Melco Management Accounting Research
Discussion Paper Series
No.MDP2024-004

Accounting as a Normative Mechanism for the Pursuit of ‘Economic Value forSocial Value’: A Critical Realist Analysis of a Case for Developing Social
Business

June 2024
Yan Li *Associate Professor, Faculty of Commerce, Takushoku University
4-14 Kohinata3-Chome, Bunkyo-ku, Tokyo 112-8585, Japane-mail: liyan@ner.takushoku-u.ac.jp
Asako Kimura
Kansai University
Norio Sawabe
Kyoto University*Corresponding author

Maki Makoto Foundation
Nagoya, Japan
Discussion Paper Series of the Melco Management Accounting Research, in order to promote
the study of management accounting, has published this unfinished paper onto the Web. Pleaseobtain the permission of the author when citing this paper.

Accounting as a Normative Mechanism for the Pursuit of ‘Economic
Value for Social Value’: A Critical Realist Analysis of a Case forDeveloping Social Business

Yan Li, Asako Kimura, and Norio Sawabe

Abstract
The role of accounting in upholding value pluralism has garnered significant attention inrecent years. This study explores the role of accounting in value pluralism in hybridorganisations for the development of social business. Social enterprises provide an
opportunity to explore the enduring coexistence of social and economic values, which
combine business and charity at their core, are an exemplary form of hybrid organisation.
Building on the foundational definition of social business, emphasising the application ofbusiness methods to address social issues and acknowledging the prevalent challenge of‘mission drift’ within social enterprises, we propose an institutional value framework
termed ‘economic value for social value.’ This value proposition is expected to lead totransnationalism and standardisation, ultimately resulting in the institutionalisation ofvalue pluralism. To investigate the role of accounting in advancing the pursuit of theinstitutional value of ‘economic value for social value,’ we mobilise the notion of ‘norm
circles and normative intersectionality’ as our theoretical framework. This study
elucidates how accounting based calculating hybrid, functioning as a normative
mechanism—an actual norm circle—is involved in generating the power of institutional
value proposition of ‘economic value for social value,’ within the field of our case study—a Japanese social enterprise. Building upon this premise, we conduct a retroductive
analysis of the normative mechanisms through which this value exerts institutional
influence, asserting that accounting, through the hybrid calculation of social impacts andeconomic profits, generates causal influences on the value proposition. In a criticalassessment of the identified normative mechanism through retrodictive explanation, we
argue that accounting functions as a normative mechanism by determining whether, whenand how actors endorse and enforce the institutional value of ‘economic value for social
value.’
Keywords: value pluralism, normative mechanism, social business, critical realism* This is an early work. Please do not quote.

11 Introduction
The role of accounting in upholding value pluralism has attracted significant
attention in recent years (Ahrens & Ferry, 2022; Annisette, Vesty, & Amslem, 2017;
Casarin, 2023; Faulconbridge & Muzio, 2021; Grossi, Vakkuri, & Sargiacomo, 2022;
Millo, Power, Robson, & Vollmer, 2021). To explore the role of accounting in value
pluralism, hybridity and hybrid organisations are considered pertinent fields for research(Ahrens & Ferry, 2022; Anderson-Gough, Edgley, Robson, & Sharma, 2022; Aquino &Batley, 2022; Ghio & Verona, 2022; Kurunmäki, 2004; Kurunmäki & Miller, 2011;
Lepori & Montauti, 2020; Miller, 2004; Miller, Kurunmäki., & O’Leary, 2008, 2010;
Thomson, Grubnic, & Georgakopoulos, 2014). Hybridity is defined as mixing of coreorganisational elements, including identities, forms, logics, and values, that do notconventionally cohere (Battilana, Besharov, & Mitzinneck, 2017; Glynn, Hood, & Innis,2020).
This study explores the role of accounting in value pluralism in hybridorganisations for the development of social business. Social business, as articulated by
the Nobel Laureate and Grameen Bank founder Mohammad Yunus as a novel paradigm,
addresses social issues and yields social welfare using business methods rather thanmaximising economic profit (Yunus, 2008; Yunus, Moingeon, & Lehmann-Ortega, 2010).
Thus, social enterprises provide an opportunity to explore the enduring coexistence ofdual values, namely social and economic values, given that social enterprises, which
combine business and charity at their core, are an exemplary form of hybrid organisations(Battilana & Dorado, 2010; Battilana & Lee, 2014; Santos, Pache, Birkholz, 2015; Smith& Besharov, 2019; Yunus, 2008; Yunus et al., 2010).
In accounting for hybridity, informed by Miller et al.’s (2008, 2010) notion of the‘calculating hybrids,’ scholars explore how accounting can be an instrument that‘mediates’ multiple values by providing visibility and calculability in hybridisation(Busco, Giovannoni, & Riccaboni, 2017; Jordan, Jørgensen, & Mitterhofer, 2013;
Kurunmäki & Miller, 2011; Thomson et al., 2014). More recently, mostly grounded ininstitutional logic research, studies have offered various accounts of how accounting andcalculative frameworks can be involved in institutional settings to embrace diverse values(Anderson-Gough et al., 2022; Aquino & Batley, 2022; Baud & Lallemand-Stempak,
2024; Casarin, 2023; Maran & Lowe, 2021; Sargiacomo, Corazza, D’Andreamatteo, &Torchia, 2022; Weichselberger & Lagström, 2022).
Drawing upon the sociology of value and valuation (Boltanski & Thevenot, 2006;
Stark, 2009), scholars provide a distinct approach to embrace value pluralism mediatedby accounting and calculation, which constitutes a ‘compromise’ involving diverse values(Annisette et al., 2017; Baud & Lallemand-Stempak, 2024; Casarin, 2023; Carlsson-Wall,
Kraus, & Messner, 2016; Chenhall, Hall, & Smith 2013; Grossi et al., 2022; Trevisan &Mouritsen, 2023). A compromise suggests the possibility of a principle taking judgments
based on objects stemming from different worlds and making them compatible (Boltanski& Thevenot, 2006). However, despite the discourse regarding whether the compromise
account has the potential to promote diverse values, compromise is a temporary
settlement that requires ongoing efforts to stabilise it (Chenhall et al., 2013). The
continuous interplay involved in hybridisation leads to a breakdown of compromise,
establishing temporary agreements (Annisette et al., 2017; Aquino & Batley, 2022; Baud
& Lallemand-Stempak, 2024; Kastberg Weichselberger, Fırtın, & Bracci, 2023; Lepori& Montauti, 2020), as compromised by their nature harbour fragility (Boltanski &Thevenot, 2006). This implies that there is always a risk associated with transitioning2

from the initial intention of hybridity and hybrid organisation, aimed at embracing thepluralism of values to the outcome of value purification.
Within the domain of social enterprises, the transition from embracing value
pluralism (social and economic values) to value purification (social or economic values)
is identified as ‘mission drift,’ which prompts growing concern and attention (Armendáriz& Szafarz, 2009; Battilana & Dorado, 2010; Grimes, Williams, & Zhao, 2019; Klein,
Schneider, & Spieth, 2021; Wry, Lounsbury, & Jennings, 2014). This suggests a need to
explore the role of accounting in pursuing diverse values that are taken for granted andinstitutionalised, and therefore encounter fewer challenges (Ahrens & Ferry, 2022; Glynn
et al., 2020).
Building on Yunus’s foundational definition of social business that emphasises theapplication of business methods to address social issues and acknowledge the prevalent
challenge of ‘mission drift’ within social enterprises, we propose an institutional value
framework termed ‘economic value for social value.’ In this value proposition, we
advocate for a common good with a higher level of value (Boltanski & Thevenot, 2006),
which depends on establishing an explicit means–end relationship between economic andsocial values, rather than being ambiguous and fragile. The pursuit of social value should
be regarded as the ultimate goal, with economic value serving as the means to achieve it.
As the institutional value has power over people (Kraatz, Flores, & Chandler, 2020; Scott,2013), this value proposition is expected to motivate and guide social actions within social
enterprises, which are widely recognised as normative institutions where the dual pursuitof social and economic values is the norm. We posit that this investigation may lead totransnationalism and standardisation, and ultimately result in the institutionalisation ofvalue pluralism.
To investigate the role of accounting in advancing the pursuit of the institutional
value of ‘economic value for social value,’ we mobilise the notion of ‘norm circles’(Elder-Vass, 2010, 2012, 2022) as our theoretical framework. Furthermore, following
Elder-Vass (2010, 2012, 2022), the foundation of our methodology is critical realism,
which is characterised by a retroductive analysis to investigate the mechanisms
responsible for the power of the normative institutional value (Bhaskar, 1979; Bunge,
2003; Sayer, 2000). Therefore, the study elucidates how accounting, functioning as anormative mechanism—an actual norm circle—is involved in generating the power of
institutional value, specifically the proposition of ‘economic value for social value,’
within the field of our case study — a Japanese social enterprise. Building upon thispremise, the study conducts a retroductive analysis of the normative mechanisms throughwhich this value exerts institutional influence. We assert that accounting, through thehybrid calculation of social impacts and economic profits, generates causal influences on
the value proposition. In a critical assessment of the identified normative mechanism
through retrodictive explanation, we argue that accounting functions as a normative
mechanism by determining whether, when and how actors endorse and enforce thenormative value of ‘economic value for social value.’
The remainder of this paper is organised as follows. Section 2 reviews theaccounting literature on value pluralism and Section 3 introduces the theoreticalframework of ‘norm circles.’ This framework provides insight into the causal power ofvalues and norms as social structures at the level of social groups, particularly within
normative institutions such as social enterprises. Section 4 outlines our methodology,
which is based on critical realism. Subsequently, we provide an overview of our researchcontext, focusing on a Japanese social enterprise, and detail the data collection process.
3

In Sections 5–7, we conduct our case analysis by adopting a critical realist approach that
includes an empirical description (Section 5), a retroductive analysis of the investment
mechanism (Section 6), and a retrodictive explanation (Section 7). Finally, Section 8
presents the conclusion synthesising our findings in the context of accounting research on
hybridity and value pluralism, offering insights into the implications of our study.

2 Accounting in value pluralism and hybridity
In accounting for hybridity, Miller et al. (2008, 2010) propose the notion of‘calculating hybrids,’ referring to the distinctive feature of accounting: it is ‘constantly
engaged in a dual hybridisation process: seeking to make visible and calculable thehybrids that it encounters, while at the same time hybridising itself through encounterswith a range of other practices and discipline’ (Miller et al., 2008, pp. 944–945). However,sustaining value pluralism through calculating hybrids is challenging. Scholars highlight
how accounting, primarily grounded in economic value, has the potential to ‘crowd out’
other values in hybrid settings (Ezzamel, Robson, & Stapleton, 2012; Ferry & Slack,2021; Fischer & Ferlie, 2013; Kurunmäki, 2004). This phenomenon, which weconveniently refer to as ‘A (one value) or B (another value),’ accentuates the complexityof upholding divergent values in organisational settings. Through a longitudinal casestudy of a mental health service organisation in the UK, Fischer & Ferlie (2013) highlightthe intractable conflicts and contradictions that emerged between ethics-oriented andrules-based clinical models, ultimately resulting in ‘resisting hybridisation.’ Resisting
hybridisation manifests as purification of values, as indicated by the term ‘A or B,’
thereby contradicting the principle of value pluralism.
Despite its inherent complexity, scholars have outlined pathways for achieving ‘A
and B,’ facilitating hybridity and the development of hybrid organisations that embracevalue pluralism. Institutional research suggests that organisations can achieve ‘A and B’
through integration, where hybrids amalgamate the different components they bring
together and create a unified blend; or differentiation, where hybrids keep theirconstituent elements separate, forming an organisation with multiple, distinct parts; or a
combination of the two (Battilana et al., 2017; Kraatz & Block, 2008; Pache & Santos,
2013; Polzer, Meyer, Höllerer, & Seiwald, 2016). Building on and developing the notionof ‘calculating hybrids’ (Miller et al., 2008, 2010), accounting scholars have also explored
how accounting, by providing visibility and calculability in hybridisation, can mediate
the achievement ‘A and B’ (Busco et al., 2017; Jordan et al., 2013; Kurunmäki & Miller,
2011; Miller et al., 2008, 2010; Thomson et al., 2014). More recently, informed by theinstitutional literature, mostly by institutional logics research, accounting scholars haveoffered various accounts of how accounting and calculative frameworks act as the‘mediating instruments’ to achieve ‘A and B.’ These involve the role of accounting andcalculation in combining (Casarin, 2023), selectively coupling and layering (Baud &Lallemand-Stempak, 2024; Maran & Lowe, 2021), juxtaposing (Sargiacomo et al., 2022),
assimilating and accommodating (Aquino & Batley, 2022), partitioning and segmenting(Anderson-Gough et al., 2022), and semi-integrating (Weichselberger & Lagström, 2022)
diverse values.
Following the sociology of value and valuation (Boltanski & Thevenot, 2006; Stark,2009), these studies provide a distinct approach to achieving ‘A and B,’ mediated byaccounting and calculation, which constitutes a ‘compromise’ involving multiple values(Annisette et al., 2017; Baud & Lallemand-Stempak, 2024; Casarin, 2023; Chenhall et al.,2013; Carlsson-Wall et al., 2016; Grossi et al., 2022; Trevisan & Mouritsen, 2023). A
4compromise suggests the possibility of a principle that can take judgments based on
objects stemming from different worlds and make them compatible (Boltanski &Thevenot, 2006). In accounting studies, Chenhall et al. (2013) introduce the notion of‘compromising accounts’ that performance measurement systems can be designed andoperated to provide the potential for productive debate and compromise between different
modes of evaluation, which can help the organisation to recombine ideas and perspectives
in creative and constructive ways. Moreover, Carlsson-Wall et al. (2016) suggest that themeaning attributed to different levels of performance outcomes influences suchcompromising accounts.
Despite the debate over whether the compromise account has the potential topromote productive friction, this depends on whether and how the convention isenvisaged as an ‘acceptable’ compromise (Chenhall et al., 2013, p. 271). According to
Boltanski & Thevenot (2006), ‘a compromise, in order to be acceptable, must be basedon the quest for a common good of a higher order than the ones the compromise attempts
to reconcile (p. 20).’ Several studies elucidate the nature and ways by which accounting
and calculation can function as mediators in achieving an ‘acceptable compromise,’concerning the establishment of a ‘common good of a higher order.’ For instance,
Annisette et al. (2017) contend that accounting, with its unique ability to occupy different
worlds as a qualified object, enables it to act as an ambiguous object and, through its
technical role as a test of industrial value, can be involved in compromises—both ofwhich form the basis of a higher order common good. Based on this idea, they provide
two cases, a not-for-profit organisation and a government-owned water utility, illustrating
how accounting is implicated as an ambiguous object and test of industrial value, fromwhich disputes and various outcomes, including compromise, unfold. Additionally,
Trevisan & Mouritsen (2023) present how accounting and control in hybrid settings—in
their case, budgeting and planning in a cultural and creative organisation—are mobilisedin the creation of an ambiguous association between different values that become aresource for a higher common good and articulate an industrial order. Casarin (2023)
emphasises the importance of comprehending the quality inherent in mutuallyconstitutive elements to understand how calculative frames function as mechanisms ofcompromise-mediated combinability. This entails key metrics aligned with a root
metaphor that denotes higher order quality and offers various interpretations andframeworks for actors’ activities along with a principle of worth that explains and justifies
the selection of specific framing categories.
However, ‘because the common good remains unspecified as long as it has not been
made explicit and established in a polity, compromises remain fragile’ (Boltanski &Thevenot, 2006, p. 20). Following this argument, accounting scholars concur thatcompromise is a temporary settlement that requires ongoing efforts to stabilise it(Chenhall et al., 2013, p. 271). They illustrate the ongoing dynamics inherent in theprocess of hybridisation, which ultimately culminates in the breakdown of compromise,even after reaching temporary compromises (Annisette et al., 2017; Aquino & Batley,2022; Baud & Lallemand-Stempak, 2024; Kastberg Weichselberger et al., 2023; Lepori& Montauti, 2020). Additionally, they demonstrate the potential for critique (Trevisan &Mouritsen, 2023), decomposition (Lepori & Montauti, 2020), and the emergence of moral
struggles (Ferry & Slack, 2021; Morinière & Georgescu, 2021) during compromise. Thisimplies that owing to the fragility of compromise, there is always a risk associated withtransitioning from the initial intention of hybridity and hybrid organisation, aimed atembracing the pluralism of values (A and B), to the outcome of value purification (A or5

B).
In the social enterprise field, the phenomenon of moving from ‘A and B’ to ‘A or
B’ is documented as ‘mission drift,’ which has raised concerns and received increasing
attention (Armendáriz & Szafarz, 2009; Battilana & Dorado, 2010; Grimes et al., 2019;
Klein et al., 2021; Wry et al., 2014). For example, Battilana & Dorado (2010) discoverthat the adoption of commercial and business principles within microfinance expands loan
sizes, representing a ‘mission drift’ where activities and outcomes deviate from theoriginal goal of providing loans to assist impoverished individuals.
This prompts the question: to what extent do organisations embrace value pluralism,
wherein pursuing ‘A and B’ are taken for granted and institutionalised, thus encountering
fewer challenges (Glynn et al., 2020). Furthermore, what is the role of accounting in
advocating such a ‘value hybridity’ that can exercise power over people to make themeffective motivators and guides for social actions (Ahrens & Ferry, 2022). This enquiry
holds significance for the foundational concept of ‘calculating hybrids’ introduced byMiller and his colleagues. They argue:‘It [hybridizing] entails a reconfiguring of modes of governing that links up andseeks to assemble together diverse regulatory initiatives, whether national ortransnational in aspiration. In the process, conventional dichotomies—whether ofstates vs markets, science vs the economy, or financial management vs medicine(and we believe, perhaps also true for social value vs economic value)—areincreasingly attenuated or broken down. Such developments enable new modes ofgoverning to emerge.’ (Miller et al., 2010, p. 32, italic added)
Normative organisations, exemplified by social enterprises (Moss, Short, Payne, &Lumpkin, 2011) where hybridity is the prevailing norm, present valuable opportunities toinvestigate the role of accounting in advancing hybrid values (Ahrens & Ferry, 2022).
The principle of Yunus’s (2008) definition of social business explicitly addresses social
problems and generates social welfare using business methods. This leads to the argumentthat in social business, hybridity and the development of hybrid organisations thatembrace ‘A and B’ should take the distinctive form of ‘A (economic value) for B (social
value).’ This means that there should be an explicit means–end relationship between
economic and social values and that the pursuit of social value should be considered theend, with economic value serving as the means to achieve it. Here, a common good canbe regarded as a higher level of value (Boltanski & Thevenot, 2006), referred to as ‘thevalue of economic value for social value,’ which is explicit rather than being ambiguousand fragile.
Given that this is rooted in the principle espoused by Yunus (2008) and considering
the widespread challenges surrounding ‘mission drift’ in the operationalisation of social
businesses, we posit that the value proposition of ‘economic value for social value’ insocial enterprise inherently embodies a normative dimension. In institutional settings,
values and norms constitute normative elements that, together with associated activities
and resources, provide stability and meaning to the social life encapsulated within
institutions (Scott, 2013, p. 56). Within this framework, values are conceptions of thepreferred or desirable, together with the construction of standards to which existing
structures or behaviours can be compared and assessed. While norms specify how things
should be done; they define legitimate means to pursue valued ends (Scott, 2013, p. 64).
As institutional values are present and real in their effects—they motivate, guide,
justify, and evaluate action (Kraatz et al., 2020)—the value proposition is expected to6have normative power within social enterprises, which are acknowledged as normative
institutions in which the dual pursuit of social and economic values is the norm. Therefore,
we propose that in the context of social enterprise, the value proposition of ‘economic
value for social value’ can lead to transnationalism and standardisation for thesimultaneous pursuit of social and economic values, by building the relationship between
the pursuit of social value as an end and economic value as a means, ultimately shaping
the ‘calculative hybrid’ into a ‘new mode of governing’ (Miller et al., 2010). To
theoretically investigate how accounting is involved in the normative value propositionfor ‘economic value for social value,’ in Section 3, we introduce Elder-Vass’s (2010,2012, 2022) concept of ‘norm circle’ and the methodological foundation of criticalrealism.

3 Theoretical framework
Elder-Vass (2010, 2012, 2022) explains how normative institutions can exert a
causal influence on individuals within them to tend toward conformity to the norms
valued by the institutions. Informed by Simmel’s notion of social circle, Elder-Vass
introduces the concept of the ‘norm circle,’ defined as ‘a group of people who arecommitted to endorsing and enforcing a particular norm’ (Elder-Vass, 2012, p. 22). There,
normative social practices mean ‘regularised practices encouraged by dispositions or
beliefs about appropriate ways of behaving that are shared by a group of people’ (ElderVass, 2010, p. 116). Members of a norm circle are aware that other members share thatcommitment; they may feel an obligation to endorse and enforce the norm concerned andexpect that others will support them when they do so (Elder-Vass, 2010, p. 123). In otherwords, the members of a norm circle share a collective intention to support the norm, andas a result, they tend to support it more actively, by praising or rewarding those who enact
it, by criticising or punishing those who fail to enact it, or even just by ostentatiously
enacting it themselves (Elder-Vass, 2010, p. 123-124).
As a social group or circle specifically concerned with normative questions (ElderVass, 2010, p. 123), the norm circle has a boundary—its extent and size (Elder-Vass 2010,2012, 2022). To identify the boundaries of any given norm circle empirically, Elder-Vassprovides three approaches: proximal, imagined, and actual norm circles. The proximal
norm circle means that for any given normative disposition or belief held by an individual,
the norm circle is the set of actual individuals who have influenced that disposition. Thisset of individuals could be parents or school teachers. In many such cases, however, thissingle or a set of actual people represents a wider group, which Elder-Vass terms asimagined norm circle—the individual’s beliefs (conscious or otherwise) about the extent
of the norm circle. Unlike imaginary groups, imagined groups do exist; what is imaginedby the individual concerned is their precise extent—its size and boundaries. Third, theactual norm circle implies that one might seek to establish a network of interlinked
individuals who endorse and enforce the norm concerned, irrespective of whether theindividual has had any contact with them, as long as the individuals in their proximal
norm circle are part of that wider network.
However, in contemporary societies, we are only ever likely to encounter small
portions of any given actual norm circle. Individuals must develop working ‘rules,’ basedon their experience, to give them a sense of the true extent of the actual circle. As a result,the mapping of our imagined norm circle onto the actual norm circle—a process toincrease the degree of convergence and identify the true boundary of the actual norm
circle—will always be approximate and imperfect (Elder-Vass, 2010, p. 130).
7

Moreover, in any social space, there may be multiple norm circles that can andfrequently do intersect diversely, which Elder-Vass (2010, 2012, 2022) calls ‘normativeintersectionality.’ It refers not only to intersections between nominal categories but also
to individuals as being parts of multiple distinct social entities with real causal powers(Elder-Vass, 2010, p. 131). Different types of norms, in the sense that they relate todifferent types of practice, and the way in which the associated norm circles operate, areto some extent influenced by the type of practice they regulate (Elder-Vass, 2012, p. 30).
These include cultural, linguistic, discourse and knowledge circles (Elder-Vass, 2012), as
well as asset and monetary circles (Elder-Vass, 2022). In each case, it is an empiricalquestion, in any given case, whether (and which) groups of norms can be attributed to anorm-set circle (Elder-Vass, 2010, p. 132).
In normative intersectionality, these influences are neither homogeneous norhegemonic; the individual must sometimes negotiate a path that balances normative
commitments that are in tension with each other (Elder-Vass, 2010, p. 149). In a multiple
conflict norm intersectionality, there is a need for individuals in ambivalent normative
positions to choose which norms to observe. In the context of complex normativeintersectionality, skilled social performance depends on the individual’s possession of a
sophisticated practical consciousness of the diversity, applicability and extent of thenormative circles in which they are embedded, and of others to which they are exposed,even though they may not be part of them. This, in turn, opens opportunities for normativechange through conscious members’ acts in such societies (Elder-Vass, 2010, p. 133). As
intersectionality grows, then, it is not only the influence of diverse social forces that
increases; so does the need for reflexive individual agency (Elder-Vass, 2010, p. 150).
We suggest that the notion of the ‘norm circle’ and ‘normative intersectionality’ isrelevant to the study of the power of the pluralism of values pursued by normative
institutions. There may be two ‘norm circles’ in a social group that pursue different values‘A and B’ simultaneously as norm. This could lead to intersectionality between theminfluencing individuals’ endorsement and enforcement of the norm. Applying thisperspective to the value position of ‘economic value for social value’ in social business,
we assume two relevant norm circles in the context of social business: norm circles forthe pursuit of social value and economic value. The intersectionality between them could
entail the path for the creation of ‘for,’ that is, the establishment of a means–end
relationship between the two norm circles, constituting a high level of the common good.
To explore how accounting and calculation can be implicated in this power of theinstitutional value of ‘economic value for social value,’ this study, following Elder-Vass(2010, 2012, 2022), draws on the methodological foundation of critical realism (Bhaskar,
1975, 1979; Lawson, 1997; Sayer, 1992, 2000).

4 Methodology and research design
4.1 Critical realism
Critical realist ontology considers the world stratified and comprises three domains:
real, actual and empirical. The real domain indicates the mechanisms and structures withemergent causal power to generate actual and empirical worlds. The actual domain
signifies the events that occur in space and time. The empirical domain consists of what
we perceive and experience, directly or indirectly, which, in research contexts, contains
data or facts. According to the critical realistic paradigm, scientific work should engage
in an iterative process that moves from ‘the manifest phenomena of social life to theessential relations that necessitate them’ (Bhaskar, 1979, p. 32). Here, the essential
8relations are internal or necessary relations, rather than external or contingent relations,
implying the ‘causal powers’ or ‘liabilities’ of structure (Sayer, 1992). The mechanism is‘a set of processes in a system, such that they bring about or prevent some change – either
the emergence of a property or another process – in the system as a whole’ (Bunge, 2003,
p. 31). Thus, in the critical realistic perspective, scientific work is about investigating andidentifying the causal relationship between what we experience and what happens, andthe underlying structures and mechanisms that produce the actual events. In doing so,
critical realists ‘seek to identify both necessity and possibility or potential in the world what things must go together, and what could happen, given the nature of the objects’(Sayer, 2000, p. 11).
The process of identifying the underlying structure and mechanism from observed
events is called retroduction, which is a mode of inference, by which we discern what isbasically characteristic and constitutive of the structure (Danermark, Ekström, &Karlsson, 2002, p. 96). The aim is to achieve an ‘abstract theory analysis’ in terms of theobjects’ constitutive structures and mechanisms, as parts of wider structures, and in termsof their causal powers (Sayer, 1992, p. 116). The core of retroduction is transcendental
argumentation, by which one clarifies the basic prerequisites or conditions for social
relationships, people’s actions, reasoning, and knowledge (Danermark et al., 2002).
In general, there are three steps to conducting a retrospective analysis (Danermark
et al., 2002; Edwards, O’Mahoney, & Vincent 2014; Zachariadis, Scott, & Barrett, 2013).
The first phase involves describing or appreciating the research situation and identifying
the composite events or phenomena under study. The second phase, the actual
retroductive analysis of the data, involves hypothesising the possible mechanisms thatcan generate the phenomena that have been observed, measured, or experienced. The third
phase focuses on explaining how these interact to produce events of interest, a process
called retrodiction (Lawson, 1997).
4.2 Norm circle as structure and mechanism‘Social structure is best understood as the causal forces of social groups’ (ElderVass, 2010, p. 115). Hence, the notion of the ‘norm circle’ is conceived as the structureand generic mechanism responsible for normative social institutions (Elder-Vass, 2010,
p. 121). The norm circle has an emergent property or causal power to affect the behaviourof individuals (Elder-Vass, 2010, p. 124).
The power of the norm circle to influence an individual member’s behaviour is nota direct physical effect. Normative compliance is not physically forced compliance but
voluntary; hence it is directly caused, not by the existence in the present of normative
pressures from the community, but by the individual’s internalisation of past pressures in
the form of beliefs or dispositions. The effect of social institutions on behaviour is,therefore, a two-stage causal process. In the first stage, the norm circle has a (downward)
causal impact on the individual’s motivations, and in the second, these motivations affecttheir behaviour (Elder-Vass, 2010, p. 125, italic in original). Thus, the existence of asocial institution may not enforce the corresponding norm on every occasion. It implies atendency for members of the concerned community to endorse/enforce the norm. The
institution produces a conditional tendency: if an individual transgresses against the norm,
they are likely to encounter negative sanctions (Elder-Vass, 2010, p. 126). Thus, theexercise of normative causal influences on the behaviour of an individual is mediated byindividual’s understanding of the normative environment within which they live (ElderVass, 2010, p. 143).
9

The three boundaries of norm circles—proximal, imagined, and actual norm
circles—are causally significant and play complementary roles in a single integrated
process. The proximal norm circle causally influences an individual to adopt a norm in
the first place; the imagined norm circle determines when (i.e. in whose presence) the
individual believes norm conformance will be enforced, which influences when they arelikely to conform to it; and the actual norm circle determines when actual
endorsing/enforcing behaviour is likely to occur (Elder-Vass, 2012, p. 26). At theindividual consciousness level, the influence of the actual norm circle is mediated throughtwo different forms. In learning the norm, the individual is exposed to the influence of theactual norm circle through the mechanism of the proximal norm circle; and in choosing
whether and when to observe the norm, the individual is exposed to the influence of theactual norm circle through the mental image that they have of it: the imagined norm circle.
Therefore, ultimately, normative social institutions are causal powers of actual norm
circles, mediated through the forms of proximal and imagined norm circles (Elder-Vass,
2010, p. 130).
Mobilising the concept of ‘norm circle’, based on an Australian packaging
company case study, Baker & Modell (2019) identify three norm circles potentiallyinfluencing the tendency of managers to equate CSR initiatives, which they label as
normative management knowledge on shared value, customer demands and labour rights.
The intersectionality between the first two norm circles significantly influenced CSR
practice: managers who initially resisted emerging notions of CSR implemented norms
that reinforced a relatively narrow conception of ‘shared value’ creation, followed by thecausal power of customer demands to consistently buttress the tendency to equate CSR
initiatives with enhanced financial performance. In contrast, managers were reluctant toenact competing norms associated with other sets of norms, such as labour rights, whichchallenged this conception of CSR. This led to the failure of labour rights norms tocounteract this tendency. Utilising the notion of ‘norm circles’, their emphasis is on how
accounting technology, such as environmental scorecard and social surveys, can play animportant role in channelling the activation of causal powers embedded in various norm
circles (p. 947, italics added).
4.3 Case site and data collection
Our study is based on a longitudinal case study of a Japanese platform company(hereafter referred to as the Social Group) that conducts business to address social
problems. As of August 2022, the group had 42 social businesses in 16 countries withmore than 1200 employees, to address a range of social problems, including
environmental issues; poverty in developing countries; employment for people withdisabilities, homeless people, refugees, and others. In 2022, the group sales were 7.5billion yen (approx. EUR 51,660,000). Appendix B shows the social businesses of thegroup, including the social problems to be solved, contents of the businesses, and social
impact of each business1. Considering that the group was founded in 2007 by only two
people, the group has achieved considerable success in the development of social business.
From its foundation to the development of the Group, two calculation practices have been

1 In October 2022, while conducting this research, the company underwent certain restructuring.

This study covers the period up to October 2022, before these organisational reforms. The
descriptive data, based on interviews conducted after that time, are a retrospective look-back at that
time.
10

considered significant: calculation of social impact and calculation of economic benefit
for each business.
The following data were collected: First, from May 2021 to March 2024, 30 semistructured interviews lasting 45 hours were conducted with 14 company members,
including founders, social entrepreneurs and indirect employment members. In interviews
with the two founders, questions were asked about the mission, purpose, history andevolution of the organisation; the development, design and operation of the overallmanagement system; the economic profit and social impact of both the individual social
enterprises and the group as a whole; and the current situation and challenges. The social
entrepreneurs in each social enterprise were also asked about how they got involved in
the social enterprise, business model, their perception and use of economic profit andsocial impact calculations, and their goals and challenges. Finally, members in indirect
positions were asked about their background, responsibilities in supporting social
entrepreneurs and social enterprises within the group. We also participated in eight eventsin which the founders and other members introduced the company and its businesses tothe participants. Appendix A presents details of the semi-structured interviews andparticipant observation.
Furthermore, the company published videos to communicate its thoughts andexpertise about building social businesses and conversations between founders and othersocial entrepreneurs; these videos were open to the public or limited participants. We
watched the videos to deepen our understanding. Finally, we consulted company websites,a book by one of the founders (Taguchi, 2021), newspapers and magazine articles thatpublished content about the company and its members.
Mobilising the notion of ‘norm circles and normative intersectionality’ (ElderVass, 2010, 2012, 2022), we shed light on how these accounting-based calculations are
involved in this hybrid organisation, which is assumed to have both norm circles for the
pursuit of social and economic values. Following the three stages of critical realist
analysis introduced in Section 4 we present our case analysis, including an empiricaldescription with a summary of the distinctive tendency in Section 5; a retroductive
analysis of the mechanism with a focus on accounting calculation in Section 6; and in
Section 7, we provide a retrodictive explanation of how accounting calculation functioned
as the mechanism responsible for the empirical events described in Section 5.

5 Empirical events description
We first describe the empirical events according to the chronology of the socialgroup. From its foundation in 2007 to 2022, the evolution of the organisation can bedivided into three periods in its business and organisational structure: starting as a realestate agency (March 2007–April 2008), transforming into a social enterprise (May 2008–
March 2014) and becoming a platform group company for bringing social enterprises(April 2014–October 2022). In Section 5.1, we provide empirical descriptions of theevents that surround the calculation of economic performance and social impact in eachperiod.
5.1 Starting as a real estate agent (March 2007–April 2008)
Two founders of the Social Group, Mr. T (who later became President) and Mr. S(who later became Vice President), although unfamiliar with each other, had similar
experiences during their university years. They had spent their university years having
the internal conversation of ‘who do I want to be?’ Through experiences such as watching11

documentaries about poor and malnourished African children or observing unhappy
employees, they concluded that solving social problems, whether distant in scale, such as
poverty in Africa, or proximate, such as the motivation of employees in Japan, was worth
devoting their lives to. This led them to participate in the activities of non-profit
organisations (NPOs). However, there they realised the limitations of the NPOs’ activities
due to lack of funds, and they recognised the power of business and the need to learn
business skills. With this realisation, the founders found their first job in a Japanesetrading company to learn business skills, where they met each other.
After three years there, the two founders established the company in 2007 with astrong shared aspiration for ‘social problem solving through business.’ The company’s
goal was to achieve JPY 1 trillion (approximately EUR 7,000 billion) in sales and donate
1% of it to provide stable and effective funding to NPOs. Explaining the reasons forsetting such a target, the Vice President (Mr. S) said,‘Many companies can do this when their turnover is around a billion, but they havea “presence” when their turnover is around a trillion. Presence does not mean wewant to be big, it just means we want to be known. We set that number because wethought that if we grew into a trillion-dollar company, we would be a company thatpeople would want to learn from and emulate.’ (Interview, 31 May 2021)
Although there was a turnover target, they did not specify which businesses would
achieve it. During market research, they discovered the need for small local estate agents
who struggled to attract customers. They decided to establish an estate agency businessto provide these services. They intended to collect information on tenants who had
problems finding accommodation and make it available to these small agents.
They faced many difficulties like other small start-ups. After more than a year of
hard work, their real estate agency expanded to provide a bulk quotation service system
to make it easier for small real estate agencies to attract customers and help employees
who had graduated from university or changed jobs and were about to start working inTokyo from the countryside. They also won contracts with corporate clients to findaccommodations for their employees. Consequently, sales reached JPY 20 million (about
140,000 euros) in 2007. However, approximately a year after starting their business, they
were ambiguous about their business and its results. The founders reflected on theirexperiences as estate agents and arrived at the following conclusions:‘At that time, even if we worked 365 days a year without a break, our annual sales
were 20 million JPY. This meant that we could only donate only JPY 200,000 [1%of sales] per year. I began to feel a sense of impatience.’ (Taguchi, 2021, p. 118)
Furthermore, while developing their business, many foreign students were refused to renta house. This was due to the prevailing discriminatory view that foreigners lacked proper
behaviour such as garbage disposal and other practices rooted in Japanese culture andcustoms. They found that they could do nothing about this discrimination, because
although the agent could recommend a suitable house, the decision to rent or not to rent
was made by the owner. The Vice President (Mr. S) also described his experiences during
this time as follows:‘At first, although it was immature, we thought of a model for donations [donating
1% of sales to NPOs]. However, we understood that this was difficult. Firstly, theamount of the donation needed to be larger [it was too small]; secondly, solving
problems directly was a big hurdle because we are not the landowner.’ (Interview,12

31 May 2021)
He also described his experience as a disconnect between what they were working
for and their vision of solving social problems. Considering that they developed theirtarget market in only about a year, they would be able to provide stable and impactful
donations to NPOs if the business continued to grow steadily. However, their impatienceand thoughts of disconnection between purpose and practice led them to question theirbusiness, and this propelled them to the next stage.
5.2 Transforming into a social enterprise (May 2008–March 2014)
Since May 2008, together with other members who shared their vision, the founders
have transformed their business from an estate agency to a social business development
company. During this period, they developed several social enterprises, including ashared house business in 2008 that enabled foreigners to rent, a fair-trade business in 2010
for poor farmers in Myanmar, and a garment business in 2013 that employed low-income
workers in Bangladesh. The key feature that differentiates these social businesses fromreal estate agent and so-called conventional businesses is that they must integrate social
problems into their business operations. That is to say, the essence of social business liesin the ‘inclusion of social issues in the value chain of the business’ (the Vice President,
interview, 31 May 2021). Examples include sourcing raw materials (the fair-trade herbal
tea business sourcing tea leaves from farmers in Myanmar), manufacturing (employing
low-income workers in Bangladesh), and providing services (reducing discrimination andpromoting cross-cultural exchange through shared housing).
The practice of calculating social impact has emerged during the development ofthese social enterprises. Its budding form can be observed in the ‘foreign resident ratio’in the shared house business. The practice of calculating and maintaining the ratio ofJapanese to foreign residents at 5:5 emerged during the operation of the shared housebusiness. This guaranteed the diversity of nationalities of residents considering businessobjectives. The first member who joined the two founders and jointly established theshared house is now the president of the shared house business, reflecting the emergenceprocess of the indicator.
‘At first we did not have such a philosophy [such as setting a target number ofsocial impacts and strictly sticking to the target]. However, the premise was that it
would be more interesting if there were a variety of people, so the more diverse thenationalities, the better. In the course of this process, general indications wereobtained. For example, if a shared house is designed for ten people and is said tobe a multicultural exchange shared house with foreigners, but there are eight
Japanese and only two foreigners, it is not our service at all. The ideal ratio is about
5:5 or 6:4, so we have refined the service. Our business concept is for Japanese andforeigners to live together. When we think about which ratio gives the feeling ofliving together, we find that if the ratio goes beyond the 5:5 or 6:4 line, the majorityof the residents only speak Japanese or another language in their conversation.’(Interview, 4 March 2023)
This quote suggests that the practice of calculating social impact emerged byembodying the shared house’s business purpose in its operations. Therefore, maintaining
the proportion of foreigners at 50% was the target to assess whether the operation alignedwith the business purpose of reducing discrimination and promoting multicultural
13

exchange. Moreover, it was a means of communicating the customer value of the businessto its target clients, that is, foreigners who had difficulties renting a house and Japanese
who wanted to engage in multicultural exchanges. From this perspective, the social
impact and economic profit were compatible with increased economic performance,
leading to more people being helped.
However, at times, maintaining a foreign percentage implied sacrificing economic
profit. An extreme example is the period following the Great East Japan Earthquake in2011. The earthquake and subsequent nuclear disaster at Fukushima Daiichi led to thereturn of residents to their home countries, leading to a period of poor economic
performance. Consequently, the company had to decide whether to abandon the 5:5 ratio
and operate a 100% Japanese shared house to recover its performance. The Vice President(Mr. S) explained that these events were the most significant bankruptcy crises andrecalled their decisions at that time:‘With half the people leaving, we had a huge deficit, so I felt we would go bankrupt.
The foreigners occupied half of the shared houses; if they left, we could rent thevacant rooms to Japanese people to live in the half. It is possible to survive in thisway, as many other companies have done. But our discussions brought us back tothe starting point of the business. Of course, we had the option of making a profit
on all the Japanese residences, but we did not take that approach. We thought that it[making a profit itself] was not what we wanted to do, and that it would not be an
option even if we were to die.’ (Answer to a participant’s question during a lectureon 21 June 2021)
Therefore, instead of trying to restore economic performance by letting only theJapanese occupy the shared houses and sacrificing 50% of foreigners, the founders
decided to maintain the ratio. They stopped increasing the number of houses and focusedon marketing activities to attract foreigners who might return to Japan. In addition, to savecosts, they visited homeowners and agents to ask them for favours, giving them time, andtemporarily lowering rent. Fortunately, foreigners returned within a few months, leading
to performance recovery without long-term deficits.
However, this does not always end well. One example is a company’s recruitmentof low-income workers in Bangladesh. To provide a stable job and income for single
mothers in Bangladesh, members of the organisation developed a few businesses during
this period. The first was to produce matching children’s clothes for parents and siblings
in a Bangladeshi factory and sell them to the Japanese market. However, they later
realised that it was a challenging market with fierce price competition and high inventoryrisk. Competitors often offered half-price promotions; however, by pricing products
based on the income of workers in Bangladesh to stabilise their livelihoods, they could
not participate in price competition. As a breakthrough, they increased the number of newstores to increase sales, and, consequently, their inventory grew to over JPY 100 million.
The members who joined the two founders and started the business reflected on the eventsof that time as follows:‘We had a very difficult time and put a huge amount of effort into the garment
market. However, I had no idea what I was doing when I realised that it [the garment
business] had not led to any increase in employment in Bangladesh.’ (Interview, 8March 2023)
Therefore, they withdrew from the children’s clothing business and moved into theorganic baby clothing business exclusively for baby gifts, contrary to the failure
14experience: low stock, no price competition, and products that could only be made in
Bangladeshi factories.
In this way, the organisation transformed from a real estate agency to a company
that developed social enterprises. However, once again, the President (Mr. T) stated that
he became impatient:‘Having been successful in several businesses, I gradually became more confident[about social businesses]. On the other hand, I started to get impatient with the slow
pace of only one business a year. At that time, I was in charge of setting up new
businesses, and when the business started to take off, I handed it over to anothermember. It takes at least a year to get a business off the ground, so if I had 30 years
to run the first business, I could only have created 30 businesses. It is difficult to saythat the world will be better when my life is over.’ (Taguchi, 2021, p. 161).
This sense of low speed led the organisation to take the next step.
5.3 Becoming a platform for bringing social enterprises (April 2014–August 2022)
The most significant event during this phase was the transformation from a social
enterprise, where the founders develop the social business themselves, to a platform thatbrings social entrepreneurs together. The aim was to develop many social businesses
quickly, as evidenced by the founder’s articulated ambition to ‘develop 100 new social
businesses every year’ (Taguchi, 2021). Between March 2014 and March 2017, they
gradually spun off eight of their social businesses, which had been run under thedivisional form, into independent companies. This meant that a member who took over abusiness went from being a divisional manager to becoming the president of eachcompany—a social entrepreneur. The organisation transitioned from a social enterpriseto a pure holding company, owning 100% of the equity of each company, and completed
its transformation into a platform. Thus, the first step in transforming the platform was toincrease the autonomy of the members and encourage them to become social
entrepreneurs. Explaining the reasons for the spin-off, the Vice President (Mr. S) said,‘Although divisional managers are the heads of their respective businesses, up tothat time, these businesses were built by the founder and passed on to them.
Therefore, there is still a kind of “curse of the founder.” In that context, we needed
to clarify that “you are the president.”’ (Interview, 12 December 2022)
Accordingly, the two founders changed their role from developing social
enterprises to supporting social entrepreneurs and their social businesses. The President
mainly advised on strategy and the business model, and the Vice President supported thebusiness operations to achieve the goals set out in the milestones. In line with thisorganisational change, several management tools and schemes have been formalised tosupport new social entrepreneurs from joining the group to running their businesses
independently. People who are concerned about a particular type of social problem andwish to address it through business apply to the Social Group. Those who are selected for
employment are potential social entrepreneurs. After that, they receive instruction andtraining, where they are taught the principle of social business and how it differs fromconventional business, as well as how to develop a business model based on a sharedformat. The social impact of each business, as a numerical indicator of how much thebusiness model is expected to improve the social problem it is trying to solve, is defined
based on the principle process of explicit social concept, constraining factors the business15

must consider, and specified business content (see Appendix C). These principles andformat are generalised and conceptualised by the experience of the previous stage ofsocial business development. On this, the Vice President (Mr. S) said,‘We need to communicate our fundamental thinking, which is the essential reason
why we are the Social Group. [...]Essentially, we are here to create a social business,
we need to share this with everyone [newcomers], who need to have firmly in mind
that we are building businesses with the aim of solving social problems. [...]That is
the thought behind this [a set of formalised management tools and schemes].’(Interview, 31 May 2021)
After a few months of instruction and preparation, they begin to develop andpropose a business plan, and it must be approved unanimously at meetings attended by
all social entrepreneurs in the group. If the plan is approved, the new business will beestablished as an independent social enterprise within the group, and he/she will become
the president of the new social enterprise—a new social entrepreneur. Explicitly
articulating the social concept and social impact is important for gaining approval. Several
interviewees, including the President and the Vice-President, commonly stated that‘people who cannot clearly define the “social concept” part of their business format areeasily known by others as not really aiming to solve social problems.’ One social
entrepreneur described an example of a discussion at a meeting where a new business was
rejected as follows.
‘At the last presidents’ meeting, the most repeated question from several people was“Is this really the social concept?” or “It would be better to articulate the social
concept more clearly”. When we create a business, we do so by testing different
hypotheses. Once the business has a bit more clarity, it is necessary to go back tothe social concept. The social concept is an axis that never moves, that clearly states
who it is for and how we wish the situation to be, and then if business model A fails,
there might be B or C next. We all know that if the axis is not clear, the businesswill inevitably be vague, so it is important to make that clear.’ (Interview, 8September 2021)
Once a business plan has been approved, the new company receives up to JPY 15
million (approximately EUR 102,000) in grants from the Group. A pay-forward system
has been introduced to enable this, whereby funds collected from the profits of existing
businesses, at the discretion of the social entrepreneurs, become seed funds for the new
business within the Group (see Appendix D). As the business is operationalised, eachcompany’s financial indicators, as well as the social impact defined at the planning stage,
are measured monthly (see Appendix E). To support these performances and stabilise thebusiness, specialised departments are set up within the group, including human resources,
legal and accounting. In addition, regular meetings are arranged for four or five social
entrepreneurs in pairs to share their current situation, performance and challenges.
In this sense, since its transformation into a platform, the number of social
businesses developed by the Group has increased from 8 to 42 in August 2022. Many newsocial entrepreneurs had a similar experience with the university age of their founders.
For example, there is a social entrepreneur who tackles the problem of homeless people
by helping them find jobs and housing. When she was in high school, she first saw
homeless people in central Tokyo and wondered why they had to sleep outside. She gavethem the little money she had but it could not help them. This question led her to study
16

poverty and homelessness at university, and she also participated in NPO activities like
serving food to homeless people. With these experiences, she could not find a job in aconventional company like the ones around her and stay away from the problem ofhomelessness.
‘I did a bit of job hunting for so-called big companies and when the interviewer
asked me, “Is this what you really want to do?”, I felt it was not. I cannot lie tomyself. [...] I also thought that although NPO activities can do something for theimmediate, it’s hard to solve the root problems [...] So when I was considering things
like why these problems occur, I understood that it’s inherent in the social structure.
Well, I’m not sure I was thinking exactly that at the time, but I felt that a businesscould involve a much larger number of people. [...] Then I started thinking about
how I could combine the problem of homelessness with work and business to finda sustainable solution, and that’s when I met the Social Group. I thought this would
be the right place to do what I really want to do, and that is why I am here.’(Interview, 20 February 2023)
In this manner, new social entrepreneurs concerned with a variety of social
problems, such as environmental degradation, the homeless, the disabled, out-of-school
children and many others, felt that they could realise their aspirations to address social
problems and joined the Social Group (see Appendix B for the social issues addressed byeach company). For these young entrepreneurs, who were aware of social issues but had
little business experience and funding, the Group was an attractive place with its
accumulated business know-how, support for start-up financing, operation and sharing of
information with other entrepreneurs.
However, while this support encouraged these young entrepreneurs, there is no‘best answer’ that will guarantee the success of all social enterprises, as social issues andbusiness models vary widely. Some business models were recognised at the planningstage as having the feasibility to realise the social concept and generate social impact.
However, once they entered the operational phase, many social entrepreneurs
encountered financial difficulties just as the founders had experienced in the previous
period. In particular, under the pay-forward system, which was designed to provide lessexperienced social entrepreneurs with financial support from experienced, skilled social
entrepreneurs who have succeeded in generating profit and social impact, those‘unstabilised’ businesses caused unexpected problems. The President (Mr. T) explained
his views on this issue as follows:‘It is not easy to make a profit and it can take many years. It takes a few years at theearliest, but it can take 5 or 6 years, depending on various factors. If one cannot
make a surplus profit, they feel that all they can do is let the group members do thework for them and that they are not contributing to the community[group].[…]
Despite this feeling of not contributing, they have the right to attend the president’s
meeting [the highest decision-making body] and have a vote on important decisions
such as whether to approve starting a new business. Then they feel “I’m no good.”
If this goes on for several years, however, the sense of self-contribution andpsychological security towards the community [the group] diminishes. This is asignificant problem that needs to be addressed.’ (Participant observation, 8
December 2022)
Another problem arises for those who have succeeded in making a profit and have17

turned to the provision side. Since the distribution of surplus profits to the common purse
was at each social entrepreneur’s discretion, in businesses that operate successfully andgenerate profits, entrepreneurs have to decide whether to send the profits to the common
purse or reinvest them to expand their businesses. On the one hand, the allocation of
profits to the common purse is consistent with the original aim of the pay-forward system
to promote mutual support among social entrepreneurs. On the other hand, reinvesting
surplus profits in their businesses will expand business activities that address social
problems, thereby creating more social impact. The founders described this as ‘double
justice’ and the selection of social entrepreneurs under it.
‘In recent years, the scale of social impact has been declining, as some social
entrepreneurs have been more concerned with the justice of allocating profit to thecommon purse rather than reinvesting it.’ (Vice President, interview, 12 December
2022)
This quote shows that the Vice President (Mr. S) problematises the decline of social
impact due to the social entrepreneurs not expanding their business, instead ofappreciating their help to the new and unskilled social entrepreneurs. Considering thisrecognition, the World Congress was held in August 2022; it is a formal meeting held
twice a year and attended by all the group’s social entrepreneurs to discuss and decide on
the group’s most important issues. At the Congress, the two founders shared theirreflections with the participants on the small social impact they had. Based on thefounders’ proposal, social entrepreneurs discussed and decided on substantial
organisational change again.
5.4 Summary
Overall, our empirical findings show a tendency to make explicit the essence ofsocial business consistent with its definition: to solve social problems using businessmethods. As shown in Figure 1, this involves a journey to identify an area of overlap
between two norm circles, the pursuit of economic value and the pursuit of social value,
and the enforcement and enforcement by actors to increase overlapping boundaries.
Although the two founders had strong aspirations to address social problems bydonating business success, their first stage—a real agent business—did not motivate themmuch to expand the business scale, as it was perceived as disconnected from the social
problem. In other words, two norm circles for the pursuit of economic value and social
value were separated, and their real agent business was only a small part belonging to thenorm circle for economic value.
Figure 1: Tendency towards increasing norm circle of ‘economic value for social value’
Real estate agent
Social enterprise
Platform

18

Source: Authors’ elaboration
This led them to take the next step: to become a social enterprise, integrating social
issues into the business value chain. By doing that, they were able to see the poor farmers
in Myanmar, the single mothers in Bangladesh and the discriminated foreign students
improve their lives alongside their sourcing, manufacturing and service delivery. Thissignifies an overlap between two norm circles for the pursuit of economic value and social
value, that is, extending business activity leads to increasing numbers of people needing
help. Although some businesses achieved this ideal state, the example of their financial
crisis in the Great East Earthquake and the garment business shows that the overlapping
boundaries between the two norms are always fraught with the risk of becoming smaller
and more separate from each other. As normative intersectionality grows, there is a needfor reflexive individual agency (Elder-Vass, 2010, p. 143). This is shown in our case,where the founders repeatedly asked themselves ‘What are we in business for?’ when
faced with challenges. This reflexivity clarified their understanding of the relationshipbetween ends and means: they were in business to solve social problems. Here, the valueof ‘economic value for social value’ was perceived as a normative principle in the processof actors’ searching for the creation of ‘a path that balances normative commitments thatare in tension with each other’ (Elder-Vass, 2010, p. 149).
The transformation into a platform is nothing more than the actors endorsing andenforcing the norm of ‘economic value for social value’ to expand the circle by gathering
more social entrepreneurs and social enterprises. At this stage, the founders articulated
that ‘social business, that is, solving social problems is the end, and conducting businessis the means, is the reason of the Social Group.’ And to share this thought with newcomers,
they developed a series of management tools and schemes to embody this reason,
including instruction, training, business planning format, performance management
system and pay-forward system. Through these practices, they aimed to provide
knowledge, skills and information on developing social business, as well as financial
support to new social entrepreneurs. In this way, the means–end relationship of social
value and economic value, that is, the pursuit of ‘economic value for social value,’ istaken for granted, and thus, institutionalised as the normative value of the organisation.
The social group, with this normative value, is the right place for those young, lessexperienced in business skills and funding, but with a concern for a certain social problem
and a desire to address it through business.
Normative institutions flourish based on increasing shared commitments among theparties and the shaping of identities for the actors involved (Scott, 2013, p. 178). The
increasing participation of social entrepreneurs and other members, as well as the numberof social enterprises, shows that the normative value of ‘economic value for social value’of the organisation certainly has the power to expand the boundary of the circle. However,
our case also shows that this process is accompanied by iterative struggle and change.
First, the evolution of the Social Group has shown three substantially different businessand organisational forms. It started as a real estate agency, transformed into a social
enterprise and became a platform. In addition, as we showed in the example of thefinancial crisis in the social enterprise stage and the suffering of many young social
entrepreneurs who are unable to stabilise their business, there is a constant and inevitableneed for change as social enterprises develop.
Throughout its process, the calculation of economic profit and social impact has
been implicated. We propose that the provision of visibility and calculability by19accounting calculation can be one of the mechanisms that generates the power ofnormative value of ‘economic value for social value’. In the following section, we present
a retroductive analysis of the mechanism responsible for the iterative struggle and change
observed in our case study.

6 Retroductive analysis
6.1 Accounting calculation as actual norm circle boundary
The norm circle has the emergent property or causal power to produce a tendency
whereby individuals internalise the norm, and then endorse and enforce the norm throughbehaviour (Elder-Vass, 2010, 2012, 2022). The actual norm circle boundary, defined asthat one might seek to establish the network of interlinked individuals who actually doendorse and enforce the norm concerned, ultimately determines when actual endorsing
and enforcing behaviour is likely to occur (Elder-Vass, 2012, p. 26). Calculating
economic profit and social impact is crucial in determining the boundary of the two norm
circles, which are defined in terms of positive and negative results. That is to say, apositive result is indicative of an outcome within the circle, while a negative result is
indicative of an outcome outside the circle (Figure 2).
Figure 2: Accounting calculation as actual norm circle boundary

Source：Authors’ elaboration
In any social business, it is imperative to recover the initial costs and make aneconomic profit. Generating profit by subtracting costs from revenue is the desired
outcome as it can expand the boundary of the circle for the pursuit of economic value.
The actors’ endorsement and enforcement of the expansion of this norm can be observedin a variety of practices. Social entrepreneurs were provided with a certain amount of seedfunding if their proposals were accepted. Thereafter, the cash balance was tracked every
month and placed at the top of the performance management system (Appendix E). If thebalance reached zero, the business itself must stop, and, if social entrepreneurs werewilling, they had the opportunity to propose another business plan to solve the sameproblem. Regarding the need for cash flow management, the Vice President said thefollowing:‘As the president of each social enterprise, it is clear that they have to run theirbusiness by seeing their real cash flow. So, it was decided that all social
20entrepreneurs had to have a bank book. When they had a bankbook, they started tosee how much cash they had left and they started to feel a real sense of reality inrunning the business.’ (Interview, 12 December 2022)
To help social entrepreneurs get their businesses off the ground and make a profit
quickly, there is a milestone management system that outlines periodic goals andmanagement strategies to be implemented at each stage (see rows of ‘Steps of Business,’‘Things to do,’ and ‘Recruitment’ in Appendix E). The support team set up by the groupand headed by the Vice President provides advice and information when social
entrepreneurs face problems in achieving goals at any stage. In this sense, recouping
initial costs and generating economic profits is a norm shared by all members.
Social impact, in our case, is defined as ‘the numerical representation of how much
impact we have had on the social problem we are trying to solve’ (Taguchi, 2021, p. 76).
The founders of the Social Group state that ‘a company that does not set social impact ortrack it numerically is a company that is not seriously pursuing it’ and ‘social businessmeans a business that has social impact as a management indicator’ (Taguchi, 2021, p.
249). Therefore, like the economic profit calculation, making a positive result, that is,constantly increasing the social impact, is the desirable outcome for the expansion of thecircle for pursuing economic value.
In each social business, the social impact must be clearly defined at the proposal
stage (Appendix C). It influences whether the business plan is accepted or rejected by thedecision-making body, which comprises all social entrepreneurs in the group.
Additionally, social impact is integrated into the performance management system(Appendix E). The social impact defined at the onset of the business plan should bemeasured monthly and disclosed throughout the group; every employee, including parttime employees, must have access to this information.
In addition to each social enterprise, there is consideration of the increasing social
impact at the collective level. This is evident in their stated project to ‘create 100 social
enterprises a year’ and their organisational changes to become a platform for theembodiment of the project. At this collective level, social impact was recognised as thenumber of social problems that they addressed. Here, social impact is the result of how
much a group has contributed to social problems.
In summary, the calculation of economic profit and social impact, which isembodied in a variety of management tools and schemes, makes the pursuit of economic
value and social value visible. This visibility encompasses both positive and negative
results, which distinguish between those within and outside of the circle. It has an inherent
causal power to influence actors to enforce and endorse the norms, thereby expanding its
boundaries.
6.2 Calculating hybrid as norm circle for ‘economic value for social value’Our empirical findings indicate a tendency towards expanding the norm circle of‘economic value for social value.’ We have also analysed that the calculations for
economic profit and social impact may have inherent causal power to influence actors’
enforcement and endorsement of the two norm circles. Given these considerations, ahybrid form of calculation that incorporates economic profit and social impact in a
unified manner may be posited as a potential mechanism through which the value of‘economic value for social value’ exerts its causal power.
In their transformation from a real estate agency to a social enterprise, they are21

committed to integrating social issues into their business activities, and their social
impact must be clearly defined in terms of their contribution to the social problems they
address. Integrating social issues into business activities means that activities togenerate and increase social impact define how economic revenue and costs, and hence
profit, are calculated. Therefore, the calculating hybrid that influences the boundary of‘economic value for social value’ can be shown in Figure 3.
Figure 3. Calculating hybrid as a norm circle for ‘economic value for social value’

Source: Authors’ elaboration
As illustrated in Figure 3, the calculating hybrid comprises two distinct patterns,
designated as ‘① revenue defined by social impact’ and ‘② cost defined by social impact’.
For example, in the case of shared housing, social impact is defined as an increase in thenumber of foreign residents while maintaining a certain proportion of foreigners andJapanese. This means that social impact defines how revenue is generated; that is, theirrevenue model should be based on attracting more foreigners to stay for a certain period
rather than having fewer people stay for a relatively long period. The President of the
Shared House said,‘In terms of profit, the initial costs are set up so that the longer people stay, the morestable and the better the profit, but we don’t set it up so that people stay for a longtime. I’d be happy if they stayed for a long time, but we’re not in the “let them stayfor a long time” business. […] Our social impact is the number of people who stayin the house. In a situation where the number of rooms is fixed, it’s important whostays and how often. Long-term stability is important if you need the profit, but what
is our purpose? So going round and round in a short period of time is a good way tomake a social impact. Also, as a business value and as a service value, there isactually a value to the share house, because people change regularly, it changes andupdates as a community, and even though people have lived here for a year, they’ve
become friends with 10 or 20 foreigners, and for them that’s the value. So when we
think about service value and social impact, we don’t take the easy way out to makea profit, we try to make the profit we want to make.’ (Interview, 4 March 2023)
The stream of social businesses that set up the social impact from the customer’sside and the user of the product or service have one thing in common: the social impact
defines and constrains revenue. In addition to shared housing, other examples include
recycling children’s clothing, renewable energy and garments made from nature-friendly
22materials. This pattern is shown by ① in Figure 3.
In another category of business, in which the social impact is defined from thesourcing and manufacturing side of the product or service, the social impact defines how
and how much the cost would be (marked as ② in Figure 3). In their business of sourcing
materials from farmers in Myanmar, the members realised through their research on ruralvillages that the root cause of poverty was financial debt. Farmers were forced into debt
because they could not make a living owing to the low market prices at which their crops
were sold. Poor farmers buy commodities not at the market price, but at the ‘farmer’s
price’ to get out of debt and have a stable income, which is calculated based on the
farmer’s cost of living and cultivation. As the farmer’s price is much higher than themarket price, it is necessary to develop high-priced products and formulate high-valueadded businesses. We described a similar event in which members had to change theirbusiness model from matching clothes to baby gifts. Maintaining the recruitment andnumber of single mothers and low income were necessary and constraining elements inmaking such a business model change. Many businesses providing jobs for people living
in developing countries such as Bangladesh, Myanmar, Tanzania, Burkina Faso, andpeople living in Japan who have difficulty finding jobs, including the homeless, refugees,
and the disabled, fall into this category.
In this way, the hybrid calculation of ‘economic value for social value’ can beconceived as the integration of social impact into the calculation of economic profit. A
critical particularity of the formula is that social impact defines either revenue or cost.
Under this mechanism, the desired outcome is to achieve a positive economic result incondition of a positive social impact.

7 Retrodictive explanation
The final stage in identifying the structures and mechanisms that have causal power
is to provide retrodictive explanations of how the mechanism is responsible for producing
events (Baker and Modell, 2019; Elder-Vass, 2012; Lawson, 1997). This section presents
a retrodictive explanation of the observed struggle and change, as evidenced in theempirical description, concerning the proposed mechanism, as illustrated in Figure 3.
As a mechanism, norm circles are causally significant because they determine
whether and when actors are subjected to the endorsement and enforcement of the norm
(Elder-Vass, 2010, p. 129, italic added). According to the formula in Figure 3, the desired
outcome is that the economic value is positive, provided that the social impact defines therevenue or cost. In an ideal state, an increase in economic profit causes an increase insocial impact, both at the individual business level and at the collective level of the group.
This will expand the overlapping boundaries of the circle, thereby exerting a causal
influence.
However, achieving this ideal outcome is difficult because many social problems
are at the root of inefficiencies (Yunus, 2008). Including social impact in the economic
profit formula leads to inefficiency in the calculation. Thus, struggle and change can be
explained as occurring when actual outcomes are distant from this ideal state. At the levelof the individual business, the discrepancy between the desired and actual outcomes
becomes evident as a deficit in economic profit. Considering this visibility, actors enforce
and endorse the norm through their actions to restore the deficit. More specifically,changes occur when actors are taken to improve one side of the economic profit
calculation, which is not defined by social impact. In other words, if the social impact
defines revenue, their action would be considered on change the cost side; conversely, if
23the social impact defines cost, their action would be considered on change the revenue
side. These changes can be incremental or radical in nature.
The event of the shared house suffering deficit due to the impact of the earthquake
shows little scope to increase revenue when the social impact defines the revenue side(the pattern ① in Figure 3). This is because the revenue is defined by the number offoreign residents. Thus, in this case, there has been an incremental change in the businessmodel by adopting measures to reduce costs. However, the event of the withdrawal of theclothing market indicates that actions to survive the deficit are accompanied by radical
change. This is the case for social impact that defines the cost side (pattern ② in Figure3). In this case, as social impact is defined as the number of people recruited who havedifficulty finding work, maintaining their livelihoods becomes the basis for business costs,
which are usually higher than the market price. Therefore, developing a business in aconventional manner, such as by competing on price, effectuates a deficit. To make aprofit under the condition of social impact, a radical change is imperative, from theproduct to the target market, to develop a novel business model. It is difficult to acquire
such skills without being a skilled businessman.
The difficulty in achieving an ideal state, which makes positive economic profits
conditional on the social impact on individual businesses, has influenced those involvedin trying to achieve it at a collective level. Thus, organisational change (transformation to
the platform) can be explained as a move from individual to collective outcomes. If thesocial impact is the sum of the social problems managed by the organisation, which isseparate from the economic profit shown in Figure 3, then the transformation successfullyincreases social impact. However, the problems associated with the pay-forward system,
as shown in the empirical description section, suggest that the collective outcome should
be based on the positive outcomes of each enterprise. Specifically, the mechanism shownin Figure 3 should be the norm for achieving a collective outcome.
Thus, accounting, by calculating social impacts and economic value andincorporating the two acts as a normative mechanism, determines not only whether andwhen, but also how actors endorse and enforce the norm, leading to repeated struggles
and changes observed in actual events.

8 Concluding remark
Based on an in-depth examination of the development of social business, thisresearch empirically validates that accounting based calculating hybrid functions as anorm mechanism―an actual norm circle― in the pursuit of institutional value of‘economic value for social value.’ This value proposition emanates from the fundamental
definition of social business as the application of business methodologies to advancesocial well-being (Yunus, 2008). Employing the conceptual framework of ‘norm circles
and their intersectionality’ (Elder-Vass, 2010, 2012, 2022) and the theoreticalunderpinning of critical realism, this study discerns the normative mechanism that exerts
causal influence on the observed tendency in the empirical context.
This research contributes to the exploration of accounting in upholding value
pluralism. While there are distinct approaches to embrace value pluralism mediated byaccounting and calculation, which constitutes a ‘compromise’ involving diverse values,
there is always a risk associated with transitioning from the initial intention of hybridity
and hybrid organisation, aimed at embracing the pluralism of values, to the outcome ofvalue purification, due to compromising by their nature harbouring fragility (Annisette etal., 2017; Aquino & Batley, 2022; Baud & Lallemand-Stempak, 2024; Kastberg
24

Weichselberger et al., 2023; Lepori & Montauti, 2020). In contrast, our value propositionof ‘economic value for social value’ entails a normative dimension where the pursuit ofvalue pluralism is taken for granted and institutionalised, thereby encountering fewer
challenges. By contending that accounting may serve as a normative mechanism in the
pursuit of this value pluralism, we provide evidence that accounting calculations ofhybrids entail the emergence of ‘a new modes of governing’ (Miller et al., 2010).

References
Ahrens, T., & Ferry, L. (2022). Accounting, hybrids and hybridity –attending to the value dimension in institutional logics. Qualitative
Research in Accounting & Management, 19(5), 696–715.
Anderson-Gough, F., Edgley, C., Robson, K., & Sharma, N. (2022).
Organizational responses to multiple logics: Diversity, identity andthe professional service firm. Accounting, Organizations andSociety, 103, 101336.
Annisette, M., Vesty, G., & Amslem, T. (2017). Accounting values,
controversies, and compromises in tests of worth. In Justification,
evaluation and critique in the study of organizations (Research in theSociology of Organizations, Vol. 52, pp. 209–239). Leeds: Emerald
Publishing Limited.
Aquino, A. C. B. de, & Batley, R. A. (2022). Pathways to hybridization:
Assimilation and accommodation of public financial reforms in
Brazil. Accounting, Organizations and Society, 98, 101297.
Armendáriz, B., & Szafarz, A. (2009). Microfinance Mission Drift?
https://www.microfinancegateway.org/sites/default/files/ mfg-enpaper-microfinance-mission-drift-apr-2009_0.pdf
Baker, M., & Modell, S. (2019). Rethinking performativity: A criticalrealist analysis of accounting for corporate social responsibility.
Accounting Auditing & Accountability Journal, 32(17).
Battilana, J., & Dorado, S. (2010). Building sustainable hybridorganizations: The case of commercial microfinance organizations.
Academy of Management Journal. Academy of Management, 53(6),1419–1440.
Battilana, J., & Lee, M. (2014). Advancing research on hybrid organizing –insights from the study of social enterprises. The Academy ofManagement Annals, 8(1), 397–441.
Battilana, J., Besharov, M., & Mitzinneck, B. (2017). On hybrids andhybrid organizing: A review and roadmap for future research. In R.
Greenwood, R. E. Meyer, T. B. Lawrence, & C. Oliver (Eds.), The
SAGE handbook of organizational institutionalism (2nd ed., pp.128–
25162). Thousand Oaks, California: Sage Publications, Ltd. Baud, C.,& Lallemand-Stempak, N. (2024). Quantitative technologies andreflexivity: The role of tools and their layouts in the case of credit
risk management. Accounting, Organizations and Society, 112,101533.
Bhaskar, R. (1979). The possibility of naturalism: A philosophical critiqueof the contemporary human sciences. New York, NY: Routledge.
Boltanski, L., & Thevenot, L. (2006). On justification: Economies of worth.
Princeton, NJ: Princeton University Press.
Bunge, M. (2003). Emergence and convergence: Qualitative novelty andthe unity of knowledge. Toronto: University of Toronto Press.
Busco, C., Giovannoni, E., & Riccaboni, A. (2017). Sustaining multiple
logics within hybrid organisations: Accounting, mediation and thesearch for innovation. Accounting, Auditing & Accountability
Journal, 30(1), 191–216.
Carlsson-Wall, M., Kraus, K., & Messner, M. (2016). Performancemeasurement systems and the enactment of different institutional
logics: Insights from a football organization. Management
Accounting Research, 32, 45–61.
Casarin, V. (2023). Calculative frames, compromising metrics, and themultiple values of innovation: The case of technology incubation in
the UK. Accounting, Organizations and Society, 111, 101479.
Chenhall, R. H., Hall, M., & Smith, D. (2013). Performance measurement,modes of evaluation and the development of compromising accounts.
Accounting, Organizations and Society, 38(4), 268–287.
Danermark, B., Ekström, M., & Karlsson, J. C. (Ed.). (2002). Explaining
society: Critical realism in the social sciences. Routledge.
Edwards, P. K., O’Mahoney, J., & Vincent, S. (Ed.). (2014). Studying
organizations using critical realism: A practical guide. OUP Oxford.
Elder-Vass, D. (2010). The causal power of social structures emergence,
structure and agency. Cambridge, UK: Cambridge University Press.
Elder-Vass, D. (2012). The reality of social construction. Cambridge, UK:
Cambridge University Press.
Ezzamel, M., Robson, K., & Stapleton, P. (2012). The logics of budgeting:
Theorization and practice variation in the educational field.
Accounting, Organizations and Society, 37(5), 281–303.
Faulconbridge, J. R., & Muzio, D. (2021). Valuation devices and the
dynamic legitimacy-performativity nexus: The case of PEP in the
English legal profession. Accounting, Organizations and Society, 91,
101224.
Ferry, L., & Slack, R. (2021). (Counter) accounting for hybrid organising:26

A case of the great exhibition of the north. Accounting, Auditing &Accountability Journal, 35(3), 681–705.
Fischer, M. D., & Ferlie, E. (2013). Resisting hybridisation between modesof clinical risk management: Contradiction, contest, and the
production of intractable conflict. Accounting, Organizations andSociety, 38(1), 30–49.
Ghio, A., & Verona, R. (2022). Unfolding institutional plurality in hybridorganizations through practices: The case of a cooperative bank. The
British Accounting Review, 54(4), 101041.
Glynn, M. A., Hood, E. A., & Innis, B. D. (2020). Taking hybridity for
granted: Institutionalization and hybrid identification. In Research inthe sociology of organizations (pp. 53–72). Leeds: Emerald
Publishing Limited.
Grimes, M. G., Williams, T. A., & Zhao, E. Y. (2019). Anchors aweigh:The sources, variety, and challenges of mission drift. AMRO, 44(4),819–845.
Grossi, G., Vakkuri, J., & Sargiacomo, M. (2022). Accounting,performance and accountability challenges in hybrid organisations:
A value creation perspective. Accounting, Auditing & Accountability
Journal, 35(3), 577–597.
Jordan, S., Jørgensen, L., & Mitterhofer, H. (2013). Performing risk and the
project: Risk maps as mediating instruments. Management
Accounting Research, 24(2), 156–174.
Kastberg Weichselberger, G., Fırtın, C. E., & Bracci, E. (2023).
Hybridisation, purification, and re-hybridisation: A study of shifting
registers of value. The British Accounting Review, 101201.
Klein, S., Schneider, S., & Spieth, P. (2021). How to stay on the road? Abusiness model perspective on mission drift in social purpose
organizations. Journal of Business Research, 125, 658–671.
Kraatz, M. S., Flores, R., & Chandler, D. (2020). The value of values for
institutional analysis. Academy of Management Annals, 14(2), 474–
512.
Kraus, K., Kennergren, C., & von Unge, A. (2017). The interplay between
ideological control and formal management control systems – A casestudy of a non-governmental organisation. Accounting,
Organizations and Society, 63, 42–59.
Kurunmäki, L. (2004). A hybrid profession—the acquisition ofmanagement accounting expertise by medical professionals.
Accounting, Organizations and Society, 29(3), 327–347.
Kurunmäki, L., & Miller, P. (2011). Regulatory hybrids: Partnerships,
budgeting and modernising government. Management Accounting27

Research, 22(4), 220–241.
Lawson, T. (1997). Economics and Reality. New York, NY: Routledge.
Lepori, B., & Montauti, M. (2020). Bringing the organization back in:
Flexing structural responses to competing logics in budgeting.
Accounting, Organizations and Society, 80, 101075.
Maran, L., & Lowe, A. (2021). Competing logics in a hybrid organization:
ICT service provision in the Italian health care sector. Accounting,
Auditing & Accountability Journal, 35(3), 770–800.
Miller, P. (2004). Governing by numbers: Why calculative practices matter.
In A. Amin & N. Thrift (Eds.), The Blackwell cultural economy
reader (pp. 179–190). Oxford, UK: Blackwell Publishing Ltd.
Miller, P., Kurunmäki, L., & O’Leary, T. (2008). Accounting, hybrids, andthe management of risk. Accounting, Organizations and Society,33(7), 942–967.
Miller, P., Kurunmäki., L., & O’Leary, T. (2010). Calculating hybrids. In
A. Higgins & W. Larner (Eds.), Calculating the social: Standards
and the reconfiguration of governing (pp. 21–37). London, UK:
Palgrave Macmillan.
Millo, Y., Power, M., Robson, K., & Vollmer, H. (2021). Editorial:
Themed section on accounting and valuation studies. Accounting,
Organizations and Society, 91, 101223.
Moss, T. W., Short, J. C., Payne, G. T., & Lumpkin, G. T. (2011). Dual
identities in social ventures: An exploratory study. Entrepreneurship
Theory and Practice, 35(4), 805–830.
Pache, A.-C., & Santos, F. (2013). Inside the hybrid organization: Selective
coupling as a response to competing institutional logics. Academy ofManagement Journal, 56(4), 972–1001.
Polzer, T., Meyer, R. E., Höllerer, M. A., & Seiwald, J. (2016). Institutional
hybridity in public sector reform: Replacement, blending, or layeringof administrative paradigms. In How institutions matter! (Researchin the Sociology of Organizations, Vol. 48B, pp. 69–99). Leeds:
Emerald Group Publishing Limited.
Santos, F., Pache, A.-C., Birkholz, C. (2015). Making hybrids work:
Aligning business models and organizational design for social
enterprises. California Management Review, 57(3), 36–58.
Sargiacomo, M., Corazza, L., D’Andreamatteo, A., & Torchia, D. (2022).
Megaprojects and hybridity. Accounting and performance challenges
for multiple diverse actors and values. The British Accounting
Review, 101152.
Sayer, A. (1992). Method in social science: A realist approach (Second
edition). Routledge.
28

Sayer, A. (2000). Realism and social science. Thousand Oaks, California:
SAGE Publications.
Scott, W. (2013). Institutions and organizations: Ideas, interests, andidentities (4th ed.). Thousand Oaks, California: SAGE Publications.
Simmel, G. (1955). Conflict and the Web of Group-Affiliations (Translatedby Wolff, K. H. & Bendix, R.). The Free Press.
Smith, W. K., & Besharov, M. L. (2019). Bowing before dual gods: How
structured flexibility sustains organizational hybridity.
Administrative Science Quarterly, 64(1), 1–44.
Smith, W. K., Gonin, M., & Besharov, M. L. (2013). Managing socialbusiness tensions: A review and research agenda for social
enterprise. Business Ethics Quarterly: The Journal of the Society for
Business Ethics, 23(3), 407–442.
Stark, D. (2009). The sense of dissonance. Princeton, NJ: Princeton
University Press.
Taguchi, K. (2021). 9 Wari no shakaimondai wa bijinesu de kaiketsu dekiru(Ninety per cent of social problems can be solved by business). PHP
institute, Inc.
Thomson, I., Grubnic, S., & Georgakopoulos, G. (2014). Exploring
accounting-sustainability hybridisation in the UK public sector.
Accounting, Organizations and Society, 39(6), 453–476.
Trevisan, P., & Mouritsen, J. (2023). Compromises and compromising:Management accounting and decision-making in a creative
organisation. Management Accounting Research, 100839.
Weichselberger, G. K., & Lagström, C. (2022). Accounting in and forhybrids. Observations of the power of disentanglements. Accounting
Auditing & Accountability, 35(3), 706–733.
Wry, T., Lounsbury, M., & Jennings, P. D. (2014). Hybrid vigor: Securing
venture capital by spanning categories in nanotechnology. Academyof Management Journal, 57(5), 1309–1333.
Yunus, M. (2008). Creating a world without poverty: Social business andthe future of capitalism. Global Urban Development Magazine, 4(2),16–41.
Yunus, M., Moingeon, B., & Lehmann-Ortega, L. (2010). Building social
business models: Lessons from the grameen experience. Long Range
Planning, 43(2), 308–325.
Zachariadis, M., Scott, S., & Barrett, M. (2013). Methodologicalimplications of critical realism for mixed-methods research. The
Mississippi Quarterly, 37(3), 855–879.

29

Appendix
Appendix A: Data collection
1. Semi-structured interviews
No.
Data

Interviewee

Time (minutes)

1.

31 May 2021

Vice President

90

2.

09 September 2021

Social entrepreneur A

60

3.

10 September 2021

Social entrepreneur B

75

4.

14 September 2021

Social entrepreneur C60

5.

22 October 2021

Start-up studio member A

40

6.

16 November 2021

Start-up studio member A

60

7.

09 March 2022

Start-up studio member B

90

8.

28 March 2022

Vice President and start-up studio member B

90

9.

23 June 2022

Start-up studio member B

160

10.

30 September 2022

Social entrepreneur D

180

11.

15 November 2022

Start-up studio member B

60

12.

12 December 2022

Vice President

140

13.

19 December 2022

Social entrepreneur D

60

14.

20 February 2023

Social entrepreneur E

75

15.

28 February 2023

Social entrepreneur F

120

16.

04 March 2023

Social entrepreneur G

120
30

17.

08 March 2023

Social entrepreneur H

120

18.

14 April 2023

Social entrepreneur G

90

19.

2 September 2023

Vice President

60

20.

30 September 2023

Vice President

60

21.

13 October 2023

Vice President

90

22.

17 November 2023

Social entrepreneur I

90

23.

20 November 2023

Vice President

90

24.

18 December 2023

Vice President

60

25.

15 January 2024

Social entrepreneur J

60

26.

15 January 2024

President

120

27.

15 January 2024

A member preparing to start up

30

28.

25 January 2024

Social entrepreneur J

60

29.

13 February 2024

Vice President

60

30.

11 March

Vice President

120

31

2. Participant observation
No.
1.

Data
24 October 2020

2.
3.

30 March 2021

4.
5.
6.
7.

01 June 2022
01 July 2022
08 December 2022
17 December 2022
26 January 2023

8.
14 October 2023

Event
Symposium held by an outsideorganisation
Seminar held by the group
Workshop for introducing social
businesses and social entrepreneurs
Workshop for introducing social
businesses and social entrepreneurs
Seminar held by a company within thegroup
Seminar held by a company within thegroup
Workshop for introducing social
businesses and social entrepreneurs
Event to promote social business incollaboration with university andadministrative institutions.

Main speaker(s)President and other socially influential
speakers
President and other social activists
Social entrepreneur D

60
90Social entrepreneur F

90

Two founders and social entrepreneur G

240

Social entrepreneurs G and H

180

Social entrepreneur I

80

Two founders and more than 40 social
entrepreneurs

480

Appendix B: Social businesses conducted by the group
Business
Social problems to be solved
Contents of businessno.
1
People have thoughts and concerns
Planning, development and operation of
about social issues but face difficulty in crowdfunding businesstaking action2
Low income for organic farmers in
Organic farming, harvesting and farming
urban and suburban areas
experience business

32

Time (minutes)
30

Social impact
Number of crowdfunding projects andsupporters
Improve the annual income of as many
farmers as possible by 1 million yen

3

Penetration rate of renewable energy is
only 20%
Employment problems of people with
low incomes in urban areas of
Bangladesh
Global warming caused by humanemissions of carbon dioxide

Solar power generation business andsolar leasing business
Design, inspection and sales of leather
products

Amount of natural energy generated andnumber of solar power installations
Number of direct employees and numberof units produced

Sale of electricity that does not emit
CO2

6Problem of ‘invisible’ homeless people
who cannot escape poverty

Human resource introduction business7

Poverty and isolation of refugees inJapan and the indifference of society
Society that discards resources that do
not need to be discarded as garbage

Reuse and recycle sales of electronicequipment
Sale of urban composting kits to create
sustainable food cycles

Number of consumers, carbon dioxide
emissions reduced by switching toelectricity
Number of homeless people employed
and number of homeless people
contacted
Number of refugees employed

4

5

8

9

Garbage problem that causes greenhouse Production and sale of compost
gas and energy emissions

10

Problem of technical intern trainees
suffering in the workplace ordisappearing
Problem of stateless children living in
Malaysia
Society that shuns marital problems as
something that should not be touched
Preventing postpartum depression

11
12
13

Online Japanese language education fortechnical intern trainees
Annotation agency service
Online platform business specializing inmarital problems
Education business for pregnant couples
to ‘prevent’ postpartum depression

33

Amount of food waste reduced, amountof CO2 emissions reduced, number ofregular buyers
Creating a sustainable food cycle thatstarts with the individual throughcomposting
Number of technical intern trainees who
can speak Japanese
Number of stateless children able toacquire the nationality
Number of members of Futarino
Number of students attending parent’s
school14

Discriminatory prejudice against
different cultures and a closed society

15

Young people with low self-esteem andanxiety about working
Problems of people without a place towork due to inexperience and lack ofschooling
Limited availability of jobs for people
with mental and developmental
disabilities
Problem of low self-esteem due to poor
school fit
Increasing number and younger age ofchildren with mental illness

16

17

18
19

20

21

22

23

Problem of building material loss that is
discarded in favour of economic
efficiency
Poverty problem of women who are not
employed owing to a lack of educationand skills
Problems in rural areas that are losing
their function as towns owing topopulation decline
Society where people and environmentfriendly clothing are not the norms

Operation of ‘BORDERLESS HOUSE’,a multinational community house thatcreates a world without prejudice
Human resource introduction business
Manufacture and sale of custom-madeleather goods
Manufacture and sale of small leather
goods
After-school classes and free school
business
Childcare for schoolchildren

Number of cumulative residents

Number of permanent employees,
number of new entries
Number of employees and their family
members employed in Bangladesh
factories, which are production centres
Number of direct employees

Reuse and outlet sales of building
materials

Number of children who are now able tohave their own themes of inquiry
Number of children who have a third
party with whom they can talk about
their true feelings and who notices
changes in themAmount of building materials collected
and resold

Housekeeping service business

Number of mothers employed

Migration support services

Number of people who actually
migrated and number of people
consulted on migration
Number of purchasers of ethicalproducts

Selective sales of people- andenvironment-friendly apparel

34

24

Small farmers with insecure incomes
and those who are unable to get out of
debt
Problem of child labour in Bangladesh
and the negative cycle of poverty
Low rate of social and politicalparticipation in Japan

Production and sale of herbal products
for pregnant and lactating mothers

Livestock deaths and disuse due tolifestyle-related diseases
Decrease in the number of people
working in agriculture
Changing the ‘disposal habit’ of
consumers who consider unnecessary
items as garbage
Problem of enthusiastic teachers giving
up the pursuit of an ideal education
Rural poverty in Africa, where
agriculture does not provide a stable
incomeProblem of former prisoners in Ecuador
who cannot find work

A society where the happiness of cows
makes people happy
Cultivation and sale of agricultural
products
Reuse business of children’s clothing
and baby products

33

Problem of chronic farmer poverty withno solution

Community trade supporting small
farmers in Myanmar

34

Poverty problems faced by farmers inremote rural areas of Myanmar

Operation of agricultural support centres
to help poor farmers

25
26

27
28
29

30
31

32

Production and sale of organic baby
clothes
Influencer office to overcome
indifferenceManagement of educational media andevents for teachers
Platform service for poor rural villages,commercial fruit, and vegetable delivery
business
Production and sales of facial cleansing
soap

35

Number of direct contracts farmer
families, community trade purchase, andtotal herb purchases
Number of direct employees and numberof children of employees
Number of registered transmitters,
number of people who participated in
educational programs, and the total
number of followers
Number of cows rebred; acreage of
farmland reused
Number of jobs and acreage undercultivation on abandoned land
Number of mothers who found us andstarted using recycling
Number of magazine subscribers; thenumber of teachers’ school members
Number of farmers in the group, numberof ‘Alpha Chama Groups’ of small
farmers in Kenya
Number of female ex-prisoners
employed by the company and thenumber of their children who are now
able to attend school.
Annual purchase price, number offarmers under contract, and number offarmers under contract
Number of service users

35

36
37
38
39
40

41
42

Negative cycle of poverty associatedwith education and employment
opportunities
Difficulties in employment for lowincome people in Bangladesh
Employment difficulties of the deaf andhard of hearing in Bangladesh
Employment difficulties of illiterate anddisabled people in Bangladesh
Employment difficulties of single
mothers in Bangladesh
Poverty problems of young single
mothers in Tanzania

Outsourced poultry farming and support
business

Number of contracted poultry farmers
and number of children educatedManufacturing of small leather goods
and bags and apparel products
Manufacture of leather shoes to train
shoemakers
Inspection and OEM contracting

Poverty problems of small farmers in
Cambodia
Poverty problems of sugarcane farmers

Poultry farming outsourcing business

Number of direct employees and numberof their families
Number of direct employees and theirfamilies
Number of direct employees and theirfamilies
Number of direct employees and theirfamilies
Number of single mothers who saved
their target funds and undertook thechallenge to achieve their dreams
Number of farmers on contract

Manufacturing of organic baby clothes
Sanitary napkin manufacturing and sales
business

Entrepreneurial support for social
Number of farmers on contract
business in the Philippines
Source: The group webpage on the introduction of social businesses (accessed on 1 August 2022).
Appendix C: Format of social business model

36

Source: From an internal document
The social business model is developed as the next stage:
1. Defining the social concept (the left-hand side of the figure)This involves answering three questions:• 1-1 Who are the people currently involved in the social issue? What are their problems? What are the causes?
• 1-2 What is the ideal situation when this social problem is solved? What should the society be like in this ideal situation? What will
the people who have been suffering be like in the ideal society?
• 1-3 What is the distance between 1 - 1 and 1 - 2? - This can be a source for solving the social problem, then, what are the possible
solutions?
2. Identifying constraining factors (2. Constraints in the figure)This is the process of identifying the constraining factors that are critical and necessary conditions to achieve the social concept. For
example, in the case of the baby clothing business employing single mothers in Bangladesh, the cost of living for these workers is a37

constraint that determines the price of the products. Identifying constraints can prevent the content of the business from being driven by
the business idea rather than the social concept.
3. Devising business concept and model (the right-hand side of the figure)This involves answering the following questions.
• 3-1 What products/services satisfy the constraints?
• 3-2 Who are the consumers of those products/services? What problems does the consumer face when becoming a customer?
• 3-3 What makes the products/services different from existing products/services? Can they be differentiated?
• 3-4 What are the customer benefits of using the product/service under consideration?
• 3-5 What are the appropriate prices, sales channels, and promotion methods for the product/service?
4. Defining ‘social impact’
Social impact is defined as a numerical indicator of how much the business model is expected to improve the social problem it is trying
to solve. It is defined based on the principle order of ‘social concept → constraints → business model’ shown in the figure. Here, thesocial concept is the most important factor in determining the social impact. In other words, the business model can be changed, but thesocial concept should not be changed.
Appendix D: Pay-forward system

38Source: Illustrated from the website of the organisation (accessed on 1 August 2022).
By becoming members of a group, social entrepreneurs can develop businesses that address social problems by establishing an independentcompany under the group. Appendices F, A, B, C, and so on (surrounded by the blue circles) show how each company conducts a social
business. The ‘surplus profit’ in the diagram (blue in the middle) is known as the common purse and is collected from each company thatmakes a profit and is used to establish new businesses (surrounded by the orange circles), the group’s working environment and welfare. The
president of each company has discretion over whether and how much to contribute to the common purse, considering business performanceand reinvestment in business expansion.
Appendix E: Format of monthly management sheet
Residual operating cash
Initial cash Initial operating cash
¥5,000,000¥9,500,000¥10,000,000

Accumulated Cash Losses－￥5,500,000

Operatingfundbalance ¥10,000,000 ¥9,500,000

Plan
Milestone approval0Month 2020/1
Steps of the Business

Achievement of two consecutive months of nonStart of business within 3 Presentation of winning scenarios within 3–6 consolidated profitability within the first 12
monthsmonthsmonths
1
2
3
1
2
3
4
5
6
7
8
9
10
11
12
2020/2
2020/3 2020/4 2020/5 2020/6 2020/7 2020/8 2020/9 2020/10 2020/11 2020/12 2021/1 2021/2 2021/3 2021/4
Birth phase<Haemostasis>
Crawling phase <Haemostasis>
Waddling phase <Acceleration>
39

Try to test as many hypotheses as possible.
(Speed of execution is everything, do not look
Start as soon as possible to for the right answer)
preserve as much cash (1) Targets (2) Products and services (3)Things to do
flow as possible.
Establishment sales methods
Hiring only part-time when inevitably needed
for business operations.
Recruitment

Don’t hire anyone

Performance
Sales
Sales A
Sales B
MarginGrossmargin ratio
SG&A expenses
Labor cost
Office rent…
…
OthersOperating profit

40

While spending a moderate advertising budget,
ensure steady sales volume.
(4) Acceleration of promotions(5) Establishment of operations
Hiring only vice presidents and founding
members(General employees will be a management
issue. Part-time employees are acceptable)

Operating
profit ratio
Social Impact(Number of XXX)
KPI
A
B
C
…
Source: Taguchi (2021, p. 259), partially revised.

41