Reconciling social value creation and private value appropriation: evidence from the microcredit industry

• Grant number: 17/26001-4
• Support Opportunities: Scholarships in Brazil - Doctorate (Direct)
• Start date: May 01, 2018
• End date: January 31, 2021
• Field of knowledge: Applied Social Sciences - Administration - Business Administration
• Principal Investigator: Sérgio Giovanetti Lazzarini
• Grantee: Leandro Nardi
• Host Institution: Instituto de Ensino e Pesquisa (Insper). São Paulo , SP, Brazil
• Associated scholarship(s): 18/10690-8 - Reconciling value appropriation with social impact: a conceptual model applied to microfinance, BE.EP.DD

Abstract

In the past decades, a large body of research has investigated the processes through which for-profit firms create and appropriate economic value. The dominant approach in this literature has been strongly focused on firm’s private value capture strategies, and, hence, disconnected from the recent efforts expended by management scholars towards understanding the social impact implications of firm’s actions. This novel research avenue has been largely concerned with the social and public benefits accruing from companies actions (or, in other words, with companies social value creation potential). In this context, the separation between such research lines impedes an adequate understanding of the mechanisms through which firms reconcile private value appropriation with social impact. The main objective of this proposal is to integrate these research avenues in a two-stage effort: i) first, departing from existing models about private value creation and appropriation, we propose an empirical methodology to measure social value creation by private enterprises; ii) second, based on empirical findings arising from the first stage, we will propose a formal conceptual refinement of value creation-appropriation theory by integrating social impact (or value) dimensions to existing theoretical frameworks. In the first stage, the empirical research will be developed in the context of a microcredit enterprise, a perfect setting since the concilliation between private value appropriation and socal impact generation is a central goal of this firm. Using modern econometric tools, we propose (and test) a robust methodology for measuring social value creation in the scope of the microcredit enterprise. We also analyze a particular differentiation strategy adopted by the firm: the offer of basic managerial training to its clients. On the other hand, in the second stage, we depart from the previously established empirical findings to propose a formal theoretical refinement to existing theory on value creation-appropriation. By integrating the social value dimension to existing theoretical frameworks, our model will enable a deep understanding of the tensions between private value capture and social value creation, as well as of the mechanisms used by private firms to reconcile such dimensions. (AU)