Reconciling value appropriation with social impact: a conceptual model applied to microfinance

• Grant number: 18/10690-8
• Support Opportunities: Scholarships abroad - Research Internship - Doctorate (Direct)
• Start date: September 15, 2018
• End date: August 29, 2019
• Field of knowledge: Applied Social Sciences - Administration
• Principal Investigator: Sérgio Giovanetti Lazzarini
• Grantee: Leandro Nardi
• Supervisor: Todd Robison Zenger
• Host Institution: Instituto de Ensino e Pesquisa (Insper). São Paulo , SP, Brazil
• Institution abroad: University of Utah (U), United States
• Associated to the scholarship: 17/26001-4 - Reconciling social value creation and private value appropriation: evidence from the microcredit industry, BP.DD

Abstract

A vast literature in strategic management has studied how private enterprises create and appropriate economic value. Nevertheless, this literature strand remains seemingly disconnected from the efforts more recently devoted by management scholars to understanding the processes of social value creation by private organizations. Seeking to merge these research avenues, this project proposes a conceptual model integrating social aspects to the current debate on value creation and appropriation. In a nutshell, our framework conceives the social value created by an organization as a function of the value captured by transacting parties. We test our model in the context of a microfinance enterprise, estimating the firm's potential for generating social impact as a function of the impacts generated on its clients' businesses - small ventures from impoverished regions in the Northeast of Brazil. By combining matching techniques with difference-in-differences regressions, our model estimates a rate that proxies the social impact generated by the microfinance company and analyzes how this rate responds to variations in distinct dimensions - e.g. microbusinesses' access to resources and capabilities, relational governance and other characteristics. We thus provide information useful to inform the ongoing debates on how firms deal with the inherent tensions between social value creation and private value appropriation; the elicited information is valuable for investors, managers, and any other parties interested in measuring social value creation by private organizations. (AU)