Are social impact measures financial measures in sheep’s clothing?

This paper investigates how ventures construct accounts to gain legitimacy from the social impact generated by their products and operations. We find that social impact accounts are framed to appeal to two distinct forms of judgment about legitimacy: cognitive and evaluative. Cognitive forms of judgment qualify how well a venture shares attributes with an individual’s schemas of established actors or roles in society. Evaluative forms of judgment tend to operate more analytically to make comparisons of the relative appropriateness and desirability of multiple ventures to achieve an audience’s goals. Evaluative forms of judgement make these comparisons by appraising the “matter-of-degree” to which each possesses certain attributes. We show how ventures construct two independent forms of social impact accounts to take advantage of different biases in cognitive and evaluative forms of judgment. Yet, while legitimizing the social aspects of a venture involved justifications aimed at both forms of judgment, legitimizing a venture’s professionalism relied almost exclusively on evaluative judgments. We also found that the justifications created to appeal to evaluative judgements relied almost exclusively on financial and operational data, using operational scale as a proxy. Because financial and operational data were so critical to evaluative justifications, and because these based justifications were so critical to a venture’s social impact accounts, many social impact accounts ultimately became for-profit financial measures dressed in sheep’s clothing.