The Hidden Voices Impact Assessment from the Perspective of Social Enterprises

MASTER THESIS WITHIN: Business Administration PROGRAMME OF STUDY: Strategic Entrepreneurship NUMBER OF CREDITS: 30 ECTS AUTHOR: Kristina Mayr & Sophia Seidel TUTOR: Duncan Levinsohn JÖNKÖPING May 2021

Master Thesis in Business Administration

Title: The Hidden Voices: Impact Assessment from the Perspective of Social Enterprises Authors: Kristina Mayr and Sophia Seidel Tutor: Duncan Levinsohn Date: 2021-05-24

Key terms: Social Enterprise, Impact Assessment, Interpretative Phenomenological Analysis, Critical Management Studies, Purposes, Challenges, Experiences

Abstract

Background: The field of impact assessment in social enterprises is largely influenced by the top-down demands of institutions like the European Union and other resource-giving institutions. This has caused a one-sided exploration of the topic impact assessment as the perspective of the social enterprises is so far under-researched. Therefore, the purposes, challenges and other experiences the social enterprises face when assessing impact were not yet given enough attention. Purpose: By taking a critical perspective, we seek to inspire dialogue and a change in the practical and theoretical field of impact assessment in social enterprises. We explore the enterprise’s perspective on why they assess their impact and what challenges they face. By that, their voices that have been hidden so far are raised and existing assumptions enriched by the social enterprise’s perspective. Method: To highlight the social enterprises’ experiences when assessing impact, the qualitative research approach Interpretative Phenomenological Analysis was chosen. A purposive sampling strategy led to eight in-depth interviews with people from different German- based social enterprises. Five steps were followed to analyze the data, including a two-stage interpretation process where the researcher’s and participant’s interpretations play an essential role.

Conclusion: This thesis shows the importance of including all perspectives in a research field. Our study found that social enterprises can have different reasons to assess impact and face challenges differently than assumed with the previous research focus on the funding perspective. At the same time, they experience the process positively. A model was developed to show the interrelations of the different experiences and influencing factors.

Acknowledgments

We would like to thank all those who accompanied us in the realization of this thesis.

In particular, we want to thank our supervisor Duncan Levinsohn, who supported us throughout our journey and inspired us with creative approaches.

We also thank the members of our seminar group (Alina Karola Neuer, Arne Ibo Stein, Eva Medvecová and Rein Te Winkel) who regularly contributed constructive feedback and enhanced our learning beyond the scope of our topic.

A special appreciation goes out to the participants of our thesis as well as the social enterprises they work for, for spending their time, openness and dedication to this project. They also enriched us with inspiring insights into their respective fields of work and life.

And, needless to say, we express our gratitude to our family and friends who have accompanied us in the process, engaged in discussions and supported us.

Jönköping International Business School, Jönköping University

May 2021

Kristina Mayr & Sophia Seidel

Table of Contents

1 Introduction ...... 1

1.1 Background ...... 1

1.2 Research Problem ...... 4

1.3 Research Purpose and Research Questions ...... 5

2 Literature Review ...... 6

2.1 Critical Management Studies ...... 6

2.2 Social Enterprises ...... 8

2.3 Impact and Impact Assessment ...... 9

2.4 Approaches to Impact Assessment ...... 11

2.5 Historical Development of Impact Assessment ...... 13 2.5.1 Origins of Impact Assessment ...... 13 2.5.2 Towards a Participatory Approach of Impact Assessment ...... 14 2.5.3 Impact Assessment in Development Aid ...... 15 2.5.4 Impact Assessment in Impact Investment ...... 16 2.5.5 How the Development of Impact Assessment informed this Thesis ...... 16

2.6 Purposes of Impact Assessment ...... 17 2.6.1 Purposes for Impact Assessment: Third Sector Organizations ...... 19 2.6.2 Purposes for Impact Assessment: Social Enterprises ...... 19 2.6.3 Examination of Existing Literature ...... 20

2.7 Challenges and other Experiences of Impact Assessment ...... 22

2.8 Conclusion of Literature Review ...... 26

3 Methodology ...... 27

3.1 Research Approach ...... 27

3.2 Research Design ...... 28 3.2.1 Data Collection ...... 28 3.2.2 Data Analysis ...... 32

3.3 Research Quality ...... 34

3.4 Research Ethics ...... 36

iii

4 Empirical Findings and Analysis ...... 38

4.1 Profile of the Participants ...... 38

4.2 Purposes of Impact Assessment ...... 38 4.2.1 Empirical Findings: Purposes ...... 38 4.2.2 Analysis and Interpretation: Purposes ...... 44

4.3 Challenges and Other Experiences of Impact Assessment ...... 47 4.3.1 Empirical Findings: Challenges and Other Experiences ...... 48 4.3.2 Analysis and Interpretation: Challenges and Other Experiences ...... 58

4.4 Synthesis of the Research ...... 65

5 Discussion ...... 67

5.1 Theoretical Implications ...... 67

5.2 Practical Implications ...... 69

5.3 Limitations ...... 70

5.4 Future Research ...... 71

6 Conclusion ...... 73

7 References ...... 75

List of Figures

Figure 1 Logic Model (adapted from Clifford, 2014) ...... 10

Figure 2 Classification of performance evaluation tools (based on Mouchamps, 2014, p. 734) ...... 12

Figure 3 Emergent Themes from Empirical Findings and Previous Literature: Purposes in Impact Assessment ...... 44

Figure 4 Frequency of Categorized Purposes of Impact Assessment ...... 47

Figure 5 Emergent Themes from Empirical Findings and Previous Literature: Challenges and Other Experiences ...... 59

Figure 6 Model of Experiences and Influencing Factors of Impact Assessment in Social Enterprises ...... 66

List of Tables

Table 1 Purposes of Impact Assessment in Third Sector and Social Enterprises ...... 18

Table 2 Research Objectives of Previous Studies ...... 20

Table 3 Geographic Location of Previous Studies ...... 22

Table 4 Overview of Participants ...... 30

Table 5 Profile of the Participants ...... 39

Table 6 Emergent Themes: Purposes of Impact Assessment ...... 39

Table 7 Participants’ Allocation to Emergent Themes: Purposes ...... 40

Table 8 Emergent Themes: Experiences and other Challenges of Impact Assessment ...... 48

Table 9 Participants’ Allocation to Emergent Themes: Challenges and Other Experiences .. 49

Appendix

Appendix I: Interview Guideline ...... 82

Appendix II: Participant Information Sheet and GDPR Form...... 83

List of Abbreviations

CSR Corporate Social Responsibility CT Critical Theory CMS Critical Management Studies e.g. For Example EaSI Programme for Employment and Social Innovation EIA Environmental Impact Assessment EMES The Emergence of Social Enterprise in Europe

EU European Union EuSEF European Social Entrepreneurship Fund et al. Et alii GECES Commission Expert Group on the Social Business Initiative GWÖ Gemeinwohl Ökonomie (‘economy for the common good’) HRM Human Resource Management IA Impact Assessment IAIA International Association for Impact Assessment IPA Interpretative Phenomenological Analysis n/a Not Available NEPA National Environmental Policy Act n.d. No Date NGO Non-Governmental Organization NPO Non-Profit Organization OECD Organization for Economic Cooperation and Development p. Page SE Social Enterprise SROI Social Return on Investment

UNECE United National Economic Commission for Europe UNEP United Nations Environment Programme US United States

1 Introduction

“[Impact assessment] must actually be a standard. So, we are not doing anything that is incredibly fancy or anything. But if we look at the current challenges: climate crisis, plastic pollution, social upheavals … it should be a matter of course to analyze, what kind of impact do we have? Is it

positive or is it negative?” – Jannik, SE1

According to the German Social Entrepreneurship Monitor 2021, two of three social enterprises (SEs) in Germany follow our interviewee Jannik’s call already: they assess their impact regularly (Hoffmann et al., 2020). The report relies on data from 428 SEs and suggests that impact assessment (IA) strengthens the anchoring of shared values in the organization and reduces deviation from the social mission. Hence, IA seems to be of significant importance for SEs for fulfilling their social mission (Hoffmann et al., 2020), which makes exploring the experience of SEs in doing so particularly interesting. At the same time, there is increasing pressure on SEs to demonstrate the fulfillment of their social mission (Ebrahim & Rangan, 2014). Especially funders and investors demand IA from SEs in order to be able to decide upon the most efficient investment of their financial resources (European Commission, 2020). These different interests and purposes do not seem to work well together, as commonly “there is a difference between what they [the organizations] are asked to do by stakeholders, what they say they do, and what they do in practice” (Arvidson & Lyon, 2014, p. 871).

Although IA is important for SEs for their own interest (Hoffmann et al., 2020), it is most often researched in the context of funding or investment relationships and there is a significant focus on the perspective of funders and investors (Nguyen et al., 2015; Ormiston, 2019). Therefore, the subject of IA has been explored one-sided. The question of what SEs do and experience regarding IA remains largely unanswered. This thesis aims to uncover these structures that significantly influence the research on IA to date. We will explore the purposes, challenges and experiences in measuring impact in SEs by focusing on the employees’ and founders' views.

1.1 Background

The number and influence of enterprises that combine the efficiency of traditional entrepreneurial practices with a social mission to tackle poverty, environmental issues and social injustice is growing (European Commission, 2020; Smith et al., 2013; Zahra et al., 2009). Both the engagement of private citizens and community initiatives (bottom-

up) as well as the provision of European funding programs (top-down) foster this growth and the emergence of new SEs (European Commission, 2020). This development attracts interest from different stakeholders such as political leaders, research institutions and public authorities (European Commission, 2020). Although there are different definitions of what a SE is, acting economically while pursuing a social mission and aiming to have an impact is part of all of them (European Commission, 2020; Young & Lecy, 2014). An example of a SE is Discovering hands who had the core idea to improve the early detection of breast cancer. They train blind and severely visually impaired women to become tactile medical examiners in order to integrate them into the primary labor market (Hoffmann et al., 2020). SEs are increasingly requested to prove that they achieve their particular social mission (Ebrahim & Rangan, 2014; Ormiston, 2019). The demand originates, among others, from powerful institutions like the European Union (EU) and other investors, as they aim to make social impact comparable and hence ease funding decisions (European Commission, 2020). However, since SEs operate in various fields and pursue different missions (Rawhouser et al., 2019), target different groups and have different business models (Pomerantz, 2003), it is not easy to assess, monitor and compare the impact. Therefore, different measuring tools and approaches are required to assess whether SEs manage to achieve their mission (Andersson & Ford, 2015; Hertel et al., 2020; Pomerantz, 2003). IA is complex and SEs often face resource constraints as they operate in an environment with scarce resources (Barraket & Yousefpour, 2013). Various European funds like the European Social Entrepreneurship Fund (EuSEFs) and the Programme for Employment and Social Innovation (EaSI) were established to support SEs. The latter alone provided more than €86 million for investments in SEs from 2014 to 2020. The European Commission also released approaches for IA to enable SEs to demonstrate their impact to investors and enable fund managers to decide upon their fund distribution (Clifford, 2014), representing a top-down requirement for IA. Funders commonly believe that intensive measurement approaches with detailed, professional and complicated methods lead to a better understanding of SEs and allow accountability to receive investments (Nguyen et al., 2015). Therefore, it is no surprise that accountability towards investors and funders was the most common purpose stated (e.g., Arena et al., 2015; Barraket & Yousefpour, 2013; Lall, 2019).

These asymmetric relationships between funders and SEs warrant critical attention, as they can create pressure and inefficiencies for SEs. They may feel compelled to comply

with the demands of resource-giving stakeholders, even though they recognize that the methods are inappropriate (Nguyen et al., 2015). However, IA in SEs does not only serve to fulfill regulations and external requirements. It can also improve self-reflection of the company's operations and the achievements towards its social mission (Nicholls, 2009), which is a bottom-up approach for IA. It can increase organizational identity and staff motivation (Barraket & Yousefpour, 2013; Ormiston, 2019), provide orientation for strategy development (Arena et al., 2015) and resource allocation (Clifford, 2014). Looking at the historical development of IA, it appears that legislative requirements and powerful institutions were, from the beginning, highly involved in shaping the literature and practice of IA (Bond & Pope, 2012). However, the stakeholders, whose situation was to be improved by IA, were often not involved in the process to a sufficient extent (Vanclay, 2014). Therefore, IA practices have been criticized for different reasons, such as the limited quality and depth of analysis (Esteves et al., 2012). Many authors call for a cultural change in the field of IA and suggest a more participatory approach that involves the stakeholders more (Morgan, 2012).

Considering these historical developments and the fact that most articles on IA are related to impact investment or even written by resource-giving institutions, scientific results might be a product of ‘discursive closure’. ‘Discursive closure’ arises when potential conflicts are suppressed and certain groups are excluded from discussions. That can happen, for instance, when specific discussions are prioritized, when discussions are marginalized or when some groups are more involved in discussions than others (Alvesson & Deetz, 2020). In the case of IA, actors from the funding perspective get privileged access to discourse and the SEs' perspective is ignored to a wide extent. Therefore, IA practices and understandings are socially constructed and shaped by the relationship of SEs and their resource-providing stakeholders (Nguyen et al., 2015). Critical reflection on how the social understandings of IA and scientific results are constructed bears the potential for emancipation and transformation to a new understanding. This critical reflection is a central element of a research path called critical theory (CT) (Alvesson & Willmott, 1992b), which will be explained later in more detail. Critical Management Studies (CMS) applies the principles of CT to management studies and aims to explore views of a subject that might not have been considered before (Alvesson & Deetz, 2020). The principles of CMS guide this thesis, aiming to inspire a change that benefits those that have not been considered sufficiently before in research (Fournier & Grey, 2000).

1.2 Research Problem

As of today, much of the literature about the topic of IA is written to improve funding decisions (e.g., Clifford, 2014), to compare social impact (e.g., Kroeger & Weber, 2014), or covers techniques for IA that should fulfill these aims (Nicholls, 2010). The papers that deal with the purposes and motivations of IA primarily examine the perspective of funders, investors and other resource-providing stakeholders (Barraket & Yousefpour, 2013; Nguyen et al., 2015). We found only one study that focuses on the perspective of SEs regarding the purposes of IA (Haski-Leventhal & Mehra, 2016). What is also examined predominantly in a direct relationship with resource-giving stakeholders are the experiences and challenges of assessing impact. An example is Ormiston (2019), who looked at the relationships in an impact investment environment. In this context, demands for accounting and marketing are prominent and influential and encourage an overly positive and optimistic IA and reporting practice. This focus undermines other functions, such as organizational learning and thus a more critical IA practice is required. Beyond that, only limited attention has been paid to the purposes and experiences of IA in SEs (Ormiston, 2019). The little research that has been conducted found that SEs need to invest disproportional high time and money to fulfill the demands from different stakeholders (Molecke & Pinkse, 2017). Although SEs often recognize that the required assessment methods are inefficient for achieving social goals, they may feel compelled to comply with them. In the resource-scarce environment of SEs (Bengo et al., 2020), this is an additional burden that hinders the realization of the social mission (Nguyen et al., 2015). It is necessary to conduct further research that sheds light on the perceived challenges of SEs in order to redress this imbalance and inefficiency. The one-sided focus on the perspective of investors or funders suggests that the narrative on the topic of IA is limited. Researchers have not included the fundamental perspective of the actors themselves: The social enterprises. Moreover, a critical perspective demands considering the historically and socially constructed nature of IA (Alvesson & Willmott, 1992a), but so far, scholars have failed to do so. Therefore, the purposes, challenges and other experiences of IA have not yet received adequate attention from the perspective of SEs.

1.3 Research Purpose and Research Questions

This work builds on previous studies that have explored the purposes and challenges of IA in SEs (e.g. Barraket & Yousefpour, 2013; Bengo et al., 2020; Molecke & Pinkse, 2017; Nguyen et al., 2015). We distinguish and enrich those by shifting the excessive focus that has been placed on the funding perspective to the SEs’ view. We explore the different purposes of IA for SEs, study what challenges they face and how they experience IA in their everyday activities. Moreover, in line with the critical standpoint of CMS, we intend to uncover the socially constructed nature of IA. Through carefully listening to the members of SEs and critical questioning, we discover different perspectives, significant themes, discourses and dominant practices (Alvesson & Deetz, 2020). This is important because the current debate and scientific findings on the topic are restricted. Through critical reflection about the current status, we aim to inspire dialogues and create room for transformation, both theoretically and practically (Alvesson & Willmott, 1992a). Understanding IA and its benefits beyond serving funders’ interest is essential as it allows entrepreneurs to shift more attention to other purposes of IA. Insights into the experiences and practices of IA will be beneficial for SEs as an orientation and inspiration for their IA process. Detecting common challenges and their origins will also serve to create dialogue about the topic and facilitate change. Thus, our thesis is valuable for SEs wanting to emancipate themselves from mainly serving the demands of their funders. Raising the hidden voices of SEs serves to overcome the assumption that SEs primarily measure impact in order to satisfy stakeholder demands. When SEs and funders or investors engage in an equitable relationship, IA can be used to improve the businesses’ performance and allows both parties to achieve their shared goal of creating social impact (Nguyen et al., 2015). Therefore, the following research questions guide our investigation to serve the purpose of this paper:

(1) What are the perceived purposes of assessing impact from the perspective of social enterprises?

(2) Which challenges do social enterprises face when assessing impact?

(3) How is impact assessment experienced within social enterprises?

(4) 5

2 Literature Review

______

This chapter aims to set an appropriate frame for our research topic by reviewing the existing literature about the related topics. Firstly, we introduce critical theory and the principles of critical management theory, which guide this thesis. Then the chapter elaborates on the definitions of the terms social enterprises, impact and impact assessment. Following that, the most relevant approaches to impact assessment are explained and the historical development presented. It is followed by the purposes of impact assessment that have been found so far. The chapter concludes with the challenges and other experiences of assessing impact perceived in social enterprises. ______

2.1 Critical Management Studies

Critical Theory

A commonly stated problem with research and theories is that many aspects are seen as self-evident, natural and unproblematic even though there are alternative views about these issues and different ways of constructing situations. These assumptions avoid that the matters are questioned (Alvesson & Deetz, 2020). For this reason, critics point out that theories often have little to do with people's everyday problems and little relevance for practitioners (Kelemen & Rumens, 2008). Some researchers make a conscious choice to challenge taken-for-granted assumptions about social reality. The research following this path is called critical theory (CT). It involves questioning what is seen as given, unproblematic and natural, to trigger critical comments and inspire dialogue (Alvesson & Willmott, 1992a). CT argues that, by critical reflection, the potential for transformation is created (Alvesson & Willmott, 1992b). A prominent example of such transformation is the relationship between sex, gender and sexuality, which has traditionally been explained and analyzed using human biology. This theoretical approach has not given room for different sexual orientations or alternative genders. However, a more critical perspective can help uncover and rethink these assumptions and recognize that the connection between sex, gender and sexuality might be culturally constructed (Kelemen & Rumens, 2008). As presented in this example, CT approaches epistemological questions and catalyzes change (Kelemen & Rumens, 2008) by directing attention to important details (Alvesson & Deetz, 2020). Through

critical reflection on how the social world and the self are constructed, the potential for emancipation can unfold (Alvesson & Willmott, 1992b). CT is inspired by different streams, especially by the Frankfurt School of Critical Theory and Neo-Marxist views (Kelemen & Rumens, 2008). While these subgroups differ in their understanding of some aspects (Alvesson & Willmott, 1992a), scholars within CT agree that science should create value through its potential to develop beneficial conditions for human beings. Moreover, to realize the potentials of CT, social structures must change so that they support and facilitate, rather than exploit, human creativity and rationality (Alvesson & Willmott, 1992b). As a collective concept, CT incorporates different theoretical perspectives, such as feminism and gender studies, as seen in the example above and is used within organization theory and management studies. In the 1990s, the application of CT in management led to the emergence of the research body Critical Management Studies (CMS) (Kelemen & Rumens, 2008).

Critical Management Studies

CMS criticizes traditional management theory for producing oppressive management forms and argues that many management theorists fail to consider the historical and socially constructed nature of processes (Kelemen & Rumens, 2008). By doing so, established management discourse tends to be narrow and restricted and negatively affects the intellectual, practical, environmental and social spheres (Alvesson & Willmott, 1992b). The subject matter of CMS and its research approaches vary widely (Kelemen & Rumens, 2008). Mabey et al. (1998) give an illustrative example of CMS, which deals with human resource management (HRM). He points out that much of the literature aiming to improve HRM practices has focused on the management perspective, attempting to manage and organize human resources. However, little attention has been paid to the experience of people at the receiving end. This perspective is fundamentally vital as “It is they [the employees], after all, who are expected to enthusiastically engage with and fully participate in the HR strategies promulgated by senior management in their organizations. And it is largely upon them that such strategies stand or fall, are seen to endure and succeed or wither and fail.“ (Mabey et al., 1998, p. 7). Negative consequences of neglecting this perspective are that the goals of HRM strategies, such as empowering employees, improving trust, or improving relationships with customers, remain widely unachieved (Mabey et al., 1998).

The CMS perspective suggests that the phenomena of interest are usually taken for granted and under-challenged in how they are researched. CMS aims to inspire a social

change in the interest of those that are underprivileged or not considered sufficiently in research (Fournier & Grey, 2000). In impact assessment (IA), this is the case with social enterprises (SEs). It is predominantly viewed from the perspective of funders and investors, while the perspective of the organizations is neglected. Investors and funders have extensive requirements for quantitative and elaborate impact reporting (Nguyen et al., 2015), but the justification of these profound demands is hardly challenged. While this might seem natural and unavoidable, it might also be the outcome of discursive domination, calling for a critical investigation (Alvesson & Deetz, 2020). Applying the philosophy of CMS to IA, we listen to the perspective of SEs and create the potential to transform the status quo. To be able to do so, we first need to define what we understand as a SE.

2.2 Social Enterprises

The term social enterprise was introduced only about 30 years ago (European Commission, 2020; Kerlin, 2006; Nyssens et al., 2006). There is no universal definition of the term (Evers, 2001), but one can observe different streams of research in the United States (US) and Europe, respectively (Nyssens et al., 2006). As one of the first initiatives to study SEs, the EU initiated the project Emergence of Social Enterprise in Europe (EMES) in the late 1990s. The aim was to investigate the development of SEs in the different member states (EMES International Research Network, 2015). Dees and Elias (1998) describe SEs as initially being a consequence of the funding problems of non-profit organizations (NPOs). Charitable organizations had to find innovative approaches to ensure their financial viability as collecting donations and money from grants became more difficult. Further, the public authorities of the welfare states were not able to tackle all problems that occurred, which created a need for new organizational forms to fill those gaps and contribute to the conversion of the welfare system (European Commission, 2020; Leadbeater, 1997). With their distinct organizational characteristics, SEs can be allocated to the third sector (Defourny, 2014). The term third sector was introduced in the 1970s to refer to organizations, such as charities, NPOs, or non-governmental organizations (NGOs), that are neither part of the public nor the traditional private sector (Corry, 2010). Dees and Elias (1998) describe a spectrum with two extremes of private enterprises. Some enterprises only seek to act in favor of society and do so by receiving donations and grants. On the other side of the spectrum, there are enterprises whose only objective is to create economic value. SEs fall somewhere in the middle of this spectrum (Dees &

Elias, 1998). There is no clear definition of SE but rather a ‘continuum of possibilities’ (Peredo & McLean, 2006, p.63). However, an essential characteristic of SEs is that they pursue a social mission by acting on the economic market. They sell products and/ or services and thereby aim to have an impact (Young & Lecy, 2014). According to Nyssens et al. (2006), the nature of the commercial operation must be linked to the social purpose. For the European dialogue, the EMES research network specified some criteria, which SEs should aim for as an ideal (Defourny, 2001). In contrast to commercial businesses, SEs may get financial support in the form of subsidies and grants. However, unlike other third sector organizations, they pursue to be profitable in the long-term in order to be financially sustainable and independent from other funding sources. By that, they are able to act autonomously and by doing so they face some degree of economic risk (Nyssens et al., 2006). Furthermore, SEs can combine monetary and non-monetary resources such as paid employees and volunteers (Defourny, 2001). As opposed to Europe, where the EMES research network defined SEs quite clearly, there is no detailed definition of the term in the US (Defourny, 2001). There, SE refers to a broader concept of aiming for a social impact using some economic practices (Kerlin, 2006; Nyssens et al., 2006). The activities classified as SEs vary across countries, such as work integration, health- related topics, educational issues and others. Furthermore, the degree of stakeholder participation and the required extent of practicing economic activities classified as a SE are different (European Commission, 2020; Kerlin, 2006). Even within the EU, the definition of SEs varies from country to country. The various regulations and distinct legal frameworks make it challenging to find one universal definition (European Commission, 2020).

As for this thesis, we define SEs as organizations that aim to solve social issues by producing and/ or selling goods and/ or services. The organizations act responsibly not only in their production of goods and services but seek sustainability in all their activities. This is commonly called to follow a triple bottom line: they care about people, our planet and their profits (Slaper, 2011).

2.3 Impact and Impact Assessment

Impact

As mentioned above, the main characteristic of SEs is the intention to create an impact. For this reason, we need to elaborate on what impact actually is.

Researchers use different terms to describe the results of the actions of SEs, but often the terms lack precise definitions. They use social impact (Rawhouser et al., 2019; Stephan et al., 2016), social value (Hall et al., 2015; Martin & Osberg, 2007), social outcome (Husted & De Jesus Salazar, 2006), public value (Meynhardt, 2009; Stoker, 2006), social return (Emerson, 2003), social effectiveness (Bagnoli & Megali, 2011) and social performance (Chen & Delmas, 2011; Hertel et al., 2020).

Another possibility of approaching the definition of impact is looking at the so-called Logic Model (or Theory of Change). It was developed by the US Agency of International Development in the 1960s and describes the causative links between the five aspects of an intervention, being input, activities, output, outcome and impact (see Figure 1) (Ebrahim & Rangan, 2014). The model is commonly used to differentiate between the results of the actions of SEs. For example in the Social Impact Measurement report by the European Commission, the model is referred to as impact value chain (Clifford, 2014).

Figure 1 Logic Model (adapted from Clifford, 2014)

In this framework, inputs include all kinds of human and capital resources that the organization uses. Activities refer to the organization's specific actions and tasks to improve a situation or tackle an issue. Those activities result in tangible products/ services for the beneficiaries, also called outputs (Andersson & Ford, 2015; Bagnoli & Megali, 2011). The intangible effects on the lives of the beneficiaries resulting from the company’s activities are called outcomes (Bagnoli & Megali, 2011; Ebrahim & Rangan, 2014). Those can be positive and negative, intended or not, long- and short-term (Clifford, 2014; Roche, 1999). Impact implies broader and more future-oriented

outcomes affecting the beneficiaries (Clifford, 2014; Hehenberger et al., 2015) or society as a whole (Bagnoli & Megali, 2011; Ebrahim & Rangan, 2014). Some authors do not differentiate between the terms output, outcome and impact but use them interchangeably (Clifford, 2014). While a close differentiation of the three can be beneficial in some areas, we lean our definition on Mulgan (2010), Rawhouser et al. (2019) and Stephan et al. (2016) for the context of this thesis. They describe impact as short- or long-term, non-monetary effects on the targeted individuals’ or communities’ welfare or the environment. The effects result from the implementation of projects or actions by market-based organizations, in our case SEs. Therefore, we distinguish between impact, output and outcome, but for the IA process all elements are essential as they enable SEs to contextualize impact with input factors. Another aspect of the discussion about the term impact is the kind of mission that SEs pursue. There is an inconsistency in the existing literature whether social, environmental, or other domains are referred to (Ormiston & Castellas, 2019). Comparing impact across domains is challenging (Rawhouser et al., 2019). However, as we do not aim to compare impact but want to investigate the challenges and purposes of assessing it, we include all domains in our definition.

Impact Assessment

For the process of assessing impact, the terminology is also not standardized. The terms assessment, measurement, evaluation, or appraisal are commonly used (Ormiston, 2019). This leads to a wide range of different combinations, such as impact measurement (Lyon & Arvidson, 2011), outcome measurement (Rawhouser et al., 2019), impact evaluation (Arvidson & Lyon, 2014), performance measurement (MacIndoe & Barman, 2013; Nicholls, 2010), impact reporting (Nicholls, 2009) or performance assessment (Ebrahim & Rangan, 2014). These processes include activities, tools, methods and standards that assess impact and aim to enable comparability across similar sectors (Ormiston, 2019). In the interest of consistency, we use the term impact assessment.

2.4 Approaches to Impact Assessment

During our review, we found a wide range of approaches used to assess the impact of SEs, some of which are more popular than others. However, none has yet become a universally recognized norm. It is unlikely that any method will ever become the golden standard as the different objectives, scales of projects, stakeholders activities require

distinct assessment methods and various ways of presenting the information (Clifford, 2014).

SEs commonly adapt performance-measuring tools for IA that were initially developed for commercial businesses. Mouchamps (2014) describes with the analogy of weighing elephants with kitchen scales. To present the most used approaches by SEs, he developed a framework in which he classifies approaches according to whether they serve external or internal purposes. Another differentiation is whether they use monetary or non-monetary indicators to assess impact (see Figure 2). However, due to the particular characteristics and the complex nature of SE’s, those traditional approaches are often not appropriate to assess their performance (Molecke & Pinkse, 2017). Therefore, new tools designed specifically for SEs need to be developed (Mouchamps, 2014).

Figure 2 Classification of performance evaluation tools (based on Mouchamps, 2014, p. 734)

The scope of this thesis does not allow us to go into detail about the approaches. However, Figure 2 shows that SEs use a wide range of different IA methods and variations thereof. They creatively find ways to give strategic attention to capturing and disclosing both social and financial value creation (Nicholls, 2009). According to Clifford (2014), however, both funders and SEs widely agree that any attempt to use pre-defined quantitative indicators to measure and capture success would be counterproductive. The reason for that is that quantitative indicators often cannot be aligned with the mission and needs of the organizations (Clifford, 2014).

To solve that issue, different associations seek to define common indicators for assessing impact and developing a shared language to communicate it (International

Federation for the Economy for the Common Good e.V., n.d.). One example is the economy for the common good movement (from German: Gemeinwohl Ökonomie (GWÖ)). However, also this approach faces criticism, for instance that there is not enough variety of indicators that show the value for the public. Moreover, it lacks legitimization by states, so its applicability is questionable (Meynhardt & Fröhlich, 2017). This confirms that also innovative approaches cannot represent the integrity of impact.

2.5 Historical Development of Impact Assessment

When conducting CMS, it is necessary to exercise sensitivity, as most critical research themes investigate hidden themes. ‘Discursive closure’ is, for instance, often an aspect of critical research. It exists whenever certain groups are not included in a discussion, for example, through marginalizing, disqualifying, or privileging certain groups and thus potential conflict is suppressed. ‘Discursive closure’ produces an apparent consensus that is actually deficient and incomplete (Alvesson & Deetz, 2020). Uncovering dissent and differing opinions usually requires historical insight into the development of what is now considered natural or consensus. When looking at history, one understands through which discussion and processes the consensus has been formed. Often, scholars fail to consider the historically constructed nature of existing processes, resulting in close- minded scientific results (Alvesson & Willmott, 1992a). The development of IA is elaborated on below to avoid such an outcome.

2.5.1 Origins of Impact Assessment

After the Second World War, the population, as well as technological and economic developments, grew explosively. Along with that came the spread of pesticide usage, oil spills and nuclear fallouts, all contributing to public concerns about the consequences on the environment and people’s health and safety (Caldwell, 1988). In 1970, the National Environmental Policy Act (NEPA) was an innovative response from the US to these concerns. The policy act aimed to assess planned governmental actions, such as policies and projects, regarding the effects of human activity on the biophysical and social environment. It demanded an integrative and interdisciplinary use of natural and social sciences and environmental design arts (Caldwell, 1988). The process of identifying and responding to the environmental impact of decisions gave rise to the term environmental impact assessment (EIA) (Morgan, 1999, 2012). Bond and Pope (2012) consider EIA as the original form of IA. Although the US government initiated it to reform policy-making, the intention was also to influence the private sector (Caldwell, 1988).

After the US introduced NEPA, other countries implemented similar legislation that was typically compatible with private and public development actions (Vanclay, 2014). Although EIA was initially supposed to cover both social and environmental impact (Esteves et al., 2012), the social aspect developed as a field on its own during the late 1970s and 1980s (Vanclay, 2014). Other IA forms have developed under the term EIA, such as social impact assessment, health impact assessment and strategic environmental assessment (Morgan, 2012). Our understanding of IA covers all these fields. The formalization of IA through legal requirements contributed to spreading legislation like NEPA and related thinking patterns worldwide. Influential organizations also promoted the spread of IA practices (Bond & Pope, 2012). For instance, the United Nations Environment Programme (UNEP) and the Organization for Economic Cooperation and Development (OECD) enforced IA by including it in their operations. Also, finance corporations introduced performance standards, such as the Equator Principles, which expanded IA standards to developing country investments (Bond & Pope, 2012). For instance, the World Bank Group included environmental and social assessment procedures as guidelines for funding decisions in developing countries (Morgan, 2012). There, IA is mainly used in its original understanding, an ex-ante prediction of the possible social consequences of a planned intervention to allow a competent authority to decide upon the decision and conditions of project approval (Vanclay, 2014). These developments indicate that IA was initially shaped in a top-down approach originating from the public sector, influential institutions and investors. Esteves et al. (2012) argue that IA was always subject to different interpretations, leading to a wide range of different implementation practices. Early developments of IA procedures have been criticized for different reasons, for example, that only limited resources and importance were devoted to it and therefore only a minimum of effort was put in to pass the expectations. Moreover, they state that low quality and missing depth in the analysis is an issue, for instance, when IA is pursued from secondary data about the impacted communities (Esteves et al., 2012).

2.5.2 Towards a Participatory Approach of Impact Assessment

To ensure a more profound analysis of impact, Dierkes and Antal (1986) suggest that a certain amount of public and stakeholder interest is needed so that businesses will implement significant efforts towards a comprehensive form of IA. Moreover, the spread of internet access brought increased possibilities for global communication. Thus,

affected communities had more opportunities to raise their voices and started to demand greater involvement in the IA process. Thereby they demonstrated real risks for the businesses, such as reputational damage, strikes, blockades and legal and financial consequences (Vanclay, 2014). The issues called for a cultural change within the IA field and suggested a more participatory approach, which entails equal participation of different stakeholders (Morgan, 2012). Intending to incorporate these aspects into IA practices internationally, the International Association for Impact Assessment (IAIA) developed a new set of principles for IA from 1998 to 2003. They point out that the main challenge of developing guidelines for a participatory practice of IA is that the stakeholders whom the guidelines should address are often not involved in the development process, which is why there is a lack of identification with the principles (Vanclay, 2003). As long as sustainable decisions that involve all affected stakeholders are the goal of IA, subjectivity and interpretive distinctions are not obstacles but strengths to promote the process and create a necessary dialogue. Debates between conflicting interests promotes learning and the development of values that foster more significant personal and social responsibility (Wilkins, 2003). Such a cultural change can only occur if social and organizational learning occurs, demanding a participatory approach to IA. Therefore, stakeholders, community groups and individuals might have to use their influence to alter power relations in existing policymaking processes (Morgan, 1998).

2.5.3 Impact Assessment in Development Aid

IA plays an essential role in the philanthropic sector and development aid (Roche, 1999). Monitoring, evaluating and assessing operations has become an integral part of aid givers' and receivers' formal requirements. Here, IA serves to win funding and fulfill advocacy work to be accountable to both funders and the stakeholders that NGOs seek to support (Roche, 1999) and discuss whether foreign aid is effective (Mahembe & Odhiambo, 2020). The lack of a shared definition of impact and a standard methodology to measure it are common problems also in development aid. Another difficulty in measuring and interpreting impact in development aid is the diversity of environments and aid projects and the complexity and interdependence of their results (Jiggins, 1995). Hence, there is a variety of approaches to assess impact. Traditionally, economic analysis is of use, but input, for instance from management and gender studies, has led to various innovations. Critical voices called for more participatory approaches to IA in development aid that involve stakeholders (Jiggins, 1995).

2.5.4 Impact Assessment in Impact Investment

Following the stock market crash of the early 2000s and the following resource constraints, social purpose organizations of any kind had to move from reporting philanthropic inputs to presenting outputs and outcomes to their grantees. Moreover, they had to engage in alternative and market-based income strategies (Nicholls, 2009), leading to a rise in enterprises that combine a social purpose with income-generating activities (Dees & Anderson, 2003). Therefore, another field of IA emerged from the philanthropy and social investment field, aiming to measure the impact of investments (Vanclay, 2014). The global financial crisis in 2008 amplified these developments, demanding that scarce funding resources are invested in projects or organizations that can demonstrate their impact (Clifford, 2014). The pressure from regulations and investors demanded more advanced reporting practices from SEs than in traditional charities and pushed the adoption of reporting practices initially used in commercial organizations (Nicholls, 2009). Social return on investment (SROI) is one of these practices (Vanclay, 2014), which uses financial proxies to capture the impact for different project areas. Although some experts in the field of IA have consistently refused to assign monetary values to predict social impacts (Esteves et al., 2012), it illustrates the diversity of understandings. The role of legislation and powerful institutions in driving the spread of IA is also evident in recent developments of IA in SEs (Bond & Pope, 2012). The European Commission Expert Group on Social Entrepreneurship (GECES), which was created to agree on a European methodology to measure the impact of SEs, is an example of that (Clifford, 2014). Impact investment has been a significant driver for the theoretical and practical development of IA in SEs (Bengo et al., 2020). This is why there is much literature on impact investment and the associated methods to measure, document and compare impact in recent years (e.g., Nicholls, 2009; Ormiston, 2019; Ormiston & Seymour, 2011). However, demands from potential investors are often not in line with SE’s internal objectives of evaluating their activities (Barraket & Yousefpour, 2013) and create tension for SEs (Ebrahim, 2019). We examine this challenge in more depth in section 2.7.

2.5.5 How the Development of Impact Assessment informed this Thesis

SEs lie somewhere between businesses that only seek to make profits and organizations that only exist to create societal value and rely on donations and grants (Dees & Elias, 1998). As the literature on IA also does not draw clear boundaries on the continuum

between the disciplines, it is questionable whether the existing literature matches the needs of SEs. This confirms the need to study IA in SEs independently. Moreover, the historical development indicates that IA has predominantly been imposed on enterprises and institutions from a top-down direction. Initially, governmental legislation required it (Caldwell, 1988). Powerful institutions such as the OECD or the World Bank Group demand IA from companies in order to make investment decisions (Bond & Pope, 2012; Morgan, 2012). In development aid, funders require it to allocate financial resources (Roche, 1999), which is similar to the area of impact investment, where investors decide on investments based on the assessed impact (Bengo et al., 2020). The perspective of SEs, however, is missing. The historical development of IA is evident in both practice and theory. This confirms our critical understanding that unequal power relations significantly shape the discourse on IA as the perspective of SEs has been widely neglected. To redress this imbalance, we now provide an overview of the perceived purposes and challenges of IA drawn from the existing literature, to later discuss them in context with our own research.

2.6 Purposes of Impact Assessment

After elaborating on the history of IA, the question arises why enterprises bother to assess their impact in the first place. As our research aims to study SEs, we first specifically looked for articles exploring their purposes and assigned special attention to those findings. However, we only identified nine articles. As explained earlier, SEs can be assigned to the third sector. That is why we then also examined papers covering the purposes of IA in third sector organizations, as those are potentially relevant for SEs as well. We summarized the purposes identified for both third sector organizations and SEs into higher-level themes, as shown in Table 1 with the corresponding articles. The following sections give a more detailed explanation of the themes.

Table 1 Purposes of Impact Assessment in Third Sector and Social Enterprises

THIRD SECTOR PURPOSES SOCIAL ENTERPRISES ORGANIZATIONS

Arvidson & Lyon, 2014; Lyon et Barraket & Yousefpour, 2013 al., 2010; Ógáin et al., 2012; Securing Financing Sawhill & Williamson, 2001; Zappalà & Lyons, 2009 Arvidson & Lyon, 2014; Beamon Arena et al., 2015; Barraket & & Balcik, 2008; Benjamin & Misra, Yousefpour, 2013; Bradford et al., 2006; Campbell et al., 2012; 2020; Clifford, 2014; Lall, 2019; Accountability Carman, 2010; Ebrahim, 2003; Nguyen et al., 2015; Ormiston, towards Resource Edwards & Hulme, 1995; Heady 2019 Providers & Keen, 2008; Jepson, 2005; Lyon et al., 2010; Nicholls, 2010; Ógáin et al., 2012 Antadze & Westley, 2012; Arena et al., 2015; Bradford et al., Arvidson & Lyon, 2014; Ebrahim, 2020; Clifford, 2014 2003; Ebrahim & Rangan, 2014; Accountability Edwards & Hulme, 1995; Grimes, towards 2010; Bouckaert & van Dooren, Stakeholders 2002; Liket et al., 2014; Nicholls, 2010; Ógáin et al., 2012; Sawhill & Williamson, 2001 Ebrahim & Rangan, 2014; Arena et al., 2015; Bagnoli & Edwards & Hulme, 1995; Flynn & Megali, 2011; Barraket & Legitimacy Hodgkinson, 2001; Jepson, 2005; Yousefpour, 2013; Bradford et al., Nicholls, 2009 2020; Hervieux & Voltan, 2019; Lall, 2019; Nguyen et al., 2015 Arvidson & Lyon, 2014; Lyon et Clifford, 2014; Haski-Leventhal & al., 2010; Nicholls, 2010; Ógáin et Mehra, 2016; Ormiston, 2019 Marketing al., 2012; Sawhill & Williamson, 2001; Zappalà & Lyons, 2009 Arvidson & Lyon, 2014; Flynn & Barraket & Yousefpour, 2013; Hodgkinson, 2001; Grimes, 2010; Clifford, 2014; Ormiston, 2019 Internal Bouckaert & van Dooren, 2002; Management Liket et al., 2014; Sawhill & Williamson, 2001 Antadze & Westley, 2012; Barraket & Yousefpour, 2013; Resource Bouckaert & van Dooren, 2002; Clifford, 2014; Ormiston, 2019 Management Liket et al., 2014; Nicholls, 2009 Flynn & Hodgkinson, 2001; Arena et al., 2015; Barraket & Bouckaert & van Dooren, 2002; Yousefpour, 2013; Clifford, 2014; Strategy Nicholls, 2010; Ógáin et al., 2012; Nguyen et al., 2015; Ormiston, Sawhill & Williamson, 2001 2019 Arvidson & Lyon, 2014; Barraket & Yousefpour, 2013; Buckmaster, 1999; Campbell et Clifford, 2014; Haski-Leventhal & al., 2012; Flynn & Hodgkinson, Mehra, 2016; Lall, 2019; Nguyen Organizational 2001; Bouckaert & van Dooren, et al., 2015; Ormiston, 2019 Learning 2002; Heady & Keen, 2008; Liket et al., 2014; Lyon et al., 2010; Nicholls, 2009; Ógáin et al., 2012

2.6.1 Purposes for Impact Assessment: Third Sector Organizations

Some authors identify IA as a means to receive funding (e.g., Lyon et al., 2010). They found that some grant givers require the organizations to fulfill certain criteria when applying for funds and IA enables the organization to show evidence. Further, it proved to be a way to attract other donors. Following that, it is not surprising that being accountable towards different stakeholders is identified by most of the studies as a reason for IA. On the one hand, organizations need to justify their activities towards their resource providers like funders and/ or grant givers (e.g., Arvidson & Lyon, 2014). Those want to make sure that they have chosen the right organization to support and therefore require them to deliver reports, or the like, to give proof of their activities. On the other hand, the organizations are also accountable to other stakeholders such as beneficiaries, employees, managers, board members, supporters and the public (e.g., Ebrahim & Rangan, 2014). The stakeholders expect the SEs to show what they are doing and to what extent they achieve their mission. Therefore, measuring their impact enables organizations to justify and legitimate their operations by disclosing the results (e.g., Flynn & Hodgkinson, 2001). Another theme that we found is to use IA to support marketing activities (e.g., Nicholls, 2010). By demonstrating their impact, organizations can increase their credibility and publicity and thereby attract new customers. When looking at the function of IA as a means for internal management, showing the impact created can increase staff motivation and strengthen the organizational identity (e.g., Bouckaert & van Dooren, 2002). Further, the collected data helps executives to manage their resources (e.g., Antadze & Westley, 2012) and gives orientation when determining a strategic and long-term plan (e.g., Flynn & Hodgkinson, 2001). Literature also suggests that measuring impact can help third sector organizations reflect on their operations and thereby improve the quality of their activities, services and programs (e.g., Heady & Keen, 2008).

2.6.2 Purposes for Impact Assessment: Social Enterprises

As mentioned earlier, there has only been limited research looking at IA purposes in the context of SEs (Ormiston, 2019). As elaborated on in chapter 2.2, SEs can receive external funding but seek to be profitable and finance themselves in the long term (Defourny, 2001). That might be a reason why the purpose of assessing impact to secure financial support seems to be less prevalent in studies on SEs as it is in the third sector in general. Surprisingly, however, most authors point out that the enterprises use IA to prove accountability, especially towards funders, investors and other stakeholders (e.g.,

Clifford, 2014). It seems that SEs are still quite dependent on their stakeholders. Due to those dominant external demands, it is not surprising that the purpose of gaining legitimacy through IA is evident in most studies (e.g., Hervieux & Voltan, 2019). As SEs act on the economic market by offering goods and/ or services (Young & Lecy, 2014), it is expectable that they use the IA results to demonstrate quality and advertise their products/ services (e.g., Haski-Leventhal & Mehra, 2016). Likewise, IA results can motivate staff (e.g., Ormiston, 2019) and help to manage resources (e.g., Clifford 2014). It is also used as a strategic tool to benchmark and make decisions (e.g., Arena et al., 2015). What was mentioned by the majority of authors is the purpose of learning within the organization through IA (e.g., Lall, 2019). IA enables enterprises to engage with their target group, define their needs and thereby improve and scale their impact. This shows that they want to do their best to follow their main mission: to act in favor of society (Young & Lecy, 2014).

2.6.3 Examination of Existing Literature

When examining the existing literature, we noticed that it is worth looking at the primary objectives of the studies that identified purposes of IA for SEs. Table 2 gives an overview of that: The left column shows the studies’ focus and the right one the authors of the articles.

Table 2 Research Objectives of Previous Studies

RESEARCH OBJECTIVE AUTHORS

Creating a Model for Arena et al., 2015; Bagnoli & Measuring Success Megali, 2011 Accountability of Social Enterprises Bradford et al., 2020 Impact Assessment from the Barraket & Yousefpour, 2013; Perspective of Social Enterprises Clifford, 2014; Lall, 2019; Nguyen & Resource Providers et al., 2015; Ormiston, 2019 Impact Assessment from the Haski-Leventhal & Mehra, 2016 Perspective of Social Enterprises

The papers of Arena et al. (2015) and Bagnoli and Megali (2011) aim to create a model to measure the success of SEs. In their study, they identify some IA purposes, but as it was not the main objective of their research, those are rather a side finding. In contrast

to that, Bradford et al. (2020) explored the aspect of being accountable and, therefore, did not discover any additional purposes for assessing SEs' impact. Interestingly, five out of the nine papers reviewed include the viewpoint of investors, funders or resource providers in general (e.g., Barraket & Yousefpour, 2013). The European Commission report emphasizes the aim to help fund managers, investors and grant givers to make better decisions (Clifford, 2014). Therefore, it is not surprising that when looking at the purposes of IA, there is a strong focus on the perspective of the financiers and why IA is crucial to them, while only a couple of points from the SEs’ perspective are mentioned. The other authors all conducted qualitative studies interviewing founders or employees from SEs and people from the funding organization, investors or similar (e.g., Ormiston, 2019). Lall (2019), Nguyen et al. (2015) and Ormiston (2019) specifically articulate their focus on the relationships between SEs with funding institutions. Therefore, they have explored how the purposes of IA are experienced in this specific context. Only the study of Haski-Leventhal and Mehra (2016) focuses solely on the perspective of the SEs and thereby allows more independent results.

The extensive focus on the perspective of the resource providers could be the reason for finding similar themes of purposes of IA for SEs as for the third sector in general. We assume that, by focusing on the perspective of resource providers, the SEs’ perspective and their distinct purposes for IA are undermined. This calls for an independent examination of SEs' perspectives without considering the funders’ views. What also stands out is the geographical location of the conducted studies (see Table 3). Australia is a frequently researched field, as our review shows four studies focusing on this context (e.g., Bradford et al., 2020). Other than that, SEs in India (e.g., Lall, 2019), United Kingdom (Ormiston, 2019), Italy (Bagnoli & Megali, 2011) and Vietnam (Nguyen et al., 2015) have been investigated. Lastly, Lall (2019) also looked at SEs in Uganda, Tanzania and Ghana. So far, there have been not many studies examining the purposes of IA for SEs in the European context. The definition of SEs and the level of stakeholder participation differs globally (Kerlin, 2006) and different corporate cultures and legal frameworks exist even within Europe (European Commission, 2020). That is why it is valuable to investigate the perspectives of SEs based in other locations than the ones mentioned above.

Table 3 Geographic Location of Previous Studies

COUNTRY AUTHORS

Barraket & Yousefpour, 2013; Australia Bradford et al., 2020; Haski-Leventhal & Mehra, 2016; Ormiston, 2019 Haski-Leventhal & Mehra, 2016; India Lall, 2019 United Kingdom Ormiston, 2019 Italy Bagnoli & Megali, 2011 Vietnam Nguyen et al., 2015 Uganda, Tanzania, Ghana Lall, 2019

2.7 Challenges and other Experiences of Impact Assessment

It is not only important to look at why SEs measure their impact but also how they experience the IA process. Challenges provide insights into the experiences of SEs. Since there is little research on the experiences of assessing impact SEs, the following sections aim to elaborate on challenges based on existing literature and extract other experiences when available. This is in line with our philosophy CMS, which aims to discover and acknowledge contradictions and clashing power relations that influence organizational practices (Spicer et al., 2009). Therefore, patterns indicating towards discourses and dominant practices are of significant interest and attention is given to situations, ideas and practices that imply repression or ‘discursive closure’ (Alvesson and Deetz, 2020). It has to be noted that, similar to the purpose section, not all of the literature reviewed for this chapter deals explicitly with SEs. In some cases, it refers to the third sector in general. Moreover, the perspective of funders and investors is very prominent in the papers discussed.

Choosing a Method

SEs and their employees face multiple challenges when assessing impact. While there are various methods to assess impact, the lack of standards makes it challenging (Molecke, 2017) as the right tool depends on the context of the SE (Willems, 2014). Organizations struggle to navigate and decide when facing diverse methods, metrics, frameworks and processes (Bengo et al., 2020). As different stakeholders have different requirements for IA and reporting, SEs are reluctant to invest in implementing a particular

process (Clifford, 2014). Frequently, the implementation process also requires specific data that is typically not available in a consistent form. Therefore, deciding on an IA process in dynamically changing organizations is challenging (Barraket & Yousefpur, 2013).

Complexity of Impact Assessment

Another challenge lies in the complexity of operationalizing impact due to various reasons (Barraket & Yousefpur, 2013). SEs most often do not operate in narrow and well-defined commercial spaces, which target a specific market. Instead, they work across a spectrum of heterogeneous activities, engage with many sectors of society and different resource inputs and generate multiple, non-measurable outputs (Nicholls, 2009). No method can capture all impacts fairly or objectively (Clifford, 2014) and often it is challenging for SEs to articulate desired outcomes (Hervieux & Voltan, 2019). Social metrics are often abstract, impractical and difficult to implement (Ormiston, 2011). It could be argued that one life being saved by a SE is priceless (Nicholls, 2009). This illustrates why impact is sometimes described as unmeasurable (Molecke, 2017). Contributing to this is the problem of timely reporting for long-term impact (Nicholls, 2009; Hervieux & Voltan, 2009). For example, the success of a criminal's rehabilitation program can only be observed after several years (Nicholls, 2009). However, long-term outcomes have to be assessed in shorter terms when using certain methods (Barraket & Yousefpur, 2013). It is also often difficult to establish a clear link between cause and effect (Hervieux & Voltan, 2019). Describing an impact as the result of a specific initiative is especially challenging when there are complex input factors such as different financial resources, volunteer work and organizational efforts (Nicholls, 2010). Exogenous factors outside the enterprise’s control may neutralize the efforts of a specific intervention, making it even harder to assign a specific intervention to an impact (Molecke, 2017). Because of their abstract and immeasurable nature, social metrics are sometimes ignored in contrast to economic and financial metrics, as those offer a level of comparability. Therefore, there is a tendency to use quantitative and growth-based measures originating from the difficulty for SEs to express the achievement of a social mission (Ormiston, 2011). These quantitative indicators cannot express the qualitative backgrounds and undervalue the qualitative nature of impact (Clifford, 2014).

Resource Constraints

How to do IA is a matter of choice, but also a matter of resources. SEs experience time constraints and work commitments hindering IA and evaluation (Barraket & Yousefpur, 2013). It requires specialized data and expertise to choose a suitable method and customizing it to the SE’s needs, which is costly and time-consuming. This is particularly relevant as SEs often operate in a resource-scarce environment (Bengo et al., 2019). Following the IA process in five SEs, Barraket and Yousefpur (2013) identified staff commitment, limited staff skills and experience and staff turnover as barriers. They found that sometimes staff turnover even led to the loss of organizational knowledge. IA is often perceived as not proportional to the efforts considering the extensive resources required (Clifford, 2014; Molecke, 2017).

Competing Demands and Experience of Power Relations

SEs experience rising demands for IA as the competition around resources in their environment increases (Arvidson & Lyon, 2014). The demands from stakeholders are different and sometimes competing with the organization’s perceived benefits of IA, such as organizational learning and performance increase (Barraket & Yousefpour, 2013). Funders, for instance, seek information that is easily transferable and interpretable, mainly being quantitative, while other stakeholders demand rich and experiential information, mostly in qualitative nature (Molecke & Pinkse, 2017). As demands for accountability encourage a positive and optimistic IA and reporting practice, internal demands of a more critical IA practice might be undermined and organizational learning hindered (Ormiston, 2019). Often, it is difficult for SEs to fulfill the reporting requirements of their funders and conflicts between the expectations of the funders and the demands of other stakeholders arise (Ebrahim, 2019). From resource-providing stakeholders, requests for IA affect the SE in a top-down approach, while internal drivers work in a bottom-up approach (Ebrahim, 2003). This is a challenge for SEs, as frequently, the top-down demands overshadow the bottom-up drivers (Carnochan et al., 2014), resulting in asymmetries of power based on resources and access to information (Arvidson and Lyon, 2014). As donors often focus on expanding and scaling organizational reach, these goals are commonly not aligned with the enterprise’s social mission. Adjusting to quantitative measures, the enterprise moves further away from achieving the social value it aims to follow (Ormiston, 2011). This imposes the wrong incentives on SEs, which are neither relevant for future success nor help with decision-making (Molecke, 2017). Ormiston

(2011) calls this a ‘mission measurement paradox’, in which SEs fail to evaluate their social impact while following their social mission.

Resistance, Discomfort & Coping Mechanisms

Discomfort and resistance are common reactions in SEs, as organizational members have the feeling that impact evaluations are imposed on them from outside. Discomfort arises as evaluations are sometimes perceived as surveillance and conflicting with internal values, leading to internal tensions (Arvidson & Lyon, 2014). While senior staff and management tend to support IA, other employees are sometimes either unwilling to comply with requests or suggest alternative ways of assessing their work, as observed by Arvidson and Lyon (2011). Further, they found that organizational members of SEs fear that demands for evaluating impact would deteriorate client relationships and request data that could ethically not be obtained. Faced with competing demands, SEs find different ways of avoiding and coping with conflicts (Arvidson & Lyon, 2014). When examining the experience of NPOs in the United Kingdom, Arvidson and Lyon (2014) observed that the nature of impact evaluation allows organizations to manipulate how they carry out the evaluation and present information. Organizations use this room for maneuver to carry out IA the way they perceive it as beneficial. So, there is a difference between what they are asked to do by stakeholders, what they say they do and what they do in practice (Arvidson & Lyon, 2014). SEs perceive the formal methodologies requested by investors as limitations for assessing impact the way they prefer to do it. Therefore, they delegitimize certain aspects of externally demanded practices to use them in a way that fits their understanding of impact and to construct a practice that is feasible with their available resources (Molecke, 2017). Therefore, SEs innovate existing reporting practices by developing new approaches (Nicholls, 2009). Ebrahim (2019) advocates changing the way of approaching the process as they see potential in a closer collaboration between funders and SEs in the IA process. He states that funders could support their investees with resources for the assessment, foster the development of the approaches and assist them with the execution.

2.8 Conclusion of Literature Review

The preceding sections give an overview of the purposes and experienced challenges that play a role in IA in third sector organizations and SEs. As mentioned above, the existing literature often does not clearly distinguish between the third sector and SEs. The former depends on IA to attract funding. Accordingly, the perceived challenges might derive from this perspective. However, the stand-alone context of SEs has not yet received enough attention in the literature. Therefore, the research question what challenges SEs face in the IA process cannot be answered with existing literature. It is necessary to take on the perspective of SEs and examine their experiences, in particular purposes and challenges. The following sections will explain how we shed light on the hidden voices in IA to fill this research gap.

3 Methodology

______

The purpose of this chapter is to describe the research approach and design of our study. We discuss how Critical Management Studies as the underlying philosophy and Interpretative Phenomenological Analysis as the methodology have shaped the way we approached our qualitative study. A detailed description of how we used in-depth interviews to collect data is also given. Further, we explain how the chosen methodology and philosophy have shaped our data analysis. To conclude the chapter, we discuss how we secured the quality of our research and consider ethical concerns. ______

3.1 Research Approach

Our thesis explores the so far hidden voices of impact assessment (IA) in social enterprises (SEs). To do so, we adopt a critical perspective, questioning what is taken for granted and triggering critical comments (Alvesson & Willmott, 1992a). Following Critical Management Studies (CMS) as an underlying philosophy, we give voice to those people who have not been considered sufficiently in research before (Fournier & Grey, 2000). CMS informs whom we interview, which questions we ask and how we ask them. Critique can also be used to point out how something is perceived (Alvesson & Deetz, 2020); in our case, the IA. Our study aims to access the experiences of the people directly involved in the IA process, including their purposes and what challenges they face. The qualitative research approach Interpretative Phenomenological Analysis (IPA) is dedicated to examining how people make sense of their experiences (Smith et al., 2009). Therefore, it is a perfect fit to get thorough insights into and detailed descriptions of the experiences of the people involved in IA. The following three philosophical principles guide IPA: (1) phenomenology, the exploration of experiences; (2) hermeneutics, the theory of interpretation; and (3) ideography, the analysis of the particular (Smith et al., 2009). In line with the hermeneutic principle, our objective is to go beyond describing the phenomenon and digging deep into the people's perspective by including our interpretations. Some authors are concerned that diving deep into the interpretations might deflect the researcher from the original meaning (Pringle et al., 2011). Other scholars encourage going beyond the apparent connotation (Smith et al., 2009) and we follow that call.

Following the ideographic principle, we use an exploratory approach to discover how a particular situation (impact assessment) in a particular context (in social enterprises) is interpreted by particular persons (our interviewees). This entails the idea that we assume that subjective factors determine reality and that the experience of individuals plays a crucial role in understanding IA and people’s behavior within it. Therefore, we explore the world from what is commonly called a social constructionist epistemological view (Easterby-Smith et al., 2018). This also goes in line with the CMS philosophy and implies a relativist ontological perspective, as we think that there is no universal truth, but that reality depends on the people looking at it. In terms of our study, this means that the purposes, challenges and other experiences in the IA process are not objective truths to be gathered but depend on the employees we interview. Initially, Smith et al. (2009) developed IPA for the research field of psychology and later it was mainly applied to issues regarding health care. Now, it is used for other disciplines as well. Approaches like IPA are becoming increasingly popular in the field of entrepreneurship (Berglund, 2007), but IPA has not yet been applied to the topic of IA in SEs. This encouraged us to choose IPA as a methodological approach for our study.

3.2 Research Design

3.2.1 Data Collection

In CMS, the data collection is also referred to as the data constructing process. In our case, we conducted interviews and made first-hand interpretations of what is going on at the chosen empirical site.

Selection of Participants

When conducting a CMS, the selection of participants should open up different perspectives by interviewing different roles and people in different settings (Alvesson & Deetz, 2020). Therefore, we decided that our sample should consist of people in different positions working in distinct SEs. In adherence to the IPA approach, a qualitative research design using in-depth interviews as a data collection method was most appropriate. In-depth interviews enable the researcher to “uncover the meanings and interpretations that people attach to events” (Easterby-Smith et al., 2018, p.294). Using this method to collect data, we got deep and rich insights into how people working in SEs perceive IA. As we want to access those particular experiences, we pursued a purposive sampling strategy. It is common with IPA to use a purposive sampling strategy (Smith et al., 2009), as it is essential to make sure that the participants are able to provide insights

into the phenomenon one wants to explore. Purposive sampling is a non-probability design using pre-defined criteria to select interviewees (Easterby-Smith et al., 2018). IPA studies expect the researcher to create a space where the participants feel comfortable sharing their personal and emotional experiences and uncover hidden spheres. The hermeneutic principle of IPA also expects researchers to interpret the phenomena (Smith et al., 2009). For these reasons, it is best for the researcher to know and understand the cultural context and work environment of the interviewees to avoid misinterpretation based on cultural differences. The German culture is the one we know best as both of us were born and raised in Germany and we know the working culture from previous work experience. Therefore, it was the optimal geographical location to focus on for our study. As can be seen in chapter 2.6.3, there has not been any research on the purposes of IA in SEs in a German context. This is another reason why we looked for Germany-based organizations that fit our definition of SEs (see chapter 2.1). There is not yet a publicly accepted definition of SEs in Germany, but it is also evident that the number of social enterprises is growing (Hoffmann et al., 2020). Moreover, it is estimated that there were already 108,000 social enterprises in 2019. The estimate is based on the definition of entrepreneurs who primarily want to make a specific contribution to solve a social problem or to protect the environment by their entrepreneurial activity (KFW Research, 2019). The large and growing number of social enterprises additionally reinforced the relevance of doing research in Germany. Another criterion for our sample was that the SEs have some IA methods in place and consist of at least five employees. We chose this criterion because IA is a resource- intensive process. Organizations with fewer employees often lack the capacity to engage in IA and therefore they also do not have experiences in the process. Our web research confirmed that SEs with fewer employees usually had no evidence of IA activities on their online presence. The last criterion for choosing our sample was that the interviewed employee needed to be actively involved in assessing impact. Based on the criteria mentioned above, we contacted 36 SEs via e-mail, online request forms and LinkedIn. We found them by going through the members of the Social Entrepreneurship Netzwerk Deutschland e.V., Gemeinwohl Ökonomie and by thinking about enterprises that we got to know in private contexts before. During our search, we came across several SEs that also operate, in addition to their core business, as an incubator or impact investors. As CMS aims to inspire a social change by giving voice to those not considered sufficiently before (Fournier & Grey, 2000), it influenced our sample

by not including these SEs in order to meet our objective of avoiding an excessive focus on the funding/ investor perspective. Initially, we aimed to have six participants with one initial interview and a follow-up one each, following the recommendation for conducting an IPA study (Smith et al., 2009). Some authors argue that the small sample size is a limitation of IPA (Pringle et al., 2011). We comply with Smith et al. (2009), who disagree and say that a much deeper and richer analysis than with a larger sample can be performed, which is especially important for IPA as mentioned in the previous chapter. The people willing to participate in our study were only available for one initial interview each and therefore we had to increase the total number of participants to eight, which is still considered appropriate according to Pietkiewicz and Smith (2012). We conducted eight in-depth interviews lasting 56 to 89 minutes, in the time frame from April 13th 2021 until May 7th 2021. The enterprises involved in our study all operate in different sectors. While being involved in the IA process, the interviewees take on different roles which allowed us to catch a broad perspective on the phenomenon of IA, as suggested for a CMS study. Naturally, this data will lead to a variety of sometimes inconsistent meanings and contradictions. These contradictions can identify suppressed conflicts and other hints for critical research (Alvesson & Deetz, 2020). An overview of the interviewees can be seen in Table 4.

Table 4 Overview of Participants

Social # of Receive Founding Dimension Inter- Position of Interview Enterprise Employ- Sector external Year of Impact viewee* Interviewee Time (SE) ees Funding (in minutes) Ecological SE 1 2019 9 Recycling Yes Jannik Co-Founder 86 & Social Executive SE 2 2017 13 Insurance Ecological Yes Lena 79 Assistance Ecological PR & Social SE 3 2015 6 Production Yes Paul 76 & Social Media Ecological SE 4 2004 500 IT No Christian CSR Manager 89 & Social Managing SE 5 1994 36 Trading Social No Raphael 79 Director Partnerships & SE 6 2017 11 Education Social Yes Anja 84 Communication Ecological SE 7 2016 15 Fashion Yes Nina Co-Founder 56 & Social

SE 8 2018 5 Living Social Yes Maria Co-Founder 66

* For confidentiality reasons, names have been changed

Process of the Interviews

In order to get meaningful and rich data, researchers using the IPA methodology tend to use semi-structured interviews to collect their data (Eatough & Smith, 2017). Smith et al. (2009) describe it as having “a conversation with a purpose” (p.57) which aims to answer the research questions by implicitly making the participants talk about their experiences regarding the research topic, but without directly asking the research questions. To do so, we created several themes and, within those, a set of questions to remind us of the topics we want to cover and guide us through the interview (see Appendix I). Still, a semi- structured interview allowed us to deviate from the pre-formulated questions to dig deeper into topics that arose during the conversation (Easterby-Smith et al., 2018). As CMS suggests, significant themes and dominant ideas and understanding were given special attention by asking follow-up questions (Alvesson & Deetz, 2020). By re-asking questions in different ways and with different emphasis, we explored different views on IA and thereby facilitated the interviewees to think about the subject going beyond the obvious. In some cases, this also stimulated new lines of thought in the interviewees and uncovered significant coherences. The themes for the interview were: Impact in General, Impact Assessment Motivation, Impact Assessment Process, Impact Assessment Experience and Personal Relation to Impact Assessment. By asking open-ended questions, we allowed the participants to reflect on the topic themselves. We wanted to make sure that they can express their feelings and reflect on their experiences towards the IA without leading them in a certain direction (Easterby-Smith et al., 2018). As all our interviewees are German native speakers, we conducted all the interviews in German to make them feel comfortable and enable them to share their experiences accurately.

Even though pilot studies are recommended specifically for highly structured interviews (Easterby-Smith et al., 2018), we wanted to test our questions, practice the interview flow and get experience in conducting interviews. We had two pilot interviews which enabled us to see whether our questions are understandable and thereby we were able to make some adjustments to our interview guideline. We did not include the results of those conversations in the table of interviewees nor the analysis. One of the test interviews was conducted with a German-based SE and the other one with a Malawian-based one, a very different cultural background than chosen for our study. It was challenging to reach a deeper analysis level during the latter and get the interviewee to share personal and emotional experiences. This confirmed our assumption that the choice for studying a to us familiar cultural setting was appropriate when using an IPA methodology.

In order to follow the current recommendations due to the ongoing Covid-19 pandemic, we decided to use the web-conference tool Zoom to communicate with our interviewees. With the participants' permission, we recorded all interviews to be able to concentrate on the conversation and recognize topics for appropriate follow-up questions. Further, we needed the audio files to transcribe the interviews accurately into a verbatim record required to analyze the data (Easterby-Smith et al., 2018). We used the software Sonix to make a first draft of the transcript and then listened to interviews again to check and correct the record.

3.2.2 Data Analysis

Having explained how we collected our data, it is time to detail how we conducted the analysis. Different authors have developed guidelines for how to analyze data in IPA studies. Those should not be understood as strict rules but rather as suggestions on how to approach the analysis (Alase, 2017; Pietkiewicz & Smith, 2012; Smith et al., 2009). However, starting with describing and then moving to interpret the data is essential (Brocki & Wearden, 2006). A two-stage interpretation process characterizes IPA. It means that “the researcher is making sense of the participant, who is making sense of x” (Smith et al., 2009, p.33). The authors emphasize that our interpretations as scholars play a crucial role in the data analysis process.

The process we went through is based on the guidelines suggested by Pietkiewicz and Smith (2012) and Smith et al. (2009). The following sections describe the five steps that we followed.

Familiarizing with the Data

As a first step, it is essential to engage and get familiar with the data (Pietkiewicz & Smith, 2012). This is why we listened to the audio file once again after transcribing the interviews. The next step was to read the interview once without making any notes. Then we printed the transcripts with two additional columns, re-read them several times and used the first column on the paper to make initial notes in German. Those notes related to anything that we noticed; the content, the language used and the context of the situations. Already in this stage, we started to make sense of what the participants could mean. Therefore, our interpretations are already present in this stage.

Categorizing the Data

Moving on from the initial notes, we went to the second column and identified emerging themes and categories. We used this step to switch the analysis process to the English language and after each of us finished this step, we discussed our initial themes and

summarized and sorted those. To facilitate the following phases, one of us transferred the themes in the software NVivo to the corresponding text passages. It enabled us to see at one glance all the passages relating to the themes and eased the process of clustering, re-naming and seeing connections between the themes. The steps described were followed for each of the eight interviews. We tried to look at each interview as unbiased as possible, but having previous literature as well as former interviews and their themes in mind, this was not always possible and therefore might have influenced our interpretations. Some authors, such as Finlay (2008), point out this challenge of not considering the researcher's prior knowledge. Smith et al. (2009) acknowledge, though, that this is unavoidable and accept it as part of analyzing interpretatively.

Recognizing Patterns

After analyzing the interviews independently as unbiased as possible and gathering emergent themes for each interview in line with the principles of IPA, we allowed us to adopt a critical approach to our research again. With this in mind, we considered the historical context and existing power relations, for instance. We also paid special attention to potential indicators of domination and to contradicting statements of the interviewees, as they reveal the social constructs of the interviewees. A critical interpretation of the expressed discourse served to indicate how interviewees relate to the world and how they perceive the IA process (Alvesson & Deetz, 2020). That allowed us to understand the broader context of the accounts and interpret further when determining themes. With the critical approach in mind, we merged the themes from all interviews in NVivo and sorted, re-clustered and looked for patterns. Going from data to data to identify patterns in the analysis shows the inductive nature of the IPA approach (Smith et al., 2009). As we investigate IA in a novel context, we seek to generate new theory instead of confirming previous findings, which would be a deductive approach (Ketokivi & Mantere, 2010). To illustrate our findings, we made tables and figures with themes and corresponding sub-themes and illustrated which participants related to which themes. A critique raised by some scholars is the inability to draw generalizations from an IPA study (Pringle et al., 2011). Authors like Reid et al. (2005) argue, though, that the study can generate valuable insights that can contribute and influence the research field. Pringle et al. (2011) add to that: “By gaining insight into the individual, insight into the whole can also be achieved.” Pietkiewicz and Smith (2012) also express that IPA does not seek generalizations but rather wants to create local knowledge. That is why

identifying the themes mentioned by most interviewees was not done to generalize but to indicate which themes are possibly relevant for SEs in general. We also want to emphasize that the themes do not reflect the interviewees' thoughts only, but our interpretations shaped the names and contents of the themes and how we think the passages relate to each other (Smith et al., 2009).

Representation of the Results

The next step was to sort the themes and descriptively write down what we see in them for the findings section. We thoughtfully chose example quotes from the transcripts to accentuate our text. At this stage, we translated the extracts from the interview language German to English making sure to maintain the original manner of expression and the meaning of the interviewees and their experiences. The interview excerpts also show the reader the level of interpretation. IPA analysis is an iterative process (Smith et al., 2009), so it is not surprising that while writing, we recognized new connections and interpretations and hence, re-organized some text passages and themes. It should also be mentioned that following the recommendation of Smith et al. (2009), a large part of the finding sections of our thesis consists of interview excerpts. The reason is to facilitate the reader to access the interviewee’s lived experience.

Contextualizing and Interpreting

After describing the contents, we went to the last step to contextualize the findings to previous studies and add more interpretations. We made a first draft and went back and forth from the data to the written text to ensure that we catch and illustrate all the important aspects. In this stage of the analysis, we set the sections from the literature in context with corresponding findings from our research. As the two sections have different subheadings, we sometimes reassembled them to create appropriate sections. The process of creating the new sections is documented for each chapter.

3.3 Research Quality

In order to conduct a high-quality and valid investigation, we applied the criteria for ensuring the quality and validity of IPA studies suggested by Smith et al. (2009) and Yardley (2000, 2015). Those criteria include sensitivity of context, commitment and rigor, transparency and coherence, impact and importance. Sensitivity to context encompasses being aware of and relating to the existing literature from the research field (Smith et al., 2009), which we showed by writing a detailed literature review at the beginning of our thesis and by contextualizing the empirical

findings with previous studies in the analysis and discussion section. Another aspect is to show sensitivity to the data collection process. We formulated open-ended questions to allow the interviewees to freely answer our questions without leading them in certain directions (Yardley, 2015) and allowed them to have different perspectives on the topic of IA (Yardley, 2000). As for the data analysis, we did not pose pre-defined categories on the interviews but were open to the themes that emerged from the data itself, accepted findings that we as researchers did not expect and recognized inconsistencies in the conversations (Yardley, 2015). Moreover, we accentuated the findings with verbatim extracts from the interviews to support our arguments and enable the reader to check how we interpreted the data. We were also careful not to generalize the findings but rather express indications that emerge from the data (Smith et al., 2009). The second aspect of how we ensured the quality of our study was to show commitment and rigor. First of all, we showed that by defining the right scope of our study, which is sufficiently in-depth for a master thesis and fulfilling the requirements of an IPA study (Yardley, 2015). We used a purposeful sampling strategy to ensure having an adequate sample (Smith et al., 2009; Yardley, 2000) and made the participants feel comfortable and valued by explaining the purpose of our study to them at the beginning of the interviews (Smith et al., 2009). Further, we invested much time to immerse ourselves in the interview transcripts to ensure a complete and rigorous analysis, paying close attention to how they were answering our questions (Smith et al., 2009; Yardley, 2000). We also followed the recommendation of the authors to put ourselves in the interviewees’ shoes as much as possible and interpreted what they said in the different stages of the analysis process. Moreover, we carefully chose the interview extracts to illustrate our arguments and ensured to include quotes from all participants (Smith et al., 2009). Lastly, both of us coded the transcripts and identified themes for all interviews independently before we engaged in a discussion about them. This method of triangulation enabled us to get a deep and thorough understanding of the data (Yardley, 2000, 2015). To conduct valid and high-quality research, it is also important to show transparency and coherence. We made sure to choose a methodology that aligns with our research philosophy, fits our research questions and explained those correlations (Yardley, 2000). Additionally, we thoroughly described all the steps that we took to collect and analyze our data. Thereby we enable the reader to retrace the complete research process, which is also supported by using tables to illustrate how we made sense of the emerging themes (Smith et al., 2009; Yardley, 2000, 2015). To be transparent, we present numerous extracts from the interviews to demonstrate our points, as mentioned above. Smith et al. (2009) also emphasize the importance of considerably writing the findings,

analysis and discussion sections. As suggested, we initially drafted the parts and went back and forth to rephrase those. Lastly, to be in line with phenomenological and hermeneutic nature of IPA, we emphasize looking at the participants’ experiences during the whole research (Smith et al., 2009). The last aspect to be mentioned regarding the quality of our study is whether it is important and has an impact (Yardley, 2000, 2015). The conclusions we draw have theoretical and practical implications, as shown in chapter 5. We offer novel perspectives on the field of IA within SEs that have been hidden so far (Smith et al., 2009).

3.4 Research Ethics

An essential principle of research is to do it in a way that does not cause harm (Easterby- Smith et al., 2018). To ensure no harm is done to the people participating and the researchers, we have considered several concerns and taken corresponding measures. We followed the eleven categories of ethical principles identified by Bell and Bryman (2007), which are directed at protecting both the research subjects and the research community's interest in general. By conducting the interviews with the online conference platform Zoom, the participants could join our conversation from their home or office. In times of the global Covid-19 pandemic, ensuring safe distance is important to protect the participants' health. Moreover, it is particularly crucial to protect the dignity and privacy of the participants (Bell & Bryman, 2007). We were open and transparent about our research purpose, the role of the participants in the study and the processing of their data. To do so, we provided an information sheet and a general data protection regulation form (GDPR form, see Appendix II). The interviewees were asked to read the documents before the calls and got a short briefing about the purpose of the study at the beginning of the interview. They could ask further questions and then each participant signed the document. With this process, we showed the interviewees that their dignity is valued and ensure that they are comfortable in the setting. To protect the anonymity and confidentiality of the participants, we replaced their names and company names in our thesis. Further, the interview transcripts and recordings were stored securely in a folder at the university cloud and will be deleted after completing the research. According to Bell and Bryman (2007), it is less likely to harm than wrong the interviewees. The latter can occur by treating them as a means to an end instead of “as important in themselves” (Bell & Bryman, 2007, p.68). Considering the CMS perspective that we adopted in our research, it is vital to treat the participants properly. The CMS perspective

suggests that research on certain topics often benefits a desired line of inquiry, taking some aspects for granted (Fournier & Grey, 2000). To compensate for an excessive focus on the funding perspective in existing IA research, we shed light on the participants' perceptions and personal opinions. By doing so, we also meet the demand for reciprocity in researching as the work should benefit both the researcher and the participants (Bell & Bryman, 2007). We are aware that taking on a particular perspective might entail a bias from our side. Therefore, we were cautious in doing our interviews and avoided imposing our opinions on the participants. Given that this work is not subject to funding or involvement from other parties, there is no conflict of interest. We also ensured that the findings are made to the best of our judgment and are not misleading or distorted.

4 Empirical Findings and Analysis

______

This chapter deals with the empirical findings of our study and provides an in-depth analysis thereof. It seeks to give answers to the research questions that define our thesis. To give a context of our study, we start the chapter by shortly introducing our interviewees. Then we will explain the identified themes in the order of our research questions. Therefore, the following section is divided into two segments. We start by describing, analyzing and contextualizing the themes that emerged regarding impact assessment purposes and then proceed to look at the challenges and other experiences that our interviewees were facing. The last section elaborates on the developed model that synthesizes the research. ______

4.1 Profile of the Participants

As the readers of this thesis should be enabled to put themselves in our participants' shoes to access their experiences, Table 5 on page 39 briefly introduces each of the interviewees and the social enterprises (SEs) they work for. Overall, we want to emphasize the considerable commitment to the SEs’ mission that we sensed in all conversations.

4.2 Purposes of Impact Assessment

In this chapter, we will first present our empirical findings of impact assessment (IA) purposes and then contextualize them with existing literature. Afterwards, we continue with the same sequence for challenges and other experiences.

4.2.1 Empirical Findings: Purposes

The data revealed several themes related to our first research question: (1) What are the perceived purposes of assessing impact from the perspective of social enterprises? Table 6 gives an overview of the higher-order and lower-order themes that we identified and presented in the following. In order to get an overall picture, Table 7 provides an overview of the emergent themes mentioned by which interviewees.

Table 5 Profile of the Participants

Participants Description

Together with three other entrepreneurs, Jannik founded SE1 to help cleaning Jannik the environment from plastic pollution. His main responsibility is to estimate (SE1) the impact they create. As the founder’s right hand, Lena has helped to build SE2 for three years. Lena SE2 seeks to make the insurance sector holistically sustainable. She is the (SE2) allrounder of the company and deals with communication, the internal organization as well as project management. SE3 offers sustainable, social, and fair products made from regional Paul materials. For two years, Paul takes care of the company’s social media (SE3) channels and has supported different impact-related projects, like getting the company certified.

Christian Sustainability has always been an important for topic for Christian privately as well as professionally. As the CSR manager of SE3, he advocates for a (SE4) circular economy and inclusion. Raphael is committed to sustainably improve the income and living conditions Raphael of small overseas producers through Fair Trade. For twelve years, he (SE5) manages the social enterprise with a particular emphasis on financials and operations. For three years, Anja is responsible for partnerships, communication and Anja evaluation in SE6. Her and the enterprise’s mission is to accompany people (SE6) on their professional path according to their needs and counteract their target group’s high unemployment rate. Nina co-founded SE7 to contribute to the integration of refugees. They tackle Nina the barrier of language deficiencies and lack of qualifications to get a job. She (SE7) is responsible for the company’s business development, marketing and communication. As co-founder of SE8, Maria promotes community building. She is convinced Maria that sustainable, connected, and responsible living in communities is the (SE8) future form of living. Table 6 Emergent Themes: Purposes of Impact Assessment

Emergent Themes Sub-Themes

Customer Demands Stakeholder Demands Partner Demands Funder Demands Holistic Impact Creating Impact Mission-Related Impact Matter of Course To Customers Communicating Impact To Public For Mission-Related Topic Raising Awareness Of Other Organizations To Differentiate Social Enterprise Differentiation Tool To Differentiate Products/ Services Adjusting Operations, Products/ Organizational Services & Business Model Learning Learning from Customers/ Public

Developing Connecting with New Partners Partnerships Strengthening Existing Collaborations

Table 7 Participants’ Allocation to Emergent Themes: Purposes

Interviewee \ Jannik Lena Paul Christian Raphael Anja Nina Maria Purposes

Stakeholder x x x x x Demands Creating x x x x x x x x Impact Communicating x x x x x x x Impact Raising x x x x x x x x Awareness Differentiation x x x x Tool Developing x x x x x Partnerships Organizational x x x x x x x Learning

Stakeholder Demands

The first theme identified is stakeholder demands. SEs experience demands from different stakeholders regarding their IA. Anja and Nina are the only participants who assess their impact to secure financial support from funders. Nina summarized:

“Of course, this [IA] is also important for our main sponsor ... also if you write applications and want to attract other foundations, that is of course also a very important aspect.”

However, three other participants also described pressure coming from other stakeholders to report the enterprise’s progress. For instance, Christian told us that they are now collecting ecological data about recycling since their partners requested that: “Relatively much [pressure comes] actually from customers. But of course, also from financing partners or other partners with whom we work”. (Christian) Maria concluded: “It’s like when you knock on certain doors, that [IA] is now required or then also asked for.”

Creating Impact

SEs do seek to generate value by following their social missions. However, as Christian explained, “it is really important that you do not look at social impact isolated from environmental impact.” All other participants agree to intend to act in favor of society and the environment from a holistic perspective. They use IA as an internal tool to check whether they fulfill that objective. For example Lena explained:

“Where we also check our impact is … in the everyday corporate activities. So, from how we travel, that we travel by bicycle as far as possible, that we travel only by train ... until now, we have avoided air travel. That we must justify these activities, in case and if then also compensate, should it [air travel] be unavoidable in the future. Also, that we pay attention to ecological food. So, a lot of different points. Also including green electricity.”

Further, IA serves to check and confirm whether the SEs follow their primary mission. Raphael described that “there was already the assumption that we are quite good there and we wanted to have that documented.” Assessing impact also confirms the people’s personal mission: “It [IA] just gives another meaning in the job.” (Jannik). Anja added to that:

“Before, it was just a gut feeling that the participants were doing well or that they were taking something with them. Or somehow, you had a nice feedback round at the end of the course or something like that. But now you have it all summarized and beautiful. ... Because I mean we all work a lot and could earn more in other industries or something. And then you see what it’s actually for.”

What also stands out is that most interviewees see IA as a matter of course. Paul, for example, sees every organization in the responsibility to maximize their positive contribution: “Because of the global situation we find ourselves in, I think every company should find out for itself how much impact is possible.” Jannik agreed as:

“[IA] must actually be a standard. ... If we somehow look at the current challenges … it should be a matter of course to look at, okay, what kind of impact do we have? Is it positive or is it negative?”

Communicating Impact

SE’s do not only assess impact to check whether they create impact, but also communicating it emerged as an overarching theme from all interviews we have conducted. What was mentioned by most participants is that they communicate the results of their IA to their customers. The SEs seek to be transparent about their operations. Also, sharing detailed information about their products/ services and the effect of their operations is considered very important since “it is of course only fair to the customers that they also know what they are buying and do not simply rely on a story” (Jannik). It is a way to create credibility and thereby maintain clients or gain new ones. Apart from customers, everybody else interested in the impact the SEs create should have access to the information. All the interviewed organizations emphasized that they communicate their impact on their website and some additionally on other channels like Instagram, Blogs or Podcasts. Maria summarized: “So in a nutshell, I would say it’s also a good communication tool.” Only Paul referred to communicating impact as being a marketing activity:

“One should not forget, why we also measure this [the impact] is, of course, marketing purposes. When having numbers, we can, of course, also communicate our impact to the public.”

Raising Awareness

Another purpose that all interviewees mentioned is to make people aware of their mission’s main subject. Assessing impact “is also interesting not only for us as an organization, but also to raise awareness for the topic” (Anja). For example, Nina seeks to change the perception towards refugees prevalent in German society and Raphael wants to make people aware of the possibility of purchasing fairly traded products instead of ‘normal’ ones. Further, SEs that measure impact can act as role models for other organizations. On the one hand, the results demonstrate to other organizations how changing even minor operations can have an extensive positive effect. Paul described the example of delivering their product with bicycles instead of sprinters:

“And I think that is really important for other businesses to see. Wow, so changing this has a real effect. That means half a ton less CO2 in the atmosphere in this city.”

On the other hand, three interviewees emphasized that they want to “show that you can also do business and be profitable without seeking only to maximize profits” (Lena) and being competitive, thereby encouraging other companies to re-think their business models.

Differentiation Tool

Half of the participants mentioned that measuring impact is also a tool to demonstrate how SEs are different from commercial companies. As Christian explained:

“So the main reason [for IA] is, as I said because we are in a market where we are competing with others who have a very rigid business mindset. Who don’t think sustainably … and don’t have a … level of value-added and can offer completely different prices than we can.”

Positioning their products and services on the market is also a reason for assessing impact. As Raphael revealed: “The product itself can’t be different. That’s why storytelling is so important. That is what makes our unique selling point.” Christian sees it also as a way to justify the possibly higher price as the organization’s focus on the social dimension is a unique selling point. He expressed:

“Our unique selling proposition is the social [dimension]. Because the environmental aspect is something that our competitors also do in essence. They still have environmental savings, even if they don’t track it themselves.”

Developing Partnerships

Five interviewees mentioned the purpose of assessing impact to build partnerships. The SEs can use the collected data as “a good starting point for reaching out to partners” (Anja). On the one hand, showing what impact they already create or might create through a partnership is a way to present themselves as credible and interesting partners. This is a good argument to convince them to cooperate and “to also be at eye level with [the partners]” (Maria). On the other hand, when contacted by potential partners, they can use IA to evaluate whether it makes sense for the SE to start a cooperation, as Jannik explained:

“We have to assess when we agree to such a deal or when we talk to a company or with our production partners or others, of course, we have to assess what the effect of it is now. Is it positive or negative.”

For an already existing cooperation, communicating the impact created collaboratively with a partner can strengthen the relationship, for example, by “telling them how many jobs we have created or preserved thanks to this particular cooperation with them” (Christian).

Organizational Learning

The last theme that emerged from the interviews was using IA as an internal learning tool. The importance of reflecting on the effect of one’s activities in order to be able to adjust and improve one’s operations, the product/ service or even the business model, was emphasized by most of our participants. Anja summarized the points:

“It is, of course, very relevant for us and for our work that we ourselves know what is actually useful and what is not and where there are perhaps blind spots or needs that we do not yet recognize. And that [IA] is like a quality management tool somehow.”

Another aspect of organizational learning is the aim to consider the opinion of customers and the public. By providing as much information about their operations and their impact as possible, some of the interviewed SEs want to create a space for discussion and a possibility to participate in tackling social issues, as Lena described:

“Those [IA results] are also disclosed on our website, not only for our members but for everyone so that each and every person can get involved. … There we also have on our website now quite new polling tools, so that people can even vote what they would like to see happening.”

The SEs encourage people to raise concerns, make suggestions and share experiences. The collaborative process blurs the lines between internal action and a more significant collective meaning. As Jannik exemplified:

“The more information we give out, the more people can say that it's totally stupid or that it could be done much better. Of course, it brings more work with it. In the end, that's exactly what we want to achieve. Obviously, there is pressure from the outside. But that's good because it helps us to improve things and to re-examine them internally.”

Thereby the organizations are able to adjust their operations to increase their positive impact eventually.

4.2.2 Analysis and Interpretation: Purposes

In the following, we contextualize the empirical findings with previous literature and add our interpretations. The names of the themes that emerged from our study differ from those from the literature. However, in their content, there are overlaps. Figure 3 indicates where we see relations. We use the themes from our findings (chapter 4.2.1) as headlines for the analysis and interpretation sections.

Figure 3 Emergent Themes from Empirical Findings and Previous Literature: Purposes in Impact Assessment

Stakeholder Demands

One former study on the purposes of IA in SEs has identified the need to assess impact in order to secure financial support from funders (Barraket & Yousefpour, 2013). This was only the case for two of our participants. Therefore, the purpose of securing financial support from funders has not stood out as a significant theme in our sample. It might be an essential distinction to the purposes of third sector organizations. This aspect does not depend on whether the SEs receive external funds though, since several enterprises from our sample receive financial support from funders, investors or other grant givers. Most of the literature that we reviewed reveals that SEs feel pressured to be accountable towards resource providers and some feel accountable to other stakeholders (e.g., Arena et al., 2015). In our study, five interviewees experience pressure from stakeholders to assess their impact and somehow report to them. The stakeholders include customers, partners, funders and investors. This discrepancy may stem from the fact that more than half of the former studies also looked at the view from resource providers. Those might have the impression that one crucial reason for their investees to assess their impact is their demands, but half of the SEs in our sample have a different perception.

Creating Impact

Performing IA in order to create impact – holistically and mission-related – was mentioned by all our participants. It includes justifying one’s activities internally as well as externally. The quotes we have used to illustrate that theme show how the interviewees talked about their enterprises’ missions and make clear that they really want to positively contribute to society and/ or the environment. That is why they continuously question all their operations and the corresponding effects to ensure the least adverse effects possible. This theme reminds us of the category legitimacy that we found in most of the previous studies. Researchers found that SEs use IA to legitimize their operations (e.g., Bagnoli & Megali, 2011).

Communicating Impact & Raising Awareness

Some of the previous research found marketing being a purpose for IA (e.g., Ormiston, 2019). In our study, only one of the interviewees talked explicitly about marketing as a purpose for measuring impact. However, almost all SEs we interviewed are seeking to communicate their impact to customers and the public. During the interviews, we observed their ambition to be fair to their customers and be credible providers. They reach that by being transparent and sharing information that could interest their clients and the public.

Moreover, they want to raise awareness for their mission-related topic. The organizations do not do so primarily to market their products/ services but rather to act as role models. We noticed their aspiration to make people think about their actions and thereby change people’s and other organization’s behavior on a higher level to tackle the current global issues. We perceived that the SEs in our sample really want to make a difference and act in favor of society and the environment and want to communicate those achievements.

Differentiation Tool & Developing Partnerships

IA as a strategy tool was identified by more than half of previous papers (e.g., Nguyen et al., 2015). From the SEs interviewed, half mentioned the reason for measuring impact being able to differentiate themselves from other companies and strategically position its products and services on the market. What was mentioned by five of our participants as well is using IA results as an opportunity to approach new potential partners and strengthen existing partnerships. The data on impact serves as proof that the SE is creating impact and, therefore, is a credible partner. Further, it can show how much impact they could create when collaborating. The SEs use this as a strategic tool to persuade them to cooperate and to impact their target group together.

Organizational Learning

A prevalent theme in most previous literature (e.g., Haski-Leventhal & Mehra, 2016) and almost all conversations of our study is organizational learning as a purpose for assessing impact. Using IA results to improve products/ services, change operations and maybe even adjust one’s business model seems quite important for SEs. In the conversations, we found the ambition of the SEs to scale and maximize their impact as much as possible in order to have the best positive contribution to make the world a better place. To reach this goal and operate most effectively, the organizations are dependent on the IA results to know what resources they need and how to allocate them. Some of our interviewees emphasized the opportunity to learn from customers and the public. Previous literature has often criticized IA as not being participatory enough and that the most important stakeholders are not involved sufficiently (Morgan, 2012). However, some interviewees approach IA comprehensively and, with the mission to understand impact, they naturally design the process to be integral and participatory. This is reflected by the involvement of as many relevant stakeholders as possible. They intentionally communicate impact externally to allow everybody to understand, critique and contribute to their activities. They view impact creation as a collective process that involves all relevant stakeholders alongside staff and customers.

Summary

Figure 4 summarizes the results for our first research question, what the perceived purposes of IA for SEs are. It shows the purposes we identified with the corresponding frequency of how many participants mentioned those themes. Further, we categorized the themes according to their primary objective. Creating impact and organizational learning were themes mentioned by most participants. That shows that assessing impact often is driven by internal objectives. Further, external relations significantly influence the decision to measure impact, as the themes raising awareness and communicating impact emerged in almost all conversations. However, the motivation starts mainly internally and only in five cases it was driven by external stakeholder demands. The last category we identified is assessing impact for strategic objectives. Developing partnerships and using IA as differentiation tool is relevant for approximately half of the SEs interviewed. This indicates that strategic uses might be less important compared to the other categories.

Figure 4 Frequency of Categorized Purposes of Impact Assessment

4.3 Challenges and Other Experiences of Impact Assessment

After elaborating on why SEs assess their impact, we will now look at the perceived challenges and other experiences of IA. Afterwards, we analyze our findings and put them in context with the existing literature. We decided to proceed by describing and analyzing both challenges and other experiences together as they are strongly connected. Hence, chapters 4.3.1 and 4.3.2 aim to answer the research questions (2)

Which challenges do social enterprises face when assessing impact? and (3) How is impact assessment experienced within social enterprises?

4.3.1 Empirical Findings: Challenges and Other Experiences

The higher- and lower-level themes that emerged are illustrated in Table 8. Table 9 outlines which participants are associated with which themes.

Table 8 Emergent Themes: Experiences and other Challenges of Impact Assessment

Emergent Themes Sub-Themes Variety of Options Choosing a Method Deciding on Right Tools/ Methods Identifying Indicators/ Categories Complexity of Impact Getting Reliable Data Assessment Weighing Different Elements Making Results Understandable Communicating Impact Deciding What to Communicate Nature of Social Impact

Intangibility of Social Measuring Social Impact Impact Ethical Dilemma Need for Quantification Lack of Standards Use of Standards Using Existing Standards Building Credibility Towards Credibility Stakeholders Finding Credible Partners Resource-Intensity of IA Resource Issues IA as Additional Task Facing Resource Constraints Confidence with Qualitative Indicators Sadness and Frustration Motivation Other Experiences Self-Efficacy Excitement in Learning Process Insecurity in Learning Process Trustful Relationship with Investors

Table 9 Participants’ Allocation to Emergent Themes: Challenges and Other Experiences Interviewee \ Jannik Lena Paul Christian Raphael Anja Nina Maria Challenges & Experiences

Challenges

Choosing a Method x x x x x x

Complexity of Impact x x x x x x x Assessment

Communicating Impact x x x

Intangibility of Social Impact x x x x x

Resource Issues x x x x x x x x

Use of Standards x x x x

Credibility x x x x x x x

Other Experiences

Confidence with Qualitative x x x x x Indicators

Sadness and Frustration x x x x x

Motivation x x x x x x x x

Self-Efficacy x x x x x

Excitement in x x x x x x Learning Process Insecurity in Learning x x x x x Process Trustful Relationship with x x x Investors

Choosing a Method

At the outset of IA, our interviewees find it challenging to orient themselves. It is overwhelming to find the way through the jungle of different options and decide which one to follow. Anja, who is responsible for developing the first-ever impact report of the enterprise, told us about her experience when starting to work on the report:

“When you only have such a blank space ... So for the next report, I would now know what I could start with. But in the beginning, I just didn't know that ... It can go in so many directions.”

Anja is challenged both by the different options to go for but also by the idea that the choice of one way to assess and communicate impact might lead to entirely different results than with others. Five of the SEs in our sample struggle to decide on the methods for IA.

Complexity of Impact Assessment

Different reasons lead to the respondents experiencing IA as very complex. This is the case for seven out of the eight interviewees. Identifying Indicators and Categories Finding the right indicators that fulfill the purpose of assessing and expressing impact is a challenge. The interviewees are confronted with numerous possibilities to use categories, many of which turn out to be unsuitable, as Jannik explained:

“The first thing, of course, is to establish valid categories. ... You can set up many categories that don't actually have any meaning. And this is what we did multiple times. Of course, that is a challenge.”

Hence, it is a process of trial and error, as there is no correct formula for doing it. The indicators and categories do not only have to make sense for themselves; they also have to fulfill stakeholder’s demands. For example for Christian, the question is also which indicators are recognized and whether there are standards to work with: “The question is, which tools or which standards to use, which KPIs, indicators. And how do I prepare it for the target group so that they can do something with it.” The quote shows the variety of questions that arise when trying to measure the impact of an action. Moreover, every decision leads to follow-up questions, which was expressed by Christian by asking himself:

“The very first thing is that they always add up the salaries or something. Then I say, mhm, is it really like that? … Or shouldn’t you somehow … keep in mind there is a correlation between high income and high negative environmental effect due to more consumption.”

In addition to the overabundance of different categories to choose from, this quote represents that no indicator can holistically present the impact created. Instead, the process raises even more questions and makes it challenging to settle in a specific way. Some interviewees are well aware of the difficulty of finding meaningful indicators, such as Jannik, who straight away clarified his perspective on the topic of IA when introducing himself:

“I'm Jannik, co-founder of [SE1] and I'm in charge of the whole topic of impact measurement, or rather impact estimation, because really measuring it is not that simple. It is always more of a rough approximation.”

Getting reliable Data Contributing to this problem is that getting reliable data is perceived as very difficult: The interviewees are pathfinders in many fields and are the first to collect and process the relevant data. This increases the difficulty and workload of acquiring them: “The goal is to show what effect we have through reuse. … And we notice that there is so little data

in the area of recycling.” (Christian). Also, the other interviewees reported that getting access to data and making sure that it is reliable and unbiased is a big challenge since there are often no strict regulations on how data has to be collected and used. Weighing different Elements Weighing the different elements of IA also adds significantly to the experience, as Lena expressed:

“We have an impact matrix and there are different areas from intergenerational justice to some economic dimensions, for example, security and so forth. … And then there's the environmental, the social, the participation, all the different dimensions. And that's something we're working on a lot with our Sustainability Advisory Board. Because there is always the question of how to weigh them.“

It comes down to being a constant effort to give fair value to the specific elements, which are not easy to measure. Raphael experiences this weighing as particularly frustrating, as a partner who certified the company with respect to its holistic impact followed a particular procedure to weigh different elements. These weights are perceived as unjustified and pointless:

“If you don't score so well now because of overseas transports, then you can score better simply by using recycled paper in the offices. So here, very large with very small are [compared]. So the whole thing is not very - I'm going to say something nasty now - It's not very professional.“

Hence, external demands for specific weights seem to be inappropriate for the specific situation the interviewee is in, resulting in efforts that are deemed ineffective.

Communicating Impact

The interviewees want to assess their impact in a holistic and extensive form, but at the same time make it understandable for different target groups. Those are sometimes only willing to absorb little information, as Lena stated:

“It is sometimes difficult to communicate the topic simply and straightforwardly. I was once told: Explain it in 10 seconds. That's important when you're explaining it on the Internet, where it has to be understandable.”

Hence, communicating impact is again much work and requires another set of capabilities and effort. Jannik, for instance, is therefore very confident that some information is only for internal use:

“Of course, we also have other data on water consumption, impact on the ozone layer and so on. But we don't report it publicly, because nobody can really do anything with it anyway.”

The interviewees expressed that it is a pity that the criteria of the highest importance are not the ones that can be easily communicated but are intangible and complicated. Our participants have all acquired a wealth of knowledge and experience and know which

areas are particularly important. Therefore, they are emotionally connected to the topic and also feel compelled to communicate about crucial issues. Christian explained:

“Well, planetary boundaries and climate change is one story, but the far more glaring story is biodiversity. That's really very critical and it's hardly in the media ... there's a much greater danger that we'll all fail. And that's why I would like to promote it and I just realized that it's difficult to communicate these values because they are totally abstract.”

He knows how critical the situation is and has to find the right way to express things to others so that they can create an effect. Other interviewees, such as Lena, experience the same:

“And that's why I sometimes have the feeling that it's easier to talk about the social economy, about the fact that we have ecological catering, that we take the bicycle. Such topics are sometimes easier to communicate, but of course, I find it more important to explain [mission-related topic].”

Knowing about these problems but not being able to express them to the outside world adequately is challenging and can be frustrating for our participants.

Intangibility of Social Impact

Assessing the dimension of social impact has caused difficulties for five of the SEs we have interviewed. The main reason for this is that social impact is considered vague and thus cannot be measured easily: “Of course I can say that our women are more self- confident now, but how do you measure that?” (Nina). Some of the interviewees have recognized that it is nearly impossible to quantify social impact, as Jannik noticed:

“However, it is not really possible to quantify this [social impact]. Of course, we can look at the qualitative level, how it was before, what are we doing, but since [SE1] has only been around for one and a half years, we can't necessarily say okay, we have now achieved this and that.”

On the other hand, they feel compelled to give the social dimension more substance and make it somehow measurable, partly because they feel pressured by the fact that “everyone wants to see numbers … but you simply can't put a number to some things” (Jannik). They also believe that it is necessary to present numbers to be able to discuss impact with different disciplines, enable comparison and bring about strong arguments about their impact. At the same time, Jannik, Christian, Paul and Anja find it difficult and ethically ambiguous to attribute a number to social dimensions in order to make them more comparable, for example, by giving them a financial value. They referred to the ethical dilemma of monetizing different aspects.

“Can it [social impact] be monetized or would you rather not? That's dangerous because then the environmental damage is monetized and the social impact is monetized. Then all

of a sudden, I have two completely different things that I give a price tag to. And then you're very quickly in an ethical discussion, whether this is something you want or not.” (Christian)

The interviewees state that there are some possibilities to quantify social impact. Those are, due to resource issues, not yet implemented by them. Therefore, despite knowing that social impact has a qualitative, not quantitative nature and some things are just not measurable, Christian, Jannik and Nina search for the right solution to measure and communicate social impact and hope for clarity through new tools in the future. Jannik expressed this situation as follows:

“Accordingly, we can't yet rely on any real, hard categories yet. Because of the time, we simply refer to the fact that we know with relative certainty that working and living conditions are improving.“

Although he knows ‘relatively certain’ that the social situation has improved, there is the desire to rely on measurable indicators in the future. One reason behind this is the experience that "everyone wants to see a number" (Jannik). Another reason is that the qualitative nature of social impact has a high degree of subjectivity and can be interpreted differently by distinct stakeholders. Handling this is particularly difficult in a business setting that is used to deal with only the environmental area and rather objective numbers:

“Maybe there isn't just one tool, because I think it's more complex than tracking CO2. Especially because the social impact is always a bit political, I think. What is positive for one actor is not desirable for another.” (Christian)

These examples show how challenging it is for those individuals to make social impact more tangible and to place it in a larger context alongside all the other activities.

Use of Standards

The matter of standards is also a challenge for the participants. On the one hand, they perceive it as challenging that there are not enough standards. On the other hand, the existing standards are not applicable. For example, the non-existence of standards requires tracking activities of partners thoroughly and in proximity to the affected stakeholders, as Raphael described:

“We are obliged under the fair-trade code to adhere closeness .... You can easily check based on regulations, whether a product is organic or not. But in the area of fair trade ... there is no officially recognized certification label.”

This situation also complicates the work of all other respondents and affects, for example, the availability of data: “In the IT sector, I sometimes wonder whether we are the first to request that, so I always feel that there is no data.” (Christian). Therefore, the

lack of standards is experienced as restricting the possibilities to operate, as there are no predefined guidelines. At the same time, existing standards, certificates, or similar, are also experienced as being not applicable. Often, they lack generalizability due to the broad context they aim to cover. Raphael reported:

“But what has been revealed in the process of getting certified is that the accounting process is only moderately suitable for companies, especially for corporations. And the weighing of criteria and the criteria themselves ... It has a few curiosities in it, which we, unfortunately, could not resolve. And for this reason, the whole undertaking was ... I'll just say that it ended successfully, but very unsatisfactorily for us. “

Credibility

The lack of standards and unifying regulations and the subjectivity that comes with standards impose the challenge of building credibility towards stakeholders and finding credible partners. Lena described the problem of finding partners that fulfill their expectations:

“There are no strict regulations for sustainable investments yet. The EU is currently working on this, but it is not binding. In other words, … a sustainable investment can be considered sustainable because it doesn't invest in one particular thing. Obviously, there are 100 other sectors that you might not want to invest in either. Nevertheless, it still counts as sustainable.”

So, she experiences mistrust and she knows that she must be considerate and critical in her choice of partners. The participants believe that competitors use the lack of standards for their benefit. In their eyes, a proper IA, possibly with certification, is not a question of the actual impact but a question of resources. After all, "a few bigger ones with a corresponding budget can afford it" (Maria). For instance, Paul even decided not to get their organic products certified. He believes the certificates are untrustworthy because no controlling bodies are in place: “Because in the end, we pay them to give us a certificate without any control.“ (Paul). In order to build credibility, Paul said:

“Ultimately, it is based on trust … because no one is going to knock on our door and say: So, now please show us your figures … and in my opinion, companies have a responsibility not to abuse this relationship.“

According to our participants, honest and transparent communication positively influences the relationship with stakeholders, especially with clients. However, the interviewees are aware of the fragility of this relationship.

Resource Issues

Another challenge is that all interviewees perceive the process of assessing impact to be very resource-intensive and time-consuming for the entire team. Anja exemplified this experience:

“While literally the phone rings, the e-mails are waiting and you have to give a presentation tomorrow. So you have this day-to-day business, you then have to sit down and draft a concept [for IA].”

IA is mostly not part of the core business but an additional task that needs to be done. At the same time, it demands constant efforts, as the activities and the environment are dynamically changing: “[IA] is a never-ending task. Things are changing constantly.” (Christian). This significantly influences the experience of the interviewees, as they all stated to face resource constraints and face economic pressure to perform on other aspects to keep their business going:

“You have to apply, you have to prove concepts … If none of that fits, you don't need to mention [mission-related topic] in the end, because that's what often helps us in the end or what makes us stand out as a USP. But if data protection is not in place, you don't need a [mission-related] company.”

Other Experiences

Confidence with Qualitative Indicators Apart from the challenges mentioned above, we identified other experiences in the IA process. All the people we interviewed reported that personal interaction with their target group confirms that they create an impact. The personal level makes people feel closer to the incident and increases commitment. Some interviewees even expressed that numbers play only a minor role, but subjective insights have much greater importance for motivation, as Maria told us:

“They have a picture. They have a name. They have a wish. … The commitment you have is completely different. … It's not just a number, it's real. There's a story behind it and that takes the situation to a whole new level.”

Anja, Raphael and Lena are particularly confident in relying on personal stories to validate the impact of their activities and use it for external reporting. As Lena explained:

“People are realizing more and more that it's not just about profit and hard-to-measure numbers. Instead, it's also possible to make a difference on an individual level … We talk about impact mainly when it comes to societal change in the end. But to get there, many individual experiences have to be taken into account.“

Being close to the action and directly witnessing a change is perceived by all individuals as affirming and indispensable. This can also be of use when approaching funders and potential partners, as Nina explained:

“I think it's important that we have photos that can tell stories about what we do, where we come from, how it developed, who our women are. As I said, I always include several photos in the applications [for funding]. Then [the funders] instantly get a feeling of what's happening here.”

Sadness & Frustration

Being close to the people to be impacted and understanding how critical the environmental situation is can also cause sadness and despair. Raphael told us how he feels about the cooperation with his partners from the global south, who have not been able to do business since the Covid-19 outbreak:

“Fortunately, it is also possible to hold conferences with Africa, South America and India on Zoom today ... Thus, of course, we get a lot of information and a lot of material. And that is not always nice, to see how people are doing at the moment.”

As SEs are following a social mission, the interviewees are all driven by this and experience sadness when the situation is not improving or even getting worse. In addition, there is a sense of frustration among some individuals about how other companies endeavor to have an impact, as Lena expressed:

“I was on a call with another [names industry] company that said they now also want to become sustainable. They are now paying attention to ecological catering in their cafeteria. That's nice, of course. But at the same time, they probably invest billions of euros that they don't care about.”

Other interviewees also reported similar situations about big corporations, which pretend to have a holistic impact while causing many problems. It is difficult to understand how a company can act irresponsibly and misuse IA for their benefit. Motivation Being able to follow up directly on effects and receiving positive feedback is often passed on internally and welds the team together and motivates it:

“Yes, that [assessing impact] is absolutely wonderful. This is communicated throughout the company. We have mechanisms in place to ensure that every employee has access to this flow of information.” (Raphael)

These positive messages are perceived as causing well-being and motivation. It is also important during the hectic day “to pause for a moment and … notice these beautiful moments” (Anja). Usually, the whole team is involved in and positively affected by the IA process because different inputs and expert advice are required. As Paul explained: “[IA]

unifies or fuses the team somehow quite well, because everyone can contribute a bit of their passion and their abilities”. At the same time, all interviewees reported that they are grateful that the topic of impact is becoming more and more important in society and that people are becoming more aware of the underlying issues. This makes the interviewees feel that the movement is gaining momentum and that they are not fighting against windmills. Instead, there are organizations supporting the same values, as Christian explained:

“I also see a positive shift. I also see that traditional companies are moving in a relatively good direction. … I think a lot is already happening.”

Self-Efficacy In this way, the interviewees also feel confirmed in their actions. They experience that what they do is meaningful and that their work bears fruit. As Jannik put it, “it creates a certain feeling of self-efficacy.” Hence, it is an emotional process and gives them a deeper sense in their job and life. Moreover, how they expressed the aspects achieved proved that they are proud of what they are doing. Anja, who has just published the first impact report of the company, exemplified this:

“Many are proud of it [the impact report]. In fact, some of my colleagues said, they'd like to have another copy for their mom or somebody, because then they'll actually have a bit of a picture of what we've achieved.”

Excitement in Learning Process Six of our interviewees perceived IA as exciting. All the challenges to be overcome and the questions to be answered make the process captivating. Therefore, it is a fun learning process that constantly provides new insights and competencies, as Paul explained:

“How do we calculate this now? What data do we need for this? How do we prepare this somehow graphically? How can we communicate this to the outside world? … After all, that's the work that's so much fun. ... It's the work that's super cool and creative.”

Also, the way the other interviewees talked about their experiences and engaged in discussion shows that they developed ownership of the topic, feel challenged to make the most out of it and enjoy seeing the results: “It's so nice to see the effect it has and I really enjoy doing it … this is fun.” (Lena). Overall, doing IA is experienced as fun and ‘cool’ and awoke the interviewees' enthusiasm. All of them had some excitement in measuring impact as, for example, Jannik expressed: “And in the process, it's just super interesting to experience it and then, you know, draw the conclusions.”

Insecurity in Learning Process The nature of IA being a learning process for those involved also brings uncertainty and the feeling that elements are disregarded or not done correctly. Five out of eight SEs feel insecure in the learning process. Christian described this situation as follows:

“If someone had asked me a year ago, I would have said: Wow, I don't know, but I think it [water consumption] is probably not even relevant to the topic [IA]. Well and now I've realized: Oh, it's absolutely relevant. And that's why I think it's so difficult somehow to define the one way ... It's just a process.”

Although they feel insecure, all interviewees also said that they have realized that it is part of the process, making them feel more confident with being unconfident. Trustful Relationship with Investors The last experience identified concerns the relationship with resource-providers. Three interviewees pointed out the special relationship they have with them: “So we have a relatively special relationship with the financing partners, that probably has to be said.” (Jannik). The relationship is perceived as trusting, built on shared values and leading to a win-win situation. In addition, investors were sometimes even referred to as ‘partners’. This wording reveals that they are perceived to be on the same level, with the same passion and goals. Jannik added to this:

“They give us their money because they think it's a cool idea, that it's worth supporting. And we work with them because we think okay, they've got you covered, they just know what they're doing and we can learn quite a lot from them. And with the money they give us, we can better pursue our mission.”

Also, Anja shared that she feels like the financing partners follow the same mission and are not posing pressure on the company but rather show understanding and support. Therefore, for our participants, the relationship with investors is not challenging, but they experience it as positively influencing their experience with IA.

4.3.2 Analysis and Interpretation: Challenges and Other Experiences

In this section, we analyze and contextualize the experiences and challenges of our participants in the IA process. Figure 5 presents the themes that emerged from our findings on the left and the right column shows the related categories that arose when reviewing existing literature.

Figure 5 Emergent Themes from Empirical Findings and Previous Literature: Challenges and Other Experiences

Choosing a Method Several studies report about the struggles of SEs to choose a suitable method because of the over-abundance of possibilities and lack of standard procedures (e.g., Molecke, 2017). Moreover, stakeholders have differing demands for IA and SEs struggle to decide on a particular process (Clifford, 2014). Our findings go in line with Bengo et al. (2020), who suggest that SEs struggle to navigate in the choice of methods. They are overwhelmed by the different tools and the consequences that the choice could have on IA outcomes. Our results, however, do not reflect the degree to which the various stakeholder requirements play a role in the choice of how to measure impact. Instead, our interviewees reported that “the most important aspect is that we know it ourselves and of course, that we make it transparent in the second step” (Jannik). This might result from the fact that prior research mainly emphasized the funding perspective and therefore this demand is prominent. Our results also highlight that no option meets SEs' requirements. Assessing impact is thus experienced as a process of trial and error, as

the specific setting and mission of SEs usually are unique situations in which approaches need to be tested.

Complexity of Impact Assessment Both existing literature and our findings highlight the complexity of IA due to various reasons. The main contribution of our work is how individuals experience the process of dealing with this complexity. Nicholls et al. (2009) suggest that SEs engage in heterogeneous markets and have various impact areas, to which it is difficult to assign a fair value (Clifford, 2014). Our interviews confirm this and express that assigning value to impact is not only a practical discussion but introduces an ethical conflict. Christian illustrated this very clearly by questioning whether it is okay to put price tags on entirely different aspects. Moreover, some of our interviewees highlighted the constant effort that this challenge brings. While three interviewees try to weigh very different elements, two others do not bother to do so and instead expressed confidence in leaving them as they are, without rating what has more value. Raphael engaged in doing it to receive a sustainability- related certificate; a process he experienced as dissatisfactory and useless. This is in line with the finding that it is difficult to assess the impact of SEs since they often engage in very diverse activities in different sectors, which have a non-measurable and non- comparable impact (Clifford, 2014; Nicholls, 2009). Hence, no approach can reflect a fair value of all areas and fulfill the requirements of the diverse stakeholders (Clifford, 2014). Therefore, it is no surprise that certifications are perceived as unfair in some cases and that a more flexible approach to assess impact is needed.

Communicating Impact As our interviewees pointed out, communicating IA is quite different from measuring it internally. The numbers are typically very complex and comprehensible only to people deeply involved in the subject and worthless for other interest groups. Often, they are of such subjective and qualitative nature that it is perceived as challenging to convey them to the outside. This is in line with the findings of Hervieux and Voltan (2019), who found that it is challenging for SEs to articulate their outcomes. The subjective nature of impact also allows SEs to carry out and communicate IA in a way that they perceive as beneficial (Arvidson & Lyon, 2014). Our interviews confirm that SEs consciously decide how they conduct IA and what to communicate.

Intangibility of Social Impact & Confidence with Qualitative Indicators One factor that adds to the complexity of IA is the intangible nature of social impact. As Ormiston (2019) shows, financial, growth-based measures are often preferred, and social and less tangible factors are ignored or disregarded. Our interviewees provide mixed opinions regarding this aspect. Contrary to Ormiston's (2019) findings, all participants use subjective assessments and qualitative perceptions of impact to make internal decisions and confirm for themselves that actions have an impact. Some participants are confident in using qualitative IA, e.g. storytelling and photos, for internal assessment and external communication. Others naturally use qualitative indicators for internal purposes but feel that measurable factors are necessary for external communication. They use qualitative indicators more as an extension. Some have not even called their qualitative methods to be IA and only refer to measurable factors as actual IA. That might result from external demands since Jannik explained to us that “everybody wants to see numbers”, but actually, he knows that sometimes it is not possible or appropriate to quantify the results. This is an important distinction to the findings of Ormiston (2019), as it is not the case that social indicators are ignored. Instead, there is a lack of confidence in using them for external communication. On the contrary, Lena shared her experience that it is easier to communicate that they use ecological catering or take the bicycle instead of communicating about their complex investments. Similarly, Christian told us about his experience in calculating the SROI, an attempt to make social impact measurable and comparable. When they finally had a number, nobody knew what to do with it and how to put it in a broader context. Therefore, our results are an important addition to the literature, as social and emotional factors are indeed used for IA and communication. Sometimes they are even considered to be more meaningful than growth-based financial terms. Those differing results could arise out of the emphasis on the funding perspective in the existing literature. These specific circumstances entail a focus on measurable indicators, for example, to enable comparability.

Use of Standards & Credibility All interviewees have experienced that there are not enough standards for IA and that the existing ones usually do not fulfill their purpose. This is in line with Clifford's (2014) and Nicholls’ (2009) statements that SEs are active in heterogeneous areas and partly engage in non-measurable activities, which is why no standard can do justice to all factors. It often leads to an excessive amount of work and dissatisfaction.

Consequently, the challenge of finding credible partners or gathering credible data was prominent in our interviews. There is mistrust and criticism towards institutions or companies that are supposed to issue certificates or evaluate sustainability. After all, they do not have control mechanisms in place. Moreover, our interviewees are aware that certificates can be bought and that a convincing IA is often more a question of resources than actual impact. This makes it more challenging to generate trust externally and find trustworthy partners who adhere to the same values. It appears that the market is not yet ready for these pioneering SEs and their requirements. To the best of our knowledge, this experience has not yet been taken up in the existing literature.

Resource Issues Both the existing literature and our findings identify resource constraints as a challenge, whereas resource scarcity does differ in some respects. Barraket and Yousefpour (2013) identified time constraints and work commitments since getting the expertise and data needed are resource-intense and SEs usually operate in resource-scarce environments. This was consistently confirmed in our interviews, especially because IA is not part of the core business in most cases but an additional task. To do this extra job properly requires constant effort in a rapidly changing environment. Our findings did not show that IA is perceived as disproportionate to the efforts. This could also stem from the fact that our sample emphasizes the internal use of IA to justify actions and make decisions. Even Anja, who started measuring impact because a funder asked for it, finds the process consistently enriching and meaningful. Accordingly, she wants to continue and even expand it in the future, even without this requirement. It has to be said that Anja was given freedom in how this assessment is made and thus she was able to do it in a for the organization meaningful way.

Existing literature suggests that the resource intensity of IA is perceived to be disproportionately high (Clifford, 2014; Molecke & Pinkse, 2017). Further, the demands for IA from resource providing stakeholders are often different to the SE’s ideas and demands of doing it (Barraket & Yousefpour, 2013). This is partly because funders and investors predominantly demand quantitative indicators (Molecke & Pinkse, 2017). Anja relies on many qualitative indicators when assessing impact and confidently uses them for external communication to the funders. This could indicate that IA is perceived as overly resource-intensive when external demands are extensive and do not match internal expectations. However, if the funders’ requirements are based on trust, the SE can use the activity in a way that is also useful internally, as in Anja's case. Therefore, it might not be perceived as overly resource-intense.

Relationship with Investors Our results differ substantially from the existing studies in terms of the relationship with investors and funders and the existence of unbalanced power relations. Ormiston (2019) suggests that the needs of investors and funders require optimistic IA with outcomes that are easy to compare and transfer. Ebrahim (2003) and Arvidson and Lyon (2014) add that these demands act on the company from above, resulting in asymmetric power structures and a dependency from resource-providing stakeholders. Three interviewees specifically mentioned investors and referred to it as partnerships characterized by trust. These relationships are based on shared values and goals, which lead to a win-win situation when working together. As Jannik mentioned, it is a special relationship with the investors, who act as mentors and critical questioners. Anja also reported that their investors remain rather unassertive, having few requirements which are flexible in their realization. Hence, the individuals in our sample do not experience discomfort or resistance due to external demands conflicting with internal values, as Arvidson and Lyon (2014) suggest. In this context, Ormiston (2011) refers to a ‘mission measurement paradox’ occurring when the SEs fail to follow their social mission while measuring impact. In contrast to these findings, investors' goals in our sample align with those of the SEs. Hence, the incentives they impose are relevant for following the enterprise’s mission. This is in line with Ebrahim's (2019) finding that a closer collaboration between funders and SEs in the IA process, e.g. providing resources and guidance, might foster a more goal-oriented, balanced cooperation. Jannik, for instance, experiences that one of their investment partners is helping them do a “really awesome life cycle assessment” and supports their IA activities, while the other funders provide general guidance and mentoring. Also, Anja confirmed that the financing partners reacted with understanding and flexibility when goals could not be met instead of pressure and strict demands. As referred to above, when it comes to IA, there is a difference between what SEs are asked to do, what they say they do and what they actually do (Arvidson & Lyon, 2014). Our findings approve that there is a difference between what SEs are asked to do and what they do in practice because (1) the enterprises do not have the resources to fulfill every stakeholder’s demands and (2) they do not bother to do it if it is not in their interest as well. However, in our setting, SEs do not pretend to do anything different from what they say. A possible explanation for the difference in these findings could be that the research of Arvidson and Lyon (2014) refers to SEs and NPOs that depend on external resource providers. Hence the relationship might be characterized by uneven power

relations. In our sample, the relationship is trust-based and on the same level. There seems to be less inefficiency and rather two-sided support in relationships like these, resulting in more goal-oriented IA activities.

Other Experiences Overall, our results show that IA in SEs is an emotional process. We add value to the existing literature by shedding light on the experiences that IA entails. So far, there is little research paying attention to those besides the stated challenges (see chapter 2.7). The emotional level has not been addressed, which may be related to the fact that little attention has been paid to the people within the SEs. Therefore, our results introduce new insights. The participants in our sample have gained ownership of assessing impact. People feel challenged in a positive and motivating sense. In addition, the work is regularly rewarding when, for example, one has made impact comprehensible in some way. This leads to a sense of self-efficacy and empowerment. Learning new aspects and overcoming challenges is experienced positively, as the learning generates excitement and enthusiasm. Impact is communicated to employees internally and frequently encourages them to reflect on their achievements and take pride in them, increasing motivation. It gives meaning to the occupational activity and also overall meaningfulness to life. Being close to the events to be influenced, our interviewees are also emotionally involved in the procedures, generating joy when positively impacting. Being aware of the depth of problems, or even seeing situations worsen, can also lead to sadness and despair. Frustration and lack of understanding are also caused by witnessing how little other companies do or how they misuse the freedoms of IA for their benefit. It is also apparent that the critical questioning of actions and their impact are becoming increasingly popular. This is experienced as motivating, as the network that shares the same values and goals is growing and the movement is gaining momentum accordingly. The fact that other people and companies are also taking on more responsibility and questioning things also helps SEs meet their social mission goals.

4.4 Synthesis of the Research

Our results suggest that IA involves many challenges, but how the challenges are experienced depends on some influencing factors. Based on the existing literature and our results, we developed Figure 6 to showcase the different influences and potential manifestations. The model is not intended to represent exclusive scientific findings or yield generalization but demonstrates potential interrelationships. There are many different purposes to assess impact, which can be divided into internal drivers and external requirements. When the decision for IA is externally driven, negative experiences are likely, as the demands often do not match the internal expectations. This can result in the experience of pressure, frustration and dissatisfaction, for instance. When impact is assessed out of internal drivers, positive experiences, such as excitement, motivation and enthusiasm, are probable. No matter what the reasons are, SEs face challenges in IA, which are shown in the center of the model. Another influencing factor is the relationship with funders or investors. In a supportive and trust-based relationship, for instance providing guidance and supervision, positive experiences in the IA process are likely. If the relationship has different power relations and the resource providers exert pressure on the SEs, negative experiences are expectable.

SEs will generally experience challenges in IA, which is what our study and previous research indicate. These challenges may cause negative experiences, e.g. feeling overwhelmed and impatience are common. At the same time, challenges can also lead to positive experiences. For example, overcoming difficulties can be motivating and the fact that it is an exciting learning process is also perceived as positive. Whether these challenges generate positive or negative experiences again depends on the purposes of IA and the relationship with investors. The elaborations show how the model can serve as an orientation as to what can be expected as well as what factors may influence the experience of IA within SEs.

Figure 6 Model of Experiences and Influencing Factors of Impact Assessment in Social Enterprises

5 Discussion

______

This section elaborates on the contribution of our work to theory and gives recommendations for practice. Further, limitations of the conducted study are mentioned and future research possibilities presented. ______

5.1 Theoretical Implications

In previous literature, the purposes, challenges and other experiences of impact assessment (IA) have predominantly been explored one-sided and illuminated the perspectives of funders and investors. We looked at another side of the matter to understand the topic of IA holistically. Hence, the findings of this thesis enrich previous research and critically question the information value of what has been found so far. Within our sample, the internal drivers of IA, creating impact and organizational learning, are the most significant for SEs. The purpose of raising awareness about the topics, engaging people and changing the business environment is prevalent among our participants. While existing literature has tended to view external stakeholders as demanders of IA, pressuring the SEs (Arvidson & Lyon, 2014; Ebrahim & Rangan, 2014), our results show that they play an essential role in IA, but rather are integrated into the process. This inconsistency might imply that the previous research is biased. It also shows that IA is done in a participatory way, which is surprising considering the critique in previous research that IA is not participatory enough (Morgan, 2012; Vanclay, 2014). Hence, we imply with this thesis that there might be a shift happening. According to existing literature, SEs are challenged by the complexity of assessing impact, starting with the choice of the right method, the evaluation of different aspects, weighing of different elements (Clifford, 2014; Nicholls, 2009) and the external communication of impact (Hervieux & Voltan, 2019). Our findings confirm the difficulty and complexity of IA and imply that not all SEs face the same challenges and that the experience of challenges is subject to different influencing factors. The perceived challenges and the consequent experiences are, inter alia, depending on the purposes of IA and the relationship with funders and investors. We contribute to the research field by developing Figure 6 portraying these connections.

Our research is path paving when it comes to the use of qualitative, subjective areas of IA. Existing research indicates that social impact is sometimes unmeasurable and difficult to assess (Molecke & Pinkse, 2017) and impractical to implement (Ormiston, 2019). Therefore, there is a tendency to use quantitative, growth-based measures instead (Ormiston & Seymour, 2011). Some of our interviewees confirm these existing schemes, but our research is pioneering in showing that this is not the only truth. For instance, all participants use qualitative indicators to conduct IA for internal decision- making. Some are very confident in communicating and invoking qualitative values externally and even favor them over quantitative indicators due to their ability to express the emotional, qualitative nature of social impact. This new insight into the experience of SEs is expanding the knowledge and can be a basis for future work. We further suggest that such differences from prior research originate from the relationship with resource-providing stakeholders. Existing literature characterizes this relationship as asymmetric (Arvidson & Lyon, 2014), suggesting that the demands for IA are imposed on SEs and may conflict with internal expectations (Arvidson & Lyon, 2014; Ormiston, 2019). Given the dominant focus on the funding perspective of existing literature, our results suggest that external demands for IA doubt the validity of qualitative indicators and encourage weighing and rating different elements of impact. This is reasonable from the perspective of investors and funders, since it is difficult to compare qualitative indicators with each other and therefore they are of less practical value (Molecke & Pinkse, 2017). However, our research shows that qualitative indicators can be of great significance from the perspective of SEs. Relying on these qualitative indicators relieves resource-limited SEs from the complex work of making social impact quantifiable and comparable.

This goes along our finding that SEs describe IA as demanding. However, our results show that it is not perceived as disproportionately work-intensive, as suggested by Clifford (2014) and Molecke and Pinkse (2017). We illustrate that if the external requirements align with the internal needs, the process can be designed to be beneficial for the SEs. This implies that studies will need to focus further on the requirements and needs of SEs in order to avoid inefficiencies in IA. We thus confirm the idea of Ebrahim (2019) that close collaboration between SEs and funders, characterized by a relationship of trust and support, might foster purposeful and constructive collaboration. In particular, because SEs are aware that IA, whether quantitative or qualitative, can easily be distorted due to a lack of standards or non-functioning standards. Therefore, a relationship of trust with funders and investors is in some cases perceived as more purposeful than meeting specific measurable targets.

Our study can be seen as preliminary groundwork for the insight that IA is an emotional process involving excitement, feeling of self-efficacy, empowerment, sadness and frustration. People engaging in IA often develop ownership of the matter and collaborate with an extensive network of people to assess impact. Hence it is experienced as a collective process that is gaining momentum with more people getting involved. This thesis is guided by the research philosophy of Critical Management Studies (CMS). It encouraged us to examine the historical development of IA, existing power relations and to shed light on perspectives that have not been considered sufficiently before. By doing that, we found many findings of existing research to be a product of one-sided exploration. Hence, our research reinforces the importance of considering how historical developments and existing power relations might shape what is seen as natural and consent. We enrich the collection of CMS with, to our best knowledge, one of the first studies conducted in the field of IA in SEs. We confirm the approach of CMS that, if things remain unchallenged, there is little potential for change. Moreover, we emphasize the importance of exploring topics both critically and from different perspectives to avoid the reinforcement of bias and existing structures through research.

5.2 Practical Implications

This thesis provides not only practical implications for SEs. The insights into the purposes, challenges and other experiences of IA can also create dialogue and change among all kinds of resource providers and support systems collaborating with SEs.

Implications for Social Enterprises

We initiated dialogue and potential for transformation, for instance, by illuminating innovative ways of collaboration between investors and SEs. This might be of interest to people who want to start a SE and SEs that want to emancipate themselves from mainly serving funders’ demands. Our interviewees gave feedback that our conversations inspired them to reflect on their IA and they became more aware of their motivations and challenges. SEs that want to assess their impact should be aware of their underlying motivations to do so. Our thesis provides orientation of different purposes to measure impact, which can guide them. Once these considerations are known, it will be easier to assess impact accordingly. For SEs facing difficulties within the process, it is worth exploring whether the challenges exist because of external requirements that do not match their internal expectations of IA.

Moreover, a trusting relationship with funders and investors and a supportive network of partners have proven to be extremely helpful for assessing impact and achieving the social mission in the context of this work. We argue that for SEs finding compatible partners and investors is essential to avoid inefficiencies and achieve their missions.

Implications for Resource Providers

Our findings strongly suggest that a trusting, collaborative relationship between resource-providing stakeholders and SEs facilitates them to realize their social mission. Requirements that do not align with internal goals create an additional burden for SEs and may cause them to find ways to pretend to meet the requirements without actually implementing them. Demanding predefined standards for IA is usually not suitable either, since SEs operate in a heterogeneous environment and thus have varying needs for IA (Barraket & Yousefpour, 2013). Instead, we suggest resource providers to thoroughly identify the needs of the SEs and adjust requirements accordingly. They can also assist SEs by providing advice and support in the IA process. This promotes a spirit of partnership and the accomplishment of collective goals. The commitment of resources specifically for IA is also beneficial to ensure that SEs can assess their impact while exercising their core activities.

Implications for Social Enterprise Support Systems

Support systems for SEs, such as impact hubs and incubators, should be aware of the experiences of SEs in assessing their impact. This thesis yields important insights that can help them understand their clients’ needs and adapt their services. For instance, we suggest that support systems should consider expanding their services for matching appropriate partners and funders to SEs. They may also provide mentoring and guidance to SEs in the respective challenges of IA that have been identified in this thesis.

5.3 Limitations

As elaborated on in the preceding sections, our study offers theoretical as well as practical implications. However, we are aware of some limitations and shortcomings.

Qualitative studies in general and IPA studies in particular provide insights rather than generalizations. The small sample and the interpretative nature of our study do not enable us to extrapolate from our findings to universal assumptions regarding the purposes, challenges and other experiences of IA in SEs. Another limitation is the depth of our findings. Due to the availability of the participants, we only had one interview each. Multiple follow-up conversations would have enabled

us to reflect on what they said and dig even deeper into their experiences in follow-up interviews. Also, we had to conduct the interviews online due to the global Covid-19 pandemic, which affected the depth of the interviews. In a virtual conversation, it is more challenging to create rapport. The participants might have been more reserved to open up and share their thoughts. Seeing their body language and facial expressions just on the screen was hindering in creating a human connection between the participants and ourselves. Lastly, we conducted our study in a German context. It cannot be easily transferred to other contexts, as the culture and business environment have to be considered.

5.4 Future Research

The limitations of our thesis can be viewed as room for enhancement and as a basis for future research. Therefore, different qualitative methodologies (e.g., grounded theory) or a quantitative methodology could be chosen to produce more generalizable results regarding the experiences of SEs in IA. Another future research suggestion is based on the fact that our study did not focus on one sector but included a broad spectrum of SEs. It would be interesting to focus on specific sectors in order to generate more profound results applicable to particular fields. Further, the SEs interviewed tackle different dimensions of impact, such as the ecological and the social dimension. Due to the different natures, it would be valuable to focus on specific dimensions to get a deeper understanding. As touched upon in chapter 4.3, especially assessing social impact has distinct challenges that need further research attention. Our research also shows that some people are very confident to rely on subjective and personal indicators to assess and communicate impact, while others are reluctant to do so and only use them for internal reasons. It would be valuable to study whether this is due to personal traits, the business culture, the environment or other reasons. In line with CMS, one could use elements from feminism or gender studies, for example, to explore whether the treatment of subjectivity and measurable figures of IA in SEs is culturally and historically conditioned. Furthermore, it should be explored how qualitative indicators can be framed to establish trustworthiness, for instance towards resource-providing stakeholders. An important finding of this thesis is that a special relationship between funders and SEs, characterized by shared values and goals and a basis of trust, positively affects their collaboration in IA. Future research could explore the functioning of such collaboration,

important preconditions and implications. This may help both SEs and investors when assessing their impact to better tackle social and environmental issues. Lastly, it would be interesting to investigate other contexts than the German one and explore similarities and differences. The different cultures and business environments might influence how people experience IA in SEs.

6 Conclusion

______

This chapter serves to conclude this thesis. We briefly recall the background of our work and the choice of a critical research philosophy. Finally, we put our findings and analysis in context with CMS and recall the main results of our study. ______

In the preparatory work for this thesis, we realized that the experiences in impact assessment (IA), in particular the purposes and challenges, have not yet been investigated sufficiently from the perspective of social enterprises (SEs). Moreover, existing literature has a strong focus on the funding perspective. We have taken a critical perspective to determine how historical developments have contributed to the status quo of IA and revealed why it has predominantly been promoted in a top-down manner, e.g., from funders or legislators. We identified purposes, challenges and other experiences of assessing impact drawn from existing literature that are affected substantially by funding relationships or by other resource-providing stakeholders and hence might shadow the perspective of SEs. The review of the existing literature has reinforced the decision to focus our research on the perspective of SEs. To do this, we interviewed eight individuals working in different SEs who assess impact and used Interpretative Phenomenological Analysis (IPA) to examine and interpret their perspectives. Our results indicate that neglecting the perspective of SEs indeed led to a misrepresentation of the topic of IA in the existing literature. By taking the perspective of SEs, we found that our sample assesses impact predominantly to create impact, raise awareness, foster organizational learning and communicate impact, which differs significantly from what previous studies portray. Less popular purposes are meeting stakeholder demands, using it as differentiation tool and developing partnerships. Regarding the experienced challenges, the SEs in our sample confirm some challenges but are far less influenced by uneven power structures than previous research suggests. For this reason, some SEs do not face some challenges, e.g. in the weighting of impact or the attempt to make qualitative factors measurable. Our study suggests that most SEs face resource issues, struggle with the complexity of IA and are challenged to build credibility and find credible partners. Challenges that fewer participants experience are

finding the right method, dealing with the intangible nature of impact, dealing with (non-) existing standards and communicating the results. Topics such as the experience of dealing with qualitative indicators and the feeling of being part of a larger movement offer new insights into the everyday matters of IA. Those insights have been overlooked in earlier research. This thesis shows that enthusiasm, motivation, excitement, sadness and frustration are common experiences in the IA process. A trustful relationship with investors and funders seems to strengthen positive experiences and reduce negative ones. We developed Figure 6 to illustrate these relationships and how the perceived purposes and challenges interrelate with other experiences. This thesis sheds light on the SEs’ experiences in IA without focusing on the relationship with funders and investors. In line with the philosophy of Critical Management Studies (CMS), we uncovered the socially constructed nature of IA and explored different and new perspectives. The underlying philosophy CMS enabled us to highlight discourses and dominant practices that influence previous academic work. It serves as a foundation to transform research on IA and enriches the practice of IA for SEs and their stakeholders. (Antadze & Westley, 2012; Beamon & Balcik, 2008; Benjamin & Misra, 2006; Buckmaster, 1999; Campbell et al., 2012; Carman, 2010; Ebrahim, 2003; Edwards & Hulme, 1995; Flynn & Hodgkinson, 2001; Grimes, 2010; Hatry, 2006; Heady & Keen, 2008; Jepson, 2005; Liket et al., 2014; Ógáin et al., 2012; Sawhill & Williamson, 2001; Zappalà & Lyons, 2009)

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Appendix

Appendix I: Interview Guideline

Getting Started

• Introducing ourselves… talk about the purpose of our study • Ask the participant to introduce him/ herself • In one sentence, what is your company doing? What is your mission/ goal?

Role in the Company

• How would you describe the role you play in the company?

Impact General

• How do you and your company know you are making a difference? • What means “making an impact” for you?

Impact Assessment

• How are you involved in assessing impact? • What is your motivation for assessing impact? • When and why have you/ your company started to do it?

Impact Assessment Process

• What challenges do you face in connection with impact assessment? How do you overcome them? • Would you measure your impact if you didn't have to? • How do you interact with your target audience/ clients/ customers in the impact assessment process? What is your experience in the interaction? • Who has the most influence in the process?

Personal Relation to Impact Assessment

• What do you think about that your company measures the impact? • How do you experience the overall impact assessment process? • If you could change the impact assessment process, how would you change it?

Appendix II: Participant Information Sheet and GDPR Form