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Socio-Psychological Motives of Socially Responsible Investors

Global Corporate Governance

ISBN: 978-1-78635-166-1, eISBN: 978-1-78635-165-4

ISSN: 1569-3732

Publication date: 30 March 2017

Abstract

The 2008/2009 World Financial Crisis underlined the importance of social responsibility for the sustainable functioning of economic markets. Heralding an age of novel heterodox economic thinking, the call for integrating social facets into mainstream economic models has reached unprecedented momentum. Financial Social Responsibility bridges the finance world with society in socially conscientious investments. Socially Responsible Investment (SRI) integrates corporate social responsibility in investment choices. In the aftermath of the 2008/2009 World Financial Crisis, SRI is an idea whose time has come. Socially conscientious asset allocation styles add to expected yield and volatility of securities social, environmental, and institutional considerations. In screenings, shareholder advocacy, community investing, social venture capital funding and political divestiture, socially conscientious investors hone their interest to align financial profit maximization strategies with social concerns. In a long history of classic finance theory having blacked out moral and ethical considerations of investment decision making, our knowledge of socio-economic motives for SRI is limited. Apart from economic profitability calculus and strategic leadership advantages, this paper sheds light on socio-psychological motives underlying SRI. Altruism, need for innovation and entrepreneurial zest alongside utility derived from social status enhancement prospects and transparency may steer investors’ social conscientiousness. Self-enhancement and social expression of future-oriented SRI options may supplement profit maximization goals. Theoretically introducing potential SRI motives serves as a first step toward an empirical validation of Financial Social Responsibility to improve the interplay of financial markets and the real economy. The pursuit of crisis-robust and sustainable financial markets through strengthened Financial Social Responsibility targets at creating lasting societal value for this generation and the following.

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Acknowledgements

Acknowledgments

Financial support of the Austrian Academy of Science, Austrian Federal Ministry of Science, Research and Economy, Fritz Thyssen Foundation, International Institute for Applied Systems Analysis, Janeway Center Fellowship, The New School for Social Research, Max Kade Foundation and the University of Vienna is gratefully acknowledged. The author declares no conflict of interest. The author thanks Rainer Maderthaner and Uwe Schubert for insightful help.

Citation

Puaschunder, J.M. (2017), "Socio-Psychological Motives of Socially Responsible Investors", Global Corporate Governance (Advances in Financial Economics, Vol. 19), Emerald Publishing Limited, Bingley, pp. 209-247. https://doi.org/10.1108/S1569-373220160000019008

Publisher

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Emerald Publishing Limited

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