Defining the value of ‘doing the right thing’ in business

An innovative Australian business tool redefining the way success is measured in mutual enterprises has launched in Europe, putting a price on social good over dollar signs.

The Monash Business School developed the Mutuals Value Measurement framework to help mutual enterprises define their total value, which after results of a two-year field study in Australia showed overwhelmingly positive results.

Co-creator Professor Matthew Hall, Professor of Accounting and Associate Dean, Graduate Research, Monash Business School said “Using the Mutuals Value Measurement framework is a way for mutuals and co-operatives to ensure that what is on the table is always something that really matters to members.”

The framework helps co-ops and mutuals to measure their total value creation using six common criteria. These are commerciality, shaping markets, member relationships, community relationships, ecosystem and reciprocity, and mutual mindset.

Being trustworthy and acting in a genuine, trustworthy, authentic and ethical way to ‘doing the right thing’ are other desired behaviours measured using the framework.

Lead researcher, Dr Paul Thambar of Monash Business School said the study is a successful accounting research project, generating real-world research impacts.

“It highlights how Monash Business School researchers collaborate with industry partners to co-create and deliver value,” Dr Thambar said

Co-ops and mutual enterprises are businesses formed to benefit their members and return value back to members rather than profits to shareholders.

In Australia, this sector generates 7 to 8 per cent of Australia’s GDP.

In an economy where ethical business practices are becoming a priority, this original business model used for over a century, is gaining traction as the total and mutual value can be measured and reported.

In Australia, these businesses have diversified into virtually every industry sector including agriculture, housing, manufacturing, retail, banking and finance, and insurance.

It is a similar scenario for businesses in Europe.

However, conventional financial accounting measures do not adequately capture the social purpose and the distinctive value co-operatives and mutuals generate.

Thirteen Australian CMEs participated in the 2018-2019 field study and collaborated with a research team drawn from Monash Business School, Australian National University and Warwick Business School, Coventry, UK.

Melina Morrison, CEO, Business Council of Co-operatives and Mutuals said “Valuing the positive impact of cooperatives and mutuals on their members, their customers, their communities and wider society, is long overdue. It’s a framework that makes sure none of the value co-ops create is hidden, overlooked or ignored.” Ms Morrison said.

Fiind out more about the Mutuals Value Measurement framework on their website.