MG4F8      Half Unit
Managerial Economics and Quantitative Measurement for Social Entrepreneurs

This information is for the 2025/26 session.

Course Convenor

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This course provides students with a grounding in the management literatures relating to social enterprises and the measurement of their performance. The course introduces social enterprises as hybrid organisations, that is, organisations that have the dual objective of both achieving financial return and impact. The course begins with a focus on markets and market failures, notably externalities and public goods, and introduces the view that social enterprises address market failures. We then consider the analysis of firm costs and the scaling up of the social enterprise. This is related to the strategy of social enterprises, including Porter & Kramer’s work on Shared Value, the Resource Based View and stakeholder theory. We consider the contemporary notion that strategy is concerned with the creation and distribution of value between an organisation’s stakeholders. The course then introduces social accounting and the techniques used to measure the performance of social enterprises. Focusing on the measurement and reporting of impact, we cover topics such as additionality, randomized controlled trials and the cost of capital of social enterprises. This discussion of impact measurement informs our consideration of the reporting of social enterprise performance using tools such as Social Return on Investment (SROI) and Expanded Value Added Statements. We consider the implications of current knowledge relating to social enterprise performance measurement for the role and organisation of social enterprises in today’s business setting. The theory and tools covered in this course inform core courses, including the dissertation course, in the SIE programme and can orient further study by informing the selection of elective courses. 

Course Objectives

Upon successful completion of this course students will be able to:

• Distinguish between alternative theories of the setting of strategy by social enterprises and appraise the merits of each theory.
• Synthesize theoretical and methodological insights, concepts and frameworks for social innovation and enterprise to real world phenomena and social problems through the use of case studies.
• Compare alternative social accounting approaches used for the purpose of reporting the performance of a social enterprise and evaluate the merits of each approach.
• Apply techniques from social accounting to measure impact in such a way that would inform (a) the internal management of the social enterprise and (b) external reporting of performance. 
• Contribute to the successful functioning of a team working on a group project, clearly and fairly demarcating roles and apportioning tasks, to develop a solution to the problem set out in the project brief. 

15 hours of seminars and 20 hours of lectures in the Autumn Term.

This course has a reading week in Week 6 of Autumn Term.

Theoretical material and analytical frameworks from accounting and economics respectively of relevance to social entrepreneurs will be taught in the lecture slots, while the seminars will cover a relevant case study each week. Although the course covers two distinct disciplines, there will be an effort, where possible, to treat the issues in an integrated manner.

In addition, students are expected to attend two introductory sessions, each lasting two hours.

In its Ethics Code, LSE upholds a commitment to intellectual freedom. This means we will protect the freedom of expression of our students and staff and the right to engage in healthy debate in the classroom.

Formative essay in the AT. 

Each week we draw on a variety of required and further readings.  The readings outlined below provide a selection of these readings that will be covered in the course. 

• Barney, J. B. 2018. Why resource‐based theory’s model of profit appropriation must incorporate a stakeholder perspective. Strategic Management Journal, Vol. 39: No. 8: 3305–3325. 
• Logue, D. (2019) Theories of social innovation. Edward Elgar Publishing. 
• Porter, M. E. & Kramer, M. (2011). Creating Shared Value: How to reinvent capitalism—and unleash a wave of innovation and growth Harvard Business Review Vol. 89, No. 1-2:1-17. 
• Rawhouser, H., Cummings, M. & Newberts, S. (2019) Social Impact Measurement: Current Approaches and Future Directions. Entrepreneurship Theory & Practice Vol. 43 No. 1:82-115. 

Suggested pre course reading:  

• Banerjee, A.V. and Duflo, E. (2011), Poor Economics, BBS Publications.
• Cohen, R. (2020) Impact: Reshaping Capitalism to Achieve Real Change, Random House.
• Estrin, S. Laidler, D. and Dietrich, M. (2008) Microeconomics (6th Edition), Pearson; chapter 25, p. 575-586.
• Nicholls, J., Lawlor, E., Neitzert, E. and Goodspeed, T. (2009) A Guide to Social Return on Investment. London: Cabinet Office.

Course participation (10%)

Essay (90%, 3000 words)

Class participation is based around student group presentations of cases.

For detailed assessment information, including all deadlines and timings, please see the relevant course Moodle page. Assessment timings will be available at the start of each term.