Measuring social impact for strategic management: The ambiguities in pursuing strategic CSR and social return on investment as an impact measurement tool

With the increased push for companies to engage in strategic CSR and ‘Creating Shared Value’ comes the need for impact measurement and the integration thereof into management decisions. However, the conceptualization of social impact and its measurement remains a challenge for academia and managers alike, leaving organizations with a lack of guidance for assessing the effectiveness of their CSR programs. To address this lack of operationalization, we introduce the concept of Social Return on Investment (SROI) as an impact evaluation tool, which combines elements from traditional social impact assessments, theories of change, finance, and cost-benefit analyses.

SROI facilitates stakeholder involvement and primary data collection to determine the perceived value of changes broad forward by an initiative. Ultimately, SROI converts social impact into a monetary proxy value. While only a limited number of SROI analyses have been conducted, this framework holds the potential to bridge conceptual gaps in strategic CSR and social impact assessments.

SROI offers a structured approach to measuring and valuing social impact, which is essential for the long-term sustainability and support of health interventions, especially in the context of shifting global priorities towards accountable giving and measurable impact.

This teaching note provides theoretical insights into the issue of strategic CSR management and the need for impact measurement, and bridges some of the identified shortcomings by combining the CSR literature with social return on investment, providing a potential framework that can be used to inform strategic decisions for shared value creation and social impact.

The underlying research relates to Novo Nordisk’s Changing Diabetes® in Children (CDiC) programme in Low- and Middle-Income Countries (LMICs).