Good Food and Good Jobs: How Construct-Based Equivalence and Bounded Flexibility Can Increase Entity-Level Relevance of Social and Environmental Accounting Standards

36 Pages Posted: 10 May 2019

See all articles by Kate Ruff

Kate Ruff

Carleton University - Eric Sprott School of Business

Date Written: April 6, 2019

Abstract

Social impact standards abound and all entail rigid, uniform sets of indicators. Yet research on standardizing has found that those with a balance of rigidity with flexibility are more relevant, longer lasting and more widely adopted. Financial accounting is perhaps the best example of a standard that balances uniformity and flexibility in order to be somehow both the same but different. Despite explicit intention to mimic accounting, social impact standards have remained rigid. This paper asks how accounting accomplished a balance between uniformity and flexibility and if those insights could help produce a flexible, more relevant and more polyvocal impact standard. The study identifies construct-based equivalence and bounded flexibility as two mechanisms at the heart of accounting’s balancing act. To examine how these might work with social impact standards, the study compares a sample of 1110 social impact indicators from 114 organizations to the UN Sustainable Development Goals (SDGs) Global Indicator Framework. Without construct-based equivalence and bounded flexibility only 24% of enterprise-defined indicators match or somewhat match to the SDGs. With construct-based equivalence and bounded flexibility, 100% of indicators can be matched. The study shows that a flexible standard has more relevance. This has implications for the adoption and longevity of impact standard. It also has ethical implications as more perspectives can be voiced through the standard.

Keywords: Uniformity and Flexibility; SDGs; Social Impact; Standards

JEL Classification: M41,

Suggested Citation

Ruff, Kate, Good Food and Good Jobs: How Construct-Based Equivalence and Bounded Flexibility Can Increase Entity-Level Relevance of Social and Environmental Accounting Standards (April 6, 2019). Available at SSRN: https://ssrn.com/abstract=3367614 or http://dx.doi.org/10.2139/ssrn.3367614

Kate Ruff (Contact Author)

Carleton University - Eric Sprott School of Business ( email )

1125 Colonel By Drive
Ottawa, Ontario K1S SB6
Canada

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