Financial performance and company size: the informative power of Value Added in Italian social cooperatives
DOI:
https://doi.org/10.7433/s124.2024.10Keywords:
social cooperatives, Value added, company size, financial performance, employmentAbstract
Purpose of the paper: Through an empirical study this paper aims to demonstrate the informative power of Value Added in reflecting the relationship between economic performance and size regarding social cooperatives.
Methodology: The analysis considers a sample of 9,268 Italian social cooperatives to highlight the expressiveness of Value Added in reflecting the link between its performance and size. The study applies a combination of two different methods to reach its aim: correlation analysis and analysis of the association between characteristics.
Findings: The study shows that Value Added has a greater capacity than Operating earnings to reflect the business trend in size and employment creation.
Research limits: The research is limited to two years for reasonable and justified reasons; however, this period is objectively short and requires expansion in future studies of the phenomenon investigated. The study ties size growth to economic performance alone, excluding other factors (quality of governance, organizational set-up, working conditions, reward systems, etc.) that require consideration in future insights.
Practical implications: The research demonstrates the opportunity to: reconfigure the income statement format by making Value Added explicit, including information on the creation and distribution of Value Added in the social balance sheet; use temporal changes in Value Added in the construction of indicators aimed at signalling the capacity of the company to create jobs.
Originality of the paper: This research increases knowledge of the informative properties of Value Added and provides insights for creating valuable tools in applying incentive policies to the category of enterprises studied.
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