Developing a social performance measurement framework for small and medium social enterprises in KwaZulu-Natal, South Africa.

Abstract

Small and medium social enterprises (SMSEs) in developing countries, particularly in South Africa, play a crucial role in a country's economy. With an entrepreneurial mind-set, they respond innovatively to the social, economic, and environmental societal problems. The achievement of the social and environmental mission of SMSEs is defined through the involvement of stakeholders within the enterprises. However, SMSEs in emerging economies experience critical survival and performance challenges, including financial sustainability, a lack of human and financial resources, and the challenge of new pressures, as stakeholders are concerned about their performance evaluation. This study’s aimed to develop a social performance measurement framework for small and medium social enterprises in KwaZulu-Natal, South Africa. The study adopted a qualitative research design and a case study approach. The study population was SMSEs who participated in the Champions’ Programme as part of a local economic development (LED) programme at the University of KwaZulu-Natal (UKZN). A total of 10 participants were selected purposively for an in-depth interview. However, the saturation point was reached after interviewing the seventh participant. Data is analysed using NVivo software, using the themes that emerged in the study. The literature review indicated that most of the SMSEs in emerging economies lack an established performance measurement framework, preventing them from measuring their social performance and skills. In line with the literature, most social enterprise participants indicated that the lack of performance measurement hindered them in meeting the stakeholders’ expectations. This study aimed to address this lack by developing a framework that measures social value as non-financial performance, rather than financial performance. The developed social performance measurement framework may benefit the SMSEs in identifying where they are, and where they would like to be, regarding social and economic growth. Moreover, the proposed framework can be used for better decision-making for all stakeholders. The developed framework can address the stakeholders’ requirements for measurement and enhance the performance of SMSEs. The proposed framework brings a new theoretical approach to performance measurement. The framework was developed based on a literature review and an empirical study. The study concluded that SMSEs must define and monitor their social mission to respond to the call for social performance from internal and external stakeholders. The involvement of stakeholders and their need for information must be identified to respond to their views of what the SMSEs need to achieve within the community, and what needs to improve to maintain the necessary support from the stakeholders. Furthermore, to assess their social performance, SMSEs must identify and focus on the activities of their business operations related to their social mission in order to increase their efficiency and maintain their sustainability. In addition, environmental; human; cultural; community; and educational factors are identified as key social metrics of social performance. The study recommends testing the developed framework to identify other indicators through confirmatory research.