Investing with dual objectives : the investment decision of impact investors and their preferences for the business model of social ventures : a qualitative exploration
Year: 2018
Type: dissertation
Abstract: Impact investors aim to achieve social and environmental impact, alongside financial return on\ntheir investments. Thus, they are increasingly considered a potential source of funding for\nventures that aim to address pressing social challenges. Despite growing interest from\npractitioners and policymakers, the academic literature on impact investing is limited. Several\nfundamental aspects have not been addressed; such as the investment decision of impact\ninvestors and the conceptual confusion. We address the conceptual confusion by conducting a\ncritical review of the literature and background interviews in Uganda, Kenya and Norway,\nleading us to propose a working definition. Furthermore, as the pursuit of social impact and\nfinancial return are historically deemed incompatible, the question arises of how impact\ninvestors approach their dual objectives in an investment decision. We address this question by\nconducting semi-structured interviews with Norwegian impact investors and potential\ninvestees; social ventures. By applying a business model perspective to the investment decision\nof impact investors, we provide novel insight on their preferences for characteristics of social\nventures.\nWe find that Norwegian impact investors aim to incorporate their dual objectives in the\ninvestment decision, however an informal and limited assessment of the potential social impact,\nlead to an emphasis on the financial objective. By identifying preferences regarding the\nbusiness model, we find that impact investors approach their dual objectives by investing in\nventures where the generation of profit and social impact are aligned. Thus, we find that the\nbusiness model of the social venture should be given high importance in the investment\ndecision, as certain characteristics lead to less conflicts between the dual objectives of impact\ninvestors.\nThis thesis contributes to the limited academic literature on impact investing, and to the best of\nour knowledge, it is the first study on the Norwegian impact investing scene. Our findings\nprovide clarity on the concept of impact investing and the investment decision, with theoretical\nand practical implications. Furthermore, based on our findings we provide concrete\nrecommendations that can be utilised by social ventures seeking funding from impact investors.
Source: BIBSYS Brage (BIBSYS (Norway))
Authors: Helen Kvande Due, Christina Lund
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W2895780463