Premises of the Social Value Exchange System Project

The ultimate goal of our project should be to develop a prototype of social value exchange that can induce a productive tension in the system and enhance the efficiency of social sector as a whole by allowing value-driven resource allocation with low transaction cost. There have been substantial progress and elaboration in conceptual discussions in this area in the past decade, but our aim is to be as practical as possible. That is, instead of dwelling too much on academic exercise of pursuing a perfect model, we focus on testing and getting feedback on a prototype of social value exchange that can be developed within our project's time frame. We believe that is where MBA students like us can add most value.

Among the most obvious issues in developing a workable model of social value exchange have been lack of proper information system and valuation mechanism. Despite all the recent attentions, talks and investments by social sector professionals, boiling down social impact to a set of indicators that can be compared across different objectives remains out of reach. It is not impossible to imagine that certain de-facto standards may emerge in a foreseeable future, but it will take time to reconcile diverse perspectives and needs. Moreover, due to the inherent complexity and diverse perception involved in the valuation of social impacts, formulaic valuation approach is extremely difficult and will require extensive information that would be prohibitively costly to produce and process.

Considering the limited time and resources at hand, our project needs to be very careful about the approach and must be highly goal-oriented. Therefore, we should first focus our efforts on designing a efficient and flexible system (=marketplace) that can process imperfect information and produce a reasonably good valuation, instead of spending our energy to understand the nitty gritty of making better information for formulaic valuation. Then, once establishing a workable valuation system with a sound information clearinghouse system, they should be linked to a resource allocation system with an efficient regulatory and supervisory system.