a claim about the type of quality that counts, thereby facilitating some lines of action while constraining others. The presence of a measuring device also shapes what is valued in a field because it creates reactivity. In the social sciences, reactivity is the “idea that people change their behavior in reaction to being evaluated, observed, or measured” (Espeland and Sauder Reference Espeland and Sauder2007:1).18 Actors seek to perform well according to the logic of the measure in order to establish legitimacy and obtain resources.19
A measuring device does all of this work by incorporating within it several decisions. First, it requires the selection of a quality of worth as salient for evaluation, thus excluding or rendering invisible other logics or qualities. It then creates a metric – a uniform scale with regular intervals, so that an entity can be assigned a value on that scale. The construction of a scale permits commensuration – the comparison of different objects according to a single and common metric.20 Finally, a measuring device also includes a claim about what type of evidence or proof counts. It necessitates the employment of particular kinds of measures or indicators to gather data and the collection of specific type of data in order for evaluation to occur (Power Reference Power1994; Porter Reference Porter1995; Espeland and Stevens Reference Espeland and Stevens1998). Consider the challenge of how to assess the health of a nation’s economy: a number of measuring devices exist to identify and so allow for comparison across countries, including GDP, employment statistics, the inflation rate, and so on.
A focus on the measuring device/s that are in place to gauge social value across different fields of social purpose organizations moves the study of social value away from other methodological approaches to this topic – away from an analysis of how people on the ground understand the idea of social value (of how actors define the project of social good), away from the study of their enactment of social value (of how actors implement their morals or interests through specific practices), and away from the study of their everyday enactment of measurement and valuation (how actors either subjectively or informally try to estimate their own worth or that of others). This book’s attention to measuring devices shifts the analysis of social value toward a concern for what types of goals, strategies, and justifications are recognized and rewarded as social value in a particular setting via a prevailing measurement tool, technique, or technology (Callon Reference Callon1998; Callon and Muniesa Reference Callon and Muniesa2005; Smith Reference Smith2007; Fourcade Reference Fourcade2011).21
To specify the precise effect of caring capitalism on the meaning and measure of social value requires the use of comparison. It necessitates placing side by side and examining not only the measuring devices used in the project of caring capitalism but also those tools employed in other societal arenas, such as the nonprofit sector, and earlier efforts in the private sector to have firms consider their social and environmental obligations, prior to the growth of caring capitalism.22 The book analyzes the meaning and metrics of social value present in the measuring devices that prevail across a range of these fields, including nonprofit organizations, social enterprises, SRI, CSR, RI, Inclusive Business, and Impact Investing. As shown in Table 1.1, these fields are all composed of social purpose organizations that share a commitment to the pursuit of social value but they differ along two critical, theoretically-salient dimensions: their sectoral location relative to the economy and their normative orientation toward the use of market methods to solve social problems. It is only through the employment of the comparative method (both across space and across time) that a determination can be made of the precise consequence of caring capitalism – as a site of both morals and money – for the meaning and measure of social value.
Table 1.1 Sectoral location and market orientation of fields of study
As a whole, I was interested in both the content of these measuring devices and in their history or biography – how and why these material objects came to be constructed by specific actors out of all possible meanings and measures of social value (Kopytoff Reference 249Kopytoff and Appadurai1998; Goede Reference Goede2005; Espeland and Stevens Reference Espeland and Stevens2008).23 To identify and to account for the construction of the measuring device/s that dominate in each field, I draw on a range of materials, including expert interviews, field research at conferences, document analysis of publications, websites, and media sources, archival research, and secondary data, gathered over a four-year period from 2010 to 2014. I conducted semi-structured interviews with sixty-seven professional experts (including respondents from resource providers, intermediaries, and social purpose organizations) involved with one or more of the fields of study. I engaged in field research at practitioner-oriented conferences held by trade and member associations in each field in order to understand the configuration of each field (Garud Reference Garud2008). I engaged in textual analysis of a range of publications and media sources. I reviewed all available documents, reports, and websites produced by each respondent’s affiliated organization and by other organizations central to the history of the field and/or to the formation of its dominant measuring device/s. I also conducted document analysis of popular advisory texts in each of the fields, the largest trade publications in each field, and mainstream media sources. To supplement this assortment of primary data, I drew from secondary research. The data from these multiple sources was analyzed using the central tenets of grounded theory (Glaser and Strauss Reference Glaser and Strauss1967). A more detailed outline of the book’s data and methods can be found in the appendix and a summary of the data sources employed can be found in individual chapters.
Turning to the literature
How then does the turn to caring capitalism affect the meaning and measure of social value? How does the growing embrace of market-based solutions to social inequities shape what gets to count as social good and how it gets counted? While the literature has yet to address these questions, we can turn to past studies that provide us with possible expectations for what might be found. These predictions can be thought as oscillating between two poles characterized by an emphasis on the effect of market on society versus an attention to the influence of actors’ morals on the market.
The market and society
One long-standing strand of scholarship emphasizes the distinct and colonizing nature of the contemporary economy for social action (Radin Reference Radin2001; Sandel Reference Sandel2012). In one version of this approach, each sphere of society is characterized by its own logic – a place-based understanding, shared by members of that space, of actors’ desired goals and appropriate strategies of action. In the private sector, a “market logic” prevails, where actors are expected to be driven by the pursuit of self-interest and the profit motive (Friedland and Alford Reference Friedland, Alford, Powell and DiMaggio1991; Glynn and Lounsbury Reference Glynn and Lounsbury2005). This market logic is often opposed to the dominant logics of other societal spaces. In the study of social value, a market logic is often contrasted by scholars to a mission logic, located in the space of the nonprofit sector, which is characterized by voluntary exchange and the pursuit of social good as an end in itself (Battilana and Dorado Reference Battilana and Dorado2010; Galaskiewicz and Barringer Reference Galaskiewicz, Barringer, Gidron and Hasenfeld2012).
The expectation here would be that the measure of social value would be contingent on sectoral location. For nonprofits, the tools used to gauge organizations’ social value would reflect actors’ values-based beliefs about how best to achieve social good. For compassionate companies, in contrast, money should be the proposed metric of social value. And, as with corporations more broadly, the measure of social value should become subject to the criteria of shareholder return, given its status as the “privileged metric for assessing corporate success,” with potential implications for what gets to count as social value in the market (Krippner 2005, Reference Krippner2011:7; Davis Reference 238Davis2009).
A second theoretical perspective rejects the view that only the private sector is characterized by a market logic. Instead, these scholars see contemporary society as inherently a “market society,” one diffused throughout with the action orientation and institutions of the economy (Polanyi Reference Polanyi1944; Sandel Reference Sandel2012). There is “nothing but” the economy in all places in a society (Zelizer Reference Zelizer2009). A market society is defined as the subordination of “the substance of society to the laws of the market” (Polanyi Reference Polanyi1944:71).24 Similarly, organizational scholars emphasize the growing isomorphism of actors in contemporary society around market-based rationales and practices (Meyer and Rowan Reference Meyer and Rowan1977; DiMaggio and Powell Reference DiMaggio and Powell1983). These social scientists have sought to demonstrate how actors located outside of the private sector employ the logic of the market as an orientation of action (Binder Reference Binder2007; Battilana and Dorado Reference Battilana and Dorado2010). As one scholar of the nonprofit sector has concluded: “the market seems to pervade every facet of our lives today” (Eikenberry Reference Eikenberry2009:582). As proof, we can think of relatively few goods that cannot be bought and sold: a dwindling assortment of items are exchanged based on the alternative means of redistribution or reciprocity, as witnessed by the existence of markets for breast milk, queuing, and human organs, among others (Healy Reference Healy2006; Sandel Reference Sandel2012).25 Relatedly, almost any good or activity can be assigned a monetary value (Fourcade Reference Fourcade2011). The measure of money is our lingua franca of worth and we think nothing of placing a dollar figure on such disparate items as old growth trees, totem poles, and an indigenous community’s DNA.
The implications of this perspective for the book’s argument are straightforward. This viewpoint suggests that, regardless of sectoral location, market indicators (e.g., money and profit) will be used to gauge the social value of all types of social purpose organizations, with ensuing consequences for what types of activities and outcomes get counted as being in the social good.26 When economic gain is privileged, other orders of worth (such as those based on equality or collective welfare) are always crowded out. As the philosopher Michael Walzer (Reference Walzer1983:119–120) concluded, “money is insidious, and market relations [tend to] transform every social good into a commodity.” For example, a comparative study of blood donation in the United States and the United Kingdom found that the sale of blood – as opposed to its altruistic donation – was detrimental to the quality of the blood, to the moral orientation of action, and to the collective identity of communities (Titmuss Reference Titmuss1971).
Morals and the market
However, a second set of scholars rejects this view of the market as an autonomous force that is causally deterministic of social relations and the pursuit of values, either within the economy or in the broader society. Here, authors instead emphasize the capacity of actors to enact their morals as members of the market and as they engage in economic exchange across an array of societal settings. One approach is wary of the effect of the economy on the pursuit of morally oriented behavior (Titmuss Reference Titmuss1971; Carruthers and Espeland Reference Carruthers and Espeland1998). The “hostile worlds” perspective emphasizes that actors may resist the move of sacred or intimate goods, such as body parts, children, and care work, into the private sector (Turco Reference Turco2012; Rossman Reference Rossman2014). The market is opposed to other societal sectors that are characterized by values-oriented activity and where exchange is based on redistribution or reciprocity. This expectation of hostility exists in part because the use of money to value goods is expected to have detrimental effects on actors’ ability to pursue their values.
Here, actors might seek to resist the growth of caring capitalism and might try to prevent the valuation of social goods in the market using the metric of money and/or the criterion of shareholder value. Based on the realization that only those types of social goods that can be monetized and that contribute to financial gain will become deemed of worth, some will question the capacity of compassionate companies to pursue social value as an end in itself and they will contest the extension of a market logic to the valuation of social goods.
A final approach in contrast emphasizes the capacity of actors to draw from multiple orders of worth in order to enact their goals through economic exchange, regardless of sectoral location. Rather than see the market as a “straightforward, irresistible force that reprocesses whole tracts of society into the commodity form” (Fourcade and Healy Reference Fourcade and Healy2007:11), these authors instead investigate how actors’ selection from among multiple logics are historically constructed, negotiated, and can be realized in and through economic activity. While the market exchange of goods is commonplace in contemporary society, this perspective emphasizes that individuals are capable of constructing a “moral market,” whereby members engage in economic exchange as a means to enact their values (Zelizer Reference Zelizer1985, Reference Zelizer1997, Reference Zelizer2009).27 Individuals actively work to relationally create “connected lives” (Zelizer Reference Zelizer2009), where a transaction is constructed based on shared understandings, practices, and media via a symbolic boundary. In this way, the use of money (as a form of payment, metric of valuation, and so forth) does not spoil or crowd out its intended values-based meaning, given that money can take a variety of meanings (Healy Reference Healy2006; Bandelj Reference Bandelj2012). For instance, while some are critical of the exchange of sex for money between a man and a woman in the case of prostitution, we are far less wary of a man’s expenditure of resources on a valuable ring for a woman as a condition of marital engagement. Although both exchanges involve the exchange of money for intimacy, the latter is deemed morally acceptable, and is governed by a set of accepted rules and expectations (Zelizer Reference Zelizer2009).
For our purposes, this perspective holds that the rise of caring capitalism constitutes an effort to create a moral market, where actors can engage in economic exchange and employ market indicators, including money as a metric of worth, as a legitimate means to pursue social value. However, the successful establishment of any measuring device, whatever its form and content, must be located in a social relationship characterized by shared understandings among members of a field of its specific moral purpose and its symbolic boundaries from other types of economic exchange.
The book’s argument
This book will show that these theoretically derived expectations – those opposing emphases on the causal priority of the market or morals – are not adequate to account for the meaning and measure of social value in a time of caring capitalism. As we will see, caring capitalism has meant the diffusion of social value into the private sector and, correspondingly, the marketization of the project of social value. Caring capitalism has entailed the proliferation of new meanings of social value, with each field characterized by proponents’ construction of a moral market in which economic exchange can be legitimately employed in a particular way to pursue social and financial ends. Yet, at the same time, caring capitalism has not resulted in the wholesale employment of market indicators to measure firms’ social value. By and large, with one exception, the tools, technologies, and techniques created to assess the worth of compassionate companies do not employ the metric of money and they do not draw from shareholder return as a criterion of value. And, even when market indicators are employed, they sometimes but not always restrict social value to those aspects that produce economic gain.
How can we account for this discrepancy between the meaning and measure of social value in an era of caring capitalism? Making sense of this puzzle constitutes the empirical task of this book. In part, the issue, as we will see, is that existing theoretical expectations – with their attention to the role of the market or morals – suffer from the “reflection assumption.” By this assumption, I mean the notion that the instruments used to perform the act of valuation reflect a particular criterion of value, driven either by the institutional pressure of the market or a particular moral belief. In this “reflection” view, a measuring device is constructed to allow for tests of entities according to the meaning of value held by the predominant actors in a situation or field. A measuring device here incorporates and instantiates a particular belief about the nature of value – of what counts and how it should be counted (Callon Reference Callon1998; Boltanski and Thévenot Reference Boltanski and Thévenot2006; Espeland and Sauder Reference Espeland and Sauder2007). Each order of worth “entails its own metrics and standards of evidence for proving the value of any object or idea” (Kaplan and Murray Reference Kaplan and Murray2010:111).28 Thus, understanding how actors understand the question of value is sufficient to account for what ultimately gets to count and how it gets counted by the salient measuring device.
In contrast, the theory put forward in this book does not presume that value drives valuation. In other words, what counts in terms of how actors envision social value (and how central a market logic is to that definition) necessarily does not determine how it gets counted in the act of valuation (in terms of the presence of the market indicators of money and shareholder value in a measuring device). By examining the construction of these measuring devices, the book is able to account for the presence of distances or disjunctures between the meaning of social value held by actors and the tools, techniques, and technologies that are developed to gauge the social world according to that quality of worth. As I will show, actors hold varying understandings of the meaning of social value – an envisioning of a social project that encompasses what societal problems need to be addressed, by what means, and toward what ends. The rise of caring capitalism has meant not only the embrace of companies as the preferred vehicles to deliver social value, but also entailed the proliferation of new, market-based articulations of social value. But attention to actors’ varied understandings of the project of social value in a field, whether it be located in the economy or not, is not adequate to explain the types of measuring devices that are constructed to conduct the act of valuation. Instead, analytical attention also must be given to the work of value entrepreneurs who are charged with developing a tool, technology, or technique in order to gauge the social world according to a specific order of worth. These value entrepreneurs are constrained in their efforts by the communicative purpose of the device and by their professional expertise.
Let me further outline my thesis. To begin, take how social value is defined and understood by actors in different fields of study. Members of a field, particularly early or powerful proponents, articulate what I call a “social project” which includes a definition of social value. A social project consists of the identification of a social problem to be solved, the specification of an intervention to solve the problem (including a claim about what types of actors should provide the intervention), and a cause and effect claim about how the proposed solution produces social value – understood as a particular kind of benefit or improvement to society (Ferguson Reference Ferguson1990; Schneider and Ingram Reference Schneider and Ingram1993; Krause Reference Krause2014).29
Despite a shared concern for social value, the fields of study vary markedly in terms of the precise configuration of their social projects. First, these social projects diverge in terms of the societal problem or challenge to be targeted. While some fields pursue an array of subjectively identified challenges (e.g., gender inequality, race/ethnicity issues, health disparities, and so forth), others focus solely on the problem of economic inequality. And, in this latter group, the solution to the problem of economic inequality occurs either by facilitating inclusion of the economically disadvantaged into the market or by ensuring companies’ equitable treatment of a company’s stakeholders.
These visions of social value across fields also differ in terms of the centrality of a market logic in their articulation of a social project. Social projects differ in the type of organizational vehicle that can best deliver the desired intervention. Some rely on nonprofits given that these types of social purpose organizations cannot distribute profit to members and that they are recognized by the state as in the public interest. Other social projects specifically critique businesses for failing to consider their negative impact on society and these actors seek to mitigate firms’ adverse societal consequences. And, as cases of caring capitalism, actors embrace businesses as the optimal purveyors of social good. Firms are championed because their reliance on market revenue produces a greater scale of delivery and leads to economic self-sufficiency, in contrast to nonprofits dependent on philanthropy. Proponents of some social projects also view market-based interventions as a means to social value by facilitating local economic development, in the form of wages for employees, income or capital for small business owners, and tax revenue for the local government. Finally, these social projects diverge in terms of who is claimed to benefit from the proposed activity – is it individuals, communities, government, and/or shareholders? In caring capitalism, the pursuit of social value through market-based solutions to social problems is proposed not only to best address social inequities but also to produce shareholder return for investors, thus increasing the likelihood that business can be sustainably harnessed for social good.
How does the content of a social project affect how a field’s measuring device then defines and gauges social value? As outlined earlier, extant literature on the role of the market in society provides two competing expectations. Either the definition of a social project, as a criterion of worth, should shape the meaning and metrics of a field’s measuring device or the irresistible force of the economy, either wholesale or as the sectoral site of the social project, should lead to the privileging of market metrics. Yet, the measuring devices present in and across fields contradict these expectations. As shown in Table 1.2, these tools, techniques, and technologies unexpectedly vary in the presence of market indicators, including their use of money as a metric and their incorporation of shareholder value as a criterion of worth.
First, these measuring devices are not consistent across locales and nor do they map neatly onto sectoral location. Money is used as a measure of social value in only a small number of fields and the monetization of social value – when it does take place – has occurred in fields both internal and external to the private sector. Perhaps more surprisingly, the content of these measuring devices does not necessarily reflect the premises of a field’s social project. Even when located in the private sector, the incorporation of multiple dimensions of a market logic in the envisioning of a social project can but need not entail the use of market indicators to evaluate the worth of organizations in that field. For instance, the production of economic development benefits through the provision of market inclusion to the poor, while easily monetized, is only counted in the currency of money in one field of caring capitalism. And while a number of fields as examples of caring capitalism are committed to the pursuit of social value as a source of shareholder value, only one possesses a measuring device that can evaluate compassionate companies in terms of their production of return on investment.
In other words, as shown in Table 1.3, measuring devices display a degree of autonomy from either the institutional pressures of the market or the envisioning of social value in a field as a criterion of worth. Striking disjunctures exist between the content of a field’s social project and that of its measuring device in many of the cases under study, thus departing from scholarly predictions about the relative causal force of morals or the markets. Sectoral location is immaterial here in explaining the use of money or shareholder value, thus contradicting the theoretical expectation that the market is either a colonizing force in society (Sandel Reference Sandel2012) or exists as a distinct societal space (Friedland and Alford Reference Friedland, Alford, Powell and DiMaggio1991; Glynn and Lounsbury Reference Glynn and Lounsbury2005). And, the moral market thesis – in its claim that actors are capable of employing economic indicators and measures to pursue moral goals through economic exchange – cannot explain the marked absence of money as a mode of valuation in many fields of caring capitalism (Zelizer Reference Zelizer2009; Fourcade Reference Fourcade2011).
To make sense of this unexpected relationship between the rise of caring capitalism and the meaning and measure of social value, I argue that measuring devices are socially and relationally constructed in ways that existing literature cannot account, given their reliance on the “reflection” thesis of value and valuation, in that the performance of valuation is presumed to follow from the determination of value. This book’s simple claim is that it is the work of “value entrepreneurs” that holds the key for apprehending the precise measures and meanings of social value that are on offer across these fields. Value entrepreneurs are those actors who produce, justify, and disseminate the measuring device that performs the assessment of social value in a field (Reinecke and Ansari Reference Reinecke and Ansari2012). Value entrepreneurs constitute one type of “institutional entrepreneur”: an individual who constructs and diffuses a new organizational form, category, practice, or field (DiMaggio Reference DiMaggio and Zucker1988; Beckert Reference Beckert1999; Maguire, Hardy and Lawrence Reference Maguire, Hardy and Lawrence2004). It is through attention to the work of value entrepreneurs that we can make sense of the conjunctures and disjunctures between the social project of a field (and what is identified to be of value) and the type of value represented in and rewarded by a measuring device (and how valuation is to take place). And attention to the constrained creativity of value entrepreneurs helps us to understand why social projects that embrace the promise of compassionate companies to produce social and shareholder value do not then necessarily entail the use of market measures to capture those businesses’ financial worth.
First, we might expect that value entrepreneurs matter because they impose their own values and understandings onto a measuring device. The absence of both money as a metric and the criterion of shareholder return in many fields might be due to these actors’ moral discomfort over assigning a dollar value to social goods or an ethical distaste for joining the pursuit of social good to the pursuit of financial gain. To explain the disjuncture between a social project and a measuring device would be to focus on the agentic capacity of value entrepreneurs to resist the forces of marketization, as one instance of the “hostile worlds” perspective (Zelizer Reference Zelizer1983; Turco Reference Turco2012; Reich Reference Reich2014). Yet, as I will show in the following chapters, value entrepreneurs in these fields were not morally resistant to the varying social projects that together constitute caring capitalism. These actors sought to produce measuring devices that precisely reflected the desire to employ market-based solutions to social problems. They were, if and when asked to do so, willing to develop a technique to monetize an organization’s social value or a tool to demonstrate the financial worth of a socially beneficial business model to shareholders.
But, as captured in Figure 1.2, value entrepreneurs’ quest to produce a measuring device that accurately captured their field’s view of social value was limited by two factors: the communicative purpose of the measuring device itself and these actors’ own professional expertise. First, drawing from critical accounting literature (Ansari and Euske Reference Ansari and Euske1987; Hopwood and Miller Reference Hopwood and Miller1994), I recognize that any measuring device is commissioned to serve a communicative purpose.30 Valuation entrepreneurs create a measuring tool or technique in order to convince a targeted audience about the merit of the field’s social project. Measuring devices, in this sense, are inherently relational in nature in that they are critical to actors’ attempts to create particular types of networks, ties, and exchanges with others (Zelizer Reference Zelizer2009). As a whole, a measuring device’s communicative purpose matters because it determines what dimensions of the field’s social project, including the presence of a market logic, are incorporated into and which are omitted from the valuation tool itself and therefore how social value itself gets counted and so defined.
Figure 1.2 Theoretical model
Measuring devices in the case of social value serve one or more of three communicative purposes. A valuation instrument can establish focal actors’ legitimacy. It can be employed, as predicted by institutional theory, to show that those organizations conform to their constituents’ expectations of good governance (Meyer and Rowan Reference Meyer and Rowan1977; Porter Reference Porter1995; Hwang and Powell Reference Hwang and Powell2009). Actors with the goal of altering others’ behavior, secondly, can commission a measuring device. A measuring device can be critical to a larger project of “governing by numbers” by gathering knowledge about others in order to influence their activities (Foucault Reference Foucault1979, Reference Foucault1994; Power Reference Power1994; Miller Reference Miller2001). And, finally, a measuring device can be utilized in the justification of a new field. It can demonstrate the relative worth of a new social project compared to existing projects or it can solve the value problem in a new market (Beckert Reference Beckert2009; DeJean, Gond, and Leca Reference Dejean, Gond and Leca2004).
To achieve any one of these three communicative goals, value entrepreneurs are commissioned to develop and diffuse a new measuring device of social value in the field. But, these actors are constrained in their capacity to do so by their professional expertise.31 Here, I draw from the sociology of professions and employ the concept of expertise as a shorthand term to convey the scope and manner of knowledge possessed by an actor or group as a result of their professional education, training, and employment background (Abbot Reference Abbott1988; Eyal Reference Eyal2013). The type of expertise held by value entrepreneurs matters because it provides those actors with a valuation repertoire that they can draw from to create a new measuring device in accordance with the field’s social project and the valuation tool’s communicative purpose.
In the social sciences, the concept of repertoire refers to the norms, conventions, and tools available to an individual or group in a specific setting. The analytical purchase of the concept has been to show that actors’ lines of actions are not driven solely by their values or interests but that their existing repertoire provides a limited range of strategies of action, containing a set of possible practices and meanings (Swidler Reference Swidler1986; Tilly Reference 260Tilly1986; Clemens Reference Clemens1993; Boltanski and Thévenot Reference Boltanski and Thévenot2006). Any effort to change existing societal arrangements is fundamentally structured by the actors’ existing repertoire of strategies and tactics at their disposal. With some exceptions, these scholars have focused largely on cases where actors have successfully transposed and recombined existing items in their repertoire in order to enact the desired change (Sewell Reference Sewell1992; Clemens Reference Clemens1993; Johnson Reference Johnson2008).
In the cases under study here, value entrepreneurs rely on their valuation repertoire in the formulation of a new measuring device. They transpose, extend, and synthesize existing tools in order to create an appropriate valuation instrument. In some fields, these actors are facilitated by their knowledge of an assortment of tools, techniques, and technologies (and their attendant conventions) they then can draw from to create a new measuring device that suits the content of the field’s social project and fits with the tool’s intended communicative purpose. In other cases, value entrepreneurs are constrained by the limited nature of their valuation repertoire and are unable to construct a valuation tool that embodies and so reproduces the social project of the field, due to the difficulty, knowledge, and capacity inherent to and required for creating a new measuring device. This failure, as noted by scholars, occurs because the construction of the material tools of valuation requires both skill and is a form of “work”: the assignment of numerical worth to items requires “enormous organization and discipline” (Espeland and Stevens Reference Espeland and Stevens1998:315; Helgesson and Muniesa Reference Helgesson and Muniesa2014).
In all, the book’s main argument is that it is the value entrepreneurs’ communicative purpose and professional expertise that explains the presence of conjunctures and disjunctures between the social project of a field and the meaning and metric of social value embedded in a measuring device. That is, rather than seeing measuring devices as following from and embodying a specific understanding of value, these tools and techniques must be analyzed as discrete social objects that are constructed by specific actors in particular relational contexts. The existence of a measuring device – and the precise ways in which it counts social value and so determines what gets to count as social value – requires a sustained effort on the part of value entrepreneurs with not only a commitment to a specific meaning of social value to guide them, but also the interests and ability to convey the worth of that social project to others.
Overview of the book
The book has three parts. The two chapters of Part I focus on the question of social value for social purpose organizations outside of the market. In the 1990s, nonprofit organizations and a newly emerging category in the sector of “social enterprises” were both subject to pressures to demonstrate their social worth. In both cases, value entrepreneurs in the field promulgated a specific measuring device.
Chapter 2 analyzes how outcome measurement – the counting of positive program change in a charity’s clients – came to dominate members of the nonprofit sector. Contrary to popular explanations that place its origins in nonprofits’ emulation of firms, value entrepreneurs, consisting of consultants and academics, instead selectively drew from their own expertise with measuring devices prevalent in the public sector to gauge social programs. They innovatively refashioned those existing practices in order to generate a new measuring device that was to be used by key funders in the field who faced accountability demands and sought to assert their legitimacy.
Chapter 3 examines the field of social enterprises. Emerging in the 1980s and 1990s, social enterprises were a new type of nonprofit organization that used market means to achieve social value. Here, one charitable foundation sought to grow the field of social enterprises by developing its own measuring device that could capture social enterprises’ economic and social value. “SROI” was distinct from outcome measurement in that it entailed the monetization of social good and the assessment of a social enterprise in terms of cost benefits for funders. Despite its use of finance discourse and money as a metric, SROI was intended to positively demonstrate the success of social enterprises in achieving social value via the innovative use of market solutions for economically disadvantaged clients.
The book then turns to the study of the meaning and measure of social value in the private sector prior to the emergence of caring capitalism. Chapters 4 and 5 of Part II focus on market monitors: civil society actors who sought to privately regulate corporations to hold them accountable for the social consequences of their products and production processes. In both the fields of SRI (in the 1970s and 1980s) and of CSR (in the 1990s), early value entrepreneurs developed ratings of companies’ social and environmental performance in order to engender the desired behavior from firms. They did so as a form of market incentive but they varied in terms of their specification of the economic value of firms’ social behavior, either for the local community or for shareholders.
Part III takes up the case of caring capitalism. Chapters 6 and 7 look at different fields of caring capitalism to account for why and when firms’ production of social and shareholder value is assessed using the market indicators of money and shareholder return. In Chapter 6, I consider the case of RI, where a company’s ESG performance – how a firm conducts itself in terms of its environmental impact, its social consequences, and its model of governance – is understood as a positive determinant of long-term shareholder value. Advocates of RI sought to develop a measuring device for ESG performance that could be integrated with ease into mainstream financial analysis. The result is that the meaning of social good has become contingent upon its financial materiality as part of financial analysts’ fundamental equity valuation of a stock.
In contrast, Chapter 7 focuses on two other fields of caring capitalism where firms pursue both money and mission, but where market indicators are not used to value their social worth. Inclusive Businesses are multinational corporations whose business models alleviate poverty in the developing world while creating shareholder value. However, the prevailing measuring device of social value focuses only on positive social changes for individuals in a business’ value chain and omits the monetization of firms’ production of economic profit or shareholder value. This disjuncture occurred because proponents of Inclusive Businesses sought to develop a measuring device for social value in order for companies to obtain license to operate from stakeholders, as constrained by value entrepreneurs’ expertise only in the fields of international and sustainable development.
Alternatively, in the case of Impact Investing, value entrepreneurs have sought to create a new industry based on investment in local companies in developing countries that pursue both mission and money. As part of their effort to create this new market, as with RI, proponents worked to create a measuring device that paralleled that of mainstream investing. Yet, these value entrepreneurs faced two challenges: the pool of potential investors held varying expectations concerning the desired balance of financial versus social return and they possessed different meanings of social value. Value entrepreneurs responded by creating a new measuring device that allowed for investors to engage in the contingent assessment of a firm’s social and/or financial value with the goal of customized commensurability.
The final chapter summarizes the constituent argument made in the book. It then traces out the pragmatic implications of these competing and intersecting accounts of social value for social purpose organizations across different societal settings. Chapter 8 concludes by highlighting how these findings speak not only to our theoretical understanding of social value and the broader study of value and valuation but also to debates concerning the relationship of morals and the market. An appendix lays out the data and methods used herein.
