Demonstrating Value: The Materiality of Measurement Tools and the Legitimation of New Institutions
The Materiality of Measurement Tools and the Legitimation of New Institutions
Emily Barman
Boston University
eabarman@bu.edu
Matthew Hall
London School of Economics and Political Science
m.r.hall@lse.ac.uk
Yuval Millo
University of Leicester
ym95@leicester.ac.uk
Abstract
Existing research on the institutionalization of new institutions has focused on the conditions underlying their emergence and the actions used by their proponents to gain acceptance (Seo and Creed 2002; Suddaby and Greenwood 2005; Lawrence and Suddaby 2006; Etzion and Ferraro 2010; Zietsma and Lawrence 2010; David, Sine, and Haveman 2013). This body of scholarship has shown that an important activity of institutional entrepreneurs is to justify the value of a new institution and to obtain legitimacy from important stakeholders (Rao et al. 2000, p. 242; Bitektine and Haack 2005).
Importantly, however, this research also has assumed that institutional entrepreneurs typically cannot capture and communicate the value of the new institution directly (Suddaby and Greenwood 2005; David, Sine and Haveman 2013) and may resort to rhetorical efforts (Greenwood, Suddaby, and Hinings 2002; Suddaby and Greenwood 2005; David et al. 2013) or try and establish relational ties with other institutional entrepreneurs or with powerful actors (Maguire, Hardy, and Lawrence 2004; Tracey, Phillips, and Jarvis 2011; David, Sine, and Haveman 2013; Jones and Massa 2013).
In contrast, we argue that one important, but overlooked, way that new institutions are promoted by proponents is through the development of measurement tools, which are technological and organizational practices aimed at demonstrating the value of a proposed institution. These measurement tools serve as a type of justificatory institutional work because they produce the appropriate data that captures and so conveys the type of value produced by the institution in question to key stakeholders.
We examine the process by which proponents develop a measurement tool in order to count and so communicate the value of a new organizational form to critical audiences. Our empirical analysis focuses on a charitable foundation’s promotion of the social enterprise as a new organizational form (Tracey, Phillips and Jarvis 2011), and its related efforts to construct a new measurement methodology, Social Return on Investment (SROI), to measure and demonstrate the social and economic impact of social enterprises to key audiences.
We find that proponents’ decision to develop a measurement tool was shaped by their theorization of the value of social enterprises, by their subsequent awareness of key stakeholders’ skepticism about the proposed innovation, and by their realization of the inadequacy of existing measurement tools to do so. However, these actors were constrained in creating a suitable measurement tool –both an accounting and reporting system and a formula that calculated a representation of value – by the technological and material nature of such an endeavor. These difficulties, inherent to the development of a measurement tool, resulted in a discrepancy between actors’ initial conception of the value and the value that was ultimately demonstrated.
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