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  • ESSAYS ON THE NATURE, PURPOSE AND MEASUREMENT

    OF SOCIAL IMPACT

    A thesis submitted to the Department of Geography and the

    Environment of the London School of Economics for the degree of

    Doctor of Philosophy

    London, February 2017

    Paolo Lucchino London School of Economics

  • Dedication

    To my father.

    2

  • Declaration

    I certify that the thesis I have presented for examination for the MPhil/PhD degree of

    the London School of Economics and Political Science is solely my own work other than

    where I have clearly indicated that it is the work of others (in which case the extent of

    any work carried out jointly by me and any other person is clearly identified in it).

    The copyright of this thesis rests with the author. Quotation from it is permitted,

    provided that full acknowledgement is made. This thesis may not be reproduced without

    my prior written consent. I warrant that this authorisation does not, to the best of my

    belief, infringe the rights of any third party.

    I declare that my thesis consists of approximately 53,000 words.

    3

  • Statement of conjoint work

    I confirm that Paper 2 was jointly co-authored with Richard Dorsett (National Institute

    of Economic and Social Research) and I contributed 50% of this work.

    I confirm that Paper 3 was jointly co-authored with Fadi Hassan (Trinity College

    Dublin and Centre for Economic Performance) and I contributed 50% of this work.

    4

  • Abstract

    This thesis consists of a series of papers relating to the nature, purpose and measurement

    of social impact. Paper 1 makes an empirical contribution to the understanding of firm

    incentives to be perceived as social, and finds that even quite distinct variants of social

    enterprises can nevertheless benefit form a strategic use of social responsibility. Paper

    2 relates to the theoretical prediction that non-profits will deliver higher standards of

    quality in markets where this quality is hard to observe, and tests this, possibly for the

    first time in the literature, in the case of unemployment support services. In contrast to

    existing literature, we do not find strong evidence of for-profit vs. non-profit differentials

    in product quality, be it observed or unobserved. The immediate focus of Paper 3 and

    Paper 4 is on the role of access to light in the socio-economic transformation and growth

    of rural communities in the developing world, which partly constitutes a second strand of

    this thesis. Using a randomised controlled trial, Paper 3 identifies strong evidence of a

    causal link between access to light and educational attainment. Through a further ran-

    domised controlled trial, Paper 4 finds that access to light contributes to a diversification

    in household livelihoods from agricultural to non-farm economic activities. To our knowl-

    edge, this constitutes the first robust evidence that small-scale lighting sources can help

    stimulate the very first steps in the direction of economic transformation. Importantly,

    Paper 3 and Paper 4 also speak to the questions of measurement of social impact evoked

    in Papers 1 and 2 and some of the practical challenges typically faced in this pursuit.

    Bringing these various threads together, these papers contribute to our understanding of

    contemporary social enterprise, with a particular focus on the role of information and its

    measurement in tightly linking social enterprise with genuine social impact.

    5

  • Acknowledgements

    I first and foremost would like to thank my supervisors for their support over these years.

    I am extremely grateful to Olmo Silva for his understanding and respect for my reasons to

    embark in doctoral research, for his insightful and disinterested guidance throughout, and

    for his unwavering sense of humour. I am also extremely grateful to Simona Iammarino for

    her passion for the study of social enterprise, and for her valuable support in my pursuit

    of this over these years.

    I would like to thank my examiners, Oriana Bandiera and Simon Quinn, for accepting

    to take on this role and providing constructive and critical scrutiny of this work.

    I am deeply indebted to all those with whom I worked together in the research projects

    forming part of this thesis.

    I would like to extend my warmest appreciation to Richard Dorsett for the co-authorship

    of Paper 2, as well as for years of intellectual exchange and inspiration. As co-authors

    of Paper 2, we gratefully acknowledge the contributions of Department for Work and

    Pensions (DWP) colleagues; in particular, Janet Allaker and Matt Garlick. This paper

    draws on and extends research we carried out while at the National Institute of Economic

    and Social Research and forming part of a broader evaluation of the Work Programme

    commissioned by DWP.

    I would like to thank the UK Secure Data Service, and all the team there, for facili-

    tating access to the data used in Paper 1.

    I would like to thank the team of Powering Impact for managing the projects be-

    hind Papers 3 and 4 and for their outstanding support. Particular regards go to Mauro

    Ometto. I would also like to thank GIVEWATTS for its precious support in the field, and

    extend special mentions to Jesper Hornberg, Michael Waiyaki, and David Orina. I am

    extremely grateful for the financial support received from Enel Foundation, STICERD,

    the Coca-Cola Company and the Private Enterprise Development in Low Income Coun-

    tries initiative to make these projects happen. A special regard goes to Fadi Hassan

    for the years we worked together on these projects, including co-authoring Paper 3 and

    collaborating on Paper 4; the substantial reciprocal learning gained; and for the dusty

    adventures in the field.

    I would like express my gratitude to the Economic and Social Research Council for

    financial support in the form of the Advanced Quantitative Methods Studentship.

    6

  • I have also benefited from discussions with other faculty and colleagues at the LSE. In

    particular, I would like to thank Henry Overman, Steve Gibbons and the participants of

    the LSE Economic Geography seminar for the helpful comments. All errors and omissions

    remain my own.

    I owe my good memories of student camaraderie to Alessandra Scandura, Alessandro

    Sforza, Alex Jaax, Andrea Ascani, David Nguyen, Davide Luca, Emanuele Campiglio,

    Luisa Gagliardi, Nicola Mastrorocco and Ted Pinchbeck,

    I offer my final token of gratitude to my wife Ana, for her patience and support, and

    my children Niko and Esma, for sharing their radiance.

    7

  • Preface

    When businesses seek to conquer the hearts and minds of consumers, they often look

    beyond just offering a good product. The product must have a soul, and it must be a good

    soul. Many firms strive to communicate their voluntary actions to integrate social and

    environmental considerations into their operations. Such behaviour has been referred to

    as corporate social responsibility (CSR), and many firms go as far as presenting themselves

    as social enterprises.

    This thesis is motivated by the desire to make sense of the above phenomenon, and

    consists of a series of papers on the nature, purpose and measurement of social impact.

    While each of these papers is designed to make a specific contribution in its relevant

    literature, they also relate to cross-cutting questions on social business and impact.

    These papers are heavily influenced by work concerning the nature of social enterprise

    in Lucchino (2017). Through a critical review of different strands of relevant literature,

    that paper asks whether the notion of social enterprise captures a unitary phenomenon,

    defined either on the basis of the presence of institutional features common to all social

    enterprises, or on the basis of common empirical patterns of behaviour. It concludes

    that this common basis is in fact lacking, and questions whether the concept of social

    enterprise conveys any substantive meaning. It further argues that research efforts would

    be better defined if, rather than attempting to study all social enterprises, they focused

    on specific institutional features present among a subset of social enterprises.

    In the course of this review, it also points to the possible decoupling between the social

    behaviour firms are perceived to uphold and that which they actually implement. Indeed,

    in the presence of asymmetric information, market forces are not able to close this gap and

    to force firms to tie their claims to actual behaviour. This is particularly worrisome given

    social enterprises are more likely to emerge in industries where the degree of asymmetric

    information is high. The implication of this postmodern disjuncture between perception

    and reality has important detrimental consequences for the growth of a vibrant socially

    responsible business sector. On the one hand, it implies the wasteful investment of firm

    resources into the marketing social achievements. Secondly, a strategic firm will first and

    foremost want to be perceived as social, as this is what ultimately affects

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