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How Did the Pandemic Crisis Affect the Financial, Economic, and Social Performance of Social Enterprises? Insight from Italian Social Cooperatives

Thu, July 14, 3:30 to 5:00pm, TBA


The recent Covid-19 pandemic crisis affected the whole world's economic and social system in many different ways, such as increasing the number of unemployed workers, raising the percentage of families in absolute poverty, inflation, decreasing GDP, and so on (International Monetary Fund 2021). Scholars are currently investigating the impact of the crisis in different sectors and regions (Atayah et al. 2021; Bond et al. 2020; Piccarozzi, Silvestri & Morganti 2021). Social enterprises (SEs) in particular play a necessary role in delivering social value during such crises (Weaver 2020). However, there is still a lack of empirical evidence that analyzes the impact of the pandemic on the performance of SEs and how that performance differs from traditional, non-social companies. Therefore, the purpose of this contribution is to fill this gap.

The measurement of SEs performance cannot be limited only to the economic and financial dimension, but it must also consider the social one (Arena, Azzone & Bengo 2015; Bagnoli & Megali 2011; Grieco, Michelini & Iasevoli 2014). For this reason, the present paper a comparative analysis between Italian social cooperatives and Italian private limited companies (società a responsabilità limitata). We present organizational performance using a three-dimensional perspective: economic, financial, and social. In the economic dimension, profit is analyzed through ROA, ROI, and SFC. In the financial dimension, the current ratio, the warranty ratio, and the equity multiplier are used to analyze the solvency of the SEs. Therefore, the ability to generate adequate cash-flows (Caramiello et al. 2003; Cescon 1995; Sostero et al. 2016). Finally, the analysis of the social dimension concerns the measurement of the ability to create and distribute value-added to stakeholders (Riahi Belkaoui 1996), with particular emphasis on distributional fairness (Haller, van Staden, & Landis 2018).

Data are extracted from the AIDA database, selecting the entire population of Italian social cooperatives (SCs) and private limited companies (PLCs) from within the ATECO sector whose code begins by 8 (support services to enterprises, education, health and social assistance). The choice of these ATECO codes made it possible to focus attention on the sectors of economic activity in which the form of SCs is widespread in Italy. All enterprises have between 5 and 250 employees, and we use a short panel of years for 2017 through 2020.

The main findings demonstrate a negative impact of the pandemic crisis on both SCs and PLCs, but with different degrees in the three dimensions considered. We expect that the two corporate forms will differ significantly in distributional fairness, with SCs maintaining their pre-pandemic distribution even at the cost of their financial and economic health in order to maintain their social mission.