Just Measures: A Methodology for Assessing the Global Value Added of Corporate Activities

Abstract

This article accepts the premise of stakeholder theory, which asserts that corporations, like other human-run entities, have obligations to all parties affected by their actions. As such, corporations should be given suitable credit for projects that add value for these stakeholders, as well as held accountable for any damage done. To provide this credit and accountability, measurement is necessary. The methodology of measurement for corporate social value creation is in its infancy. Models are incomplete, measures are not validated, and methods used to estimate net value accumulated from different domains need improvement. This article builds on one model of global value added (GVA), examining what methods are necessary to identify relevant domains, provide valid measures, and combine findings for the wide range of domains encompassed by a corporations’ projects. Once this methodology is successfully established, creation of valid measurement scales will warrant emergence of a subdiscipline in business and economics. To use these scales will be a challenge on yet another level, but the potential for an industry index based not on economic but global measures will exist, allowing for fair and transparent accountability of commercial sector activities to other sectors of society. This has particular implications for the health sector, with its complex web of numerous stakeholders. The measurement modality presented here provides the possibility of evaluating all these health sector entities’ contributions to society.

Keywords: corporate social responsibility, item-response theory, stakeholder theory, health