Impact Investing Strategy

Managing Conflicts between Impact Investor and Investee Social Enterprise

Research output: Contribution to journalJournal articleResearchpeer-review

Abstract

Impact investing pursues the dual goals of creating socio-economic value for themarginalized, and ensuring net positive financial returns. Impact investing firms achieve their goals through their investments in projects and enterprises which create both social and commercial values. The primary aim of this article is to contribute to our understanding of the process of impact investing, particularly with respect to issues related to aligning impact investing and investee social enterprise goals. The research method employs case-based research methodology. The data consist of six cases of impact investing and their investee social enterprises. In addition, the data involve interviews with experts from the field of impact investing. The findings are that: (1) Social mission plays an important moderating role in the inter-organizational relationship between the impact investor and the investee social enterprise, (2) and an emphasis on due diligence, sector specialization, and communication increases the likelihood of investment while (3) social impact measurement and reporting and frequent engagement increase the likelihood of post-investment alignment. The key contribution of this article is that impact investing (unlike venture capital) is influenced by the ability of its investee to create social value, which plays an important role in the inter-organizational relationship between investor and investee. Furthermore, similar to industry specialization in the for-profit investing, social sector specialization is equally relevant for alignment and returns.
Original languageEnglish
Article number4117
JournalSustainability (Switzerland)
Volume11
Issue number15
Number of pages21
ISSN2071-1050
DOIs
Publication statusPublished - 1 Aug 2019

Keywords

  • Impact investing
  • Impact investor
  • Social enterprise
  • Social entrepreneurship
  • Institutional logic
  • Strategy
  • Inter-organisational alignment

Cite this

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title = "Impact Investing Strategy: Managing Conflicts between Impact Investor and Investee Social Enterprise",
abstract = "Impact investing pursues the dual goals of creating socio-economic value for themarginalized, and ensuring net positive financial returns. Impact investing firms achieve their goals through their investments in projects and enterprises which create both social and commercial values. The primary aim of this article is to contribute to our understanding of the process of impact investing, particularly with respect to issues related to aligning impact investing and investee social enterprise goals. The research method employs case-based research methodology. The data consist of six cases of impact investing and their investee social enterprises. In addition, the data involve interviews with experts from the field of impact investing. The findings are that: (1) Social mission plays an important moderating role in the inter-organizational relationship between the impact investor and the investee social enterprise, (2) and an emphasis on due diligence, sector specialization, and communication increases the likelihood of investment while (3) social impact measurement and reporting and frequent engagement increase the likelihood of post-investment alignment. The key contribution of this article is that impact investing (unlike venture capital) is influenced by the ability of its investee to create social value, which plays an important role in the inter-organizational relationship between investor and investee. Furthermore, similar to industry specialization in the for-profit investing, social sector specialization is equally relevant for alignment and returns.",
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Impact Investing Strategy : Managing Conflicts between Impact Investor and Investee Social Enterprise. / Agrawal, Anirudh; Hockerts, Kai.

In: Sustainability (Switzerland), Vol. 11, No. 15, 4117, 01.08.2019.

Research output: Contribution to journalJournal articleResearchpeer-review

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