Measuring social performance: reconciling the tension between commercial and social logics

Abstract

Purpose

The purpose of this paper is to explore the implementation of microfinance programs in three Malaysian development finance institutions (DFIs). Its main concerns revolve around how these DFIs measure and manage their social performance and how they reconcile their competing social and commercial objectives which are driven by particular logics.

Design/methodology/approach

This paper analyzes the ways in which the DFIs selected for this study measure and manage their social performance. The data were acquired from two sessions of focus group interviews, a series of semi-structured interviews, and extensive reviews of documentaries. The institutional logics perspective is used to explore the interplay between social and commercial logics in shaping the view and use of social performance measures in the three studied DFIs.

Findings

Although these DFIs have consistently offered formal microfinance programs to designated target groups, their ultimate focus has been on measuring financial as opposed to social performance. Hence, performance appraisal is mainly aligned with the breadth of outreach, rather than its depth. Nevertheless, there appear to be conflicts between the need to accommodate both breadth and depth, due to the competing demands of the two objectives. The rivalry between these two competing demands, which represents the interplay between social and commercial logics, is resolved through reconciliation, that is, by making one objective compatible with the other.

Originality/value

This paper examines the ways in which the DFIs in the study measure and manage their social performance, a topic that is, currently, not widely explored. This study contributes to advancing the knowledge on the link between institutional logics and organizational practices, particularly in understanding the extent to which the Malaysian DFIs assign importance to social performance when designing and offering microfinance programs.

Citation

Siti-Nabiha, A.K., Azhar, Z., Isa, S.M. and Siti-Nazariah, A.Z. (2018), "Measuring social performance: reconciling the tension between commercial and social logics", International Journal of Social Economics, Vol. 45 No. 1, pp. 205-222. https://doi.org/10.1108/IJSE-08-2016-0216