How the Private Sector Measures Return on Investment: A Framework to Inform Future Research
This brief documents how different private sector actors understand and measure social inclusion and its return on investment (ROI) as an initial step to frame further research on the business case for social inclusion in developing countries.
USAID, as part of a larger set of learning initiatives around social inclusion on the Feed the Future Market Systems and Partnerships (MSP) Activity, is analyzing the evidence base and evidence gaps on the ROI of social inclusion (SI) strategies implemented by the private sector in developing countries. This work will be the foundation for building a business case and providing practical guidance on social inclusion strategies relevant to the private sector in developing countries to maximize the ROI while furthering the development objective of social inclusion.
Key takeaways explored more in this brief include:
- Social inclusion frameworks for private investors, public companies and private firms share common factors and a focus on women, but measurement rigor and definitions differ. Links to 11 private sector frameworks are highlighted in the brief as a subset of those reviewed for this initial scan.
- Most ROI metrics focus on direct/quick business benefits (e.g., productivity, retention, new market segments), but local firms in developing markets also consider long-term, more indirect impact (e.g., innovation, reputation). Suppliers are rarely incorporated.
- Future research will focus on evidence for key private sector SI factors: talent, leadership, supply chain diversity, culture, workplace safety, gender-based violence prevention, plus consumers and branding.
The Feed the Future Market Systems and Partnerships (MSP) Activity is advancing learning and good practice in market systems development (MSD) and private sector engagement (PSE) within USAID, USAID partners and market actors. For more information, access to technical resources and opportunities to engage, visit www.agrilinks.org/msp.
HOW THE PRIVATE SECTOR MEASURES SOCIAL INCLUSION AND ITS RETURN ON INVESTMENT: A FRAMEWORK TO INFORM FUTURE RESEARCH