Accounting and Accountability of Australian and New Zealand Social Businesses

Zeng, Sheri
Van Staden, Chris
Momin, Mahmood
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Doctor of Philosophy
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Auckland University of Technology

Social business is receiving increased attention, due to its role in pursuing a social mission through self-financing business models, rather than relying on philanthropy to survive (Manetti, 2014). Following on from the hybrid nature of social businesses, they should not only be accountable for blended value creation but should also be accountable for reporting their financial and social performance to multiple stakeholders. It is therefore necessary for social businesses to demonstrate how they discharged their accountability, created social impacts, pursued their missions, and become more self-sustainable (White, 2018). However, how social businesses discharge accountability and measure their social impact remains unclear (Jeffrey & Perkins, 2013), as there is no common impact measurement method and no established reporting guide. Doherty, Haugh and Lyon (2014, p.14) state that “there is a need for a greater understanding of how social businesses account for their performance”. Therefore, this research aims to explore accountability and social impact measurement in the context of Australia and New Zealand social businesses. To achieve this purpose, this research relies on accountability theory and the concept of blended value as a theoretical lens to explore how Australian and New Zealand social businesses discharge their accountability and measure their impacts through reporting and disclosure, as well as what challenges or barriers social businesses face in discharging accountability and measuring impacts.

Content analysis and semi-structured interviews are adopted in this research to answer the research questions. The researcher utilises content analysis to analyse the extent and comprehensiveness of the information disclosure. Nineteen semi-structured interviews are conducted to explore how managers understand accountability and social impact, and their perspectives on the challenges they face in discharging accountability and measuring impacts.

The findings of this research show that many sample companies did not provide comprehensive information, but a few did well. Significant differences observed in the extent and quality of disclosure among social businesses and between the five accountability categories. Specifically, social businesses mainly focused on reporting information about accountability for resource allocation, accountability for process and accountability for outputs. However, the information available was limited regarding financial performance, social outcomes and impacts. The interview data reveals that differing views on accountability and definition of social impact and the challenges social businesses faced which resulted in a different extent and quality of information reporting.

This research contributes to the existing literature in several ways. First, this research contributes to a holistic understanding of the accountability logic in social businesses, by introducing the concept of blended value (Emerson, 2003). Second, based on the prior literature, this research proposes the accountability categories and items to investigate how social businesses discharge their accountabilities and measure their impacts through reporting and disclosure. Third, this research provides detailed analysis of how 40 Australian and New Zealand social businesses measure their impact through reporting and disclosure. Last, the researcher interviewed 19 managers and founders of the sample businesses to understand their perceptions on accountability and social impact measurement. In doing so, this research provides a richer analysis of social business accountability and social impact measurement.

This research also contributes to practice. First, the researcher proposes a concise reporting framework for social businesses based on the limited body of social business research examining the accountability fulfilment and impact measurement. Second, the findings will prove beneficial to standard setters and regulators. As social business has not yet become a recognised business category, some institutions in Australia and New Zealand focus on developing a structured reporting framework and measurement method that can be applied in social businesses. Therefore, standard setters and regulators would gain important insights from the findings of this research to develop the reporting guidance and measurement method for social businesses.

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