RESEARCH: Recommendations for Measuring Impact in Social Enterprises within the Creative Industries in Latvia

August 26, 2024

Social enterprises that represent the creative industries are unique because they combine creative ambitions with a social entrepreneurship mission. These enterprises operate not only in the cultural and creative sectors but are also part of the promoters of social entrepreneurship. The arts, culture, and creative industries contribute not only to individual and social life but are also becoming noticeable “players” in the economy.

Evaluating social impact is a complex and multi-layered process, but it is not only crucial for understanding the impact a company has on society but also useful for examining the company’s activities and processes to adjust and plan its internal and external goals in the future.

Asnāte Kalēja, a graduate of the Latvian Academy of Culture and Riga Technical University, focused on social enterprises in the cultural and creative sector in her master’s thesis, exploring how social impact is measured within them. With the researcher’s permission, we are sharing her findings and recommendations for improving the situation in the industry.

Regarding social enterprises in the cultural and creative industries, it is necessary to review the current evaluation approaches and methodologies to develop a more comprehensive approach to social impact assessment. Moreover, such a discussion opens up opportunities to promote social entrepreneurship in the cultural and creative sectors and to understand the overall contribution and impact of these industries.

The researcher’s conclusions:

Social entrepreneurship in the creative industries requires a reevaluation of the way art and cultural products are valued to recognize the inherent values embedded in creative practices.
A value-based approach offers a more comprehensive method for recognizing and measuring value, viewing impact assessment as a social and collaborative process.
The distinctive feature of social enterprises in the creative industries, setting them apart from other social enterprises, is their diverse objectives, where they must simultaneously achieve creative (cultural), economic, and social goals. For this reason, impact planning and evaluation approaches that account for the multidimensional nature of these enterprises are crucial to advancing academic discussions on impact assessment for these organizations.
There is a lack of literature on impact assessment that is specifically tailored to the unique needs of social enterprises in the creative sector, to justify the intangible impact of the cultural goods and services produced.
In Latvia, social entrepreneurship is strongly focused on work integration enterprises, and according to expert interviews, cross-sectoral collaboration is essential for achieving broader recognition and acceptance of social enterprises in the creative industries at the political level.

Impact assessment practices of creative social enterprises largely remain at a formal level, such as preparing mandatory annual activity reports for the Ministry of Welfare. However, the experiences revealed by the enterprises interviewed in the study indicate a reflective and intuitive approach to impact assessment, which often does not fit into formal frameworks.
The results of the empirical study reveal that the activities of social enterprises in the creative sector are influenced by various stakeholders and uncertainties related to impact assessment, which are associated with different sources of financial support and conflicting priorities between the company’s objectives and impact assessment requirements.
The use of theories of change and value-based approaches in impact planning and assessment provides a comprehensive approach to capturing the changes created, as well as improving organizational accountability and fostering growth.
The demand from various stakeholders for justification of social impact and the recognition of organizations’ contributions to achieving their social missions make impact planning and assessment an essential part of social entrepreneurship. This process is crucial for understanding the set goals, applying assessment methods, and recognizing value creation as a central aspect that influences all those involved in the process.
The model of impact planning and assessment in social enterprises in the creative industries introduces a strategic approach that can help organizations learn and manage their activities. It also includes an engagement aspect that is essential for building mutual trust among stakeholders and communicating the impact created to a wider audience, thus demonstrating the enterprise as a key driver of social change.

The model of impact planning and assessment

The researcher’s recommendations for improving the situation:

At the political level, targeted collaboration between the creative and social entrepreneurship sectors is necessary to enhance the recognition, significance, and strategic policy development of social enterprises in the creative fields.
The Ministry of Welfare, in cooperation with the Ministry of Culture, should monitor and compile comprehensive data on the operations of organizations in the creative industries that function as social enterprises, both de facto and de jure, to promote understanding of the scope and significance of these organizations.
The Ministry of Welfare and the Ministry of Culture should implement educational activities and communication campaigns to raise awareness about social enterprises in the creative industries, enhancing their potential and market recognition.
Impact assessment reports should be adaptable, taking into account the various scales, sizes, and capacities of social enterprises.
The Ministry of Welfare and the Ministry of Culture, in collaboration with the development finance institution “Altum” should develop grant support programs to help new social enterprises in the creative industries increase their turnover and ensure long-term economic viability.
The Ministry of Welfare and the Ministry of Finance should provide additional financial support for mentoring and educational programs that support and build the capacity of social enterprises in the creative industries in their impact planning and assessment processes.
Collaboration between researchers and organizations should be encouraged to foster cooperation in impact assessment and communication, through joint projects that apply practical approaches to social impact assessment.