Segmenting socially responsible mutual fund investors: The influence of financial return and social responsibility

Abstract

Purpose

The purpose of this paper is to address reasons for consumer investment in socially responsible investment (SRI) profiled mutual funds. Specifically, the paper deals with the relative influence of financial return and social responsibility on the decision to invest in SRI profiled mutual funds.

Design/methodology/approach

A cluster analytic approach was used where 563 SR‐investors were classified into different segments based on their perception of importance of financial return and social responsibility. Furthermore, discriminant analysis and chi² tests were used to profile the segments.

Findings

Three segments of SR‐investors were formed. The “primarily concerned about profit” SR‐investors value financial return over social responsibility. The “primarily concerned about social responsibility” value social responsibility over financial return. The “socially responsible and return driven” SR‐investors value both return and social responsibility when deciding to invest in SRI. The segments displayed distinct differences with regard to various profiling variables.

Research limitations/implications

As respondents were generated from one SRI provider, it is possible that the respondents are not fully representative of all SR‐investors.

Practical implications

Since there are segments of SR‐investors that invest in SRI because of different reasons, there is an opportunity for SRI providers to target and adapt communication to certain segments.

Originality/value

For both academia and the SRI industry this study provides useful knowledge on how private SR‐investors handle the issue of financial return and social responsibility when investing in SRI. This understanding of the differing motivations of the SR‐investor also holds practical importance for developing appropriate marketing strategies within the SRI industry.

Citation

Nilsson, J. (2009), "Segmenting socially responsible mutual fund investors: The influence of financial return and social responsibility", International Journal of Bank Marketing, Vol. 27 No. 1, pp. 5-31. https://doi.org/10.1108/02652320910928218