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Impact Investing Strategy: Managing Conflicts between Impact Investor and Investee Social Enterprise

Department of Management, Society and Communication (MSC), Copenhagen Business School, 2000 Frederiksberg, Denmark
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Sustainability 2019, 11(15), 4117; https://doi.org/10.3390/su11154117
Received: 11 June 2019 / Revised: 25 July 2019 / Accepted: 26 July 2019 / Published: 30 July 2019
(This article belongs to the Collection Sustainability in Financial Industry)
Impact investing pursues the dual goals of creating socio-economic value for the marginalized, 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. View Full-Text
Keywords: Impact investing; impact investor; social enterprise; social entrepreneurship; Institutional logic; Strategy; Inter-organisational alignment Impact investing; impact investor; social enterprise; social entrepreneurship; Institutional logic; Strategy; Inter-organisational alignment
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MDPI and ACS Style

Agrawal, A.; Hockerts, K. Impact Investing Strategy: Managing Conflicts between Impact Investor and Investee Social Enterprise. Sustainability 2019, 11, 4117. https://doi.org/10.3390/su11154117

AMA Style

Agrawal A, Hockerts K. Impact Investing Strategy: Managing Conflicts between Impact Investor and Investee Social Enterprise. Sustainability. 2019; 11(15):4117. https://doi.org/10.3390/su11154117

Chicago/Turabian Style

Agrawal, Anirudh, and Kai Hockerts. 2019. "Impact Investing Strategy: Managing Conflicts between Impact Investor and Investee Social Enterprise" Sustainability 11, no. 15: 4117. https://doi.org/10.3390/su11154117

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