The Functions of Performance Measurement in Social Entrepreneurship: Control, Planning and Accountability

Abstract

Today, systems of performance measurement (metrics) are central to all organizational strategy and operations (Austin, 1996; Rousseau, 2006). Metrics are costly but valuable since they offer the tantalizing prospect of capturing complex situations in an apparently objective and impartial fashion to minimize risk and maximize return. Metrics offer internal actors in an organization the tools with which to assemble the data that allow them to control processes and make effective decisions. For external actors metrics allow performance assessments to be made that drive efficient resource allocation and build an argument for (or against) society granting the organization a mandate to operate by creating (or destroying) perceptions of its accountability and legitimacy. Metrics now pervade society on a trajectory that began with the establishment of consistent reporting practices in the private sector (Hopwood, 1983) and that now encompasses the public sector (Bevan and Hood, 2006; Osbourne and Gaebbler, 1992) and, increasingly, the third sector too (Paton, 2003). Today metrics are a defining feature of our modernity (Giddens, 1990). Indeed, there has never before been so much focus on measurement across the industrialized world (Power, 1994a, 1994b).