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This chapter sketches a new development in responsible investing, namely impact investing. Impact investing, which we define as the entire spectrum of investments deliberately aiming to create shared value, can be seen as an integrative approach to wealth creation through investments. The case of microfinance is used to illustrate this new development.

The chapter combines a viewpoint and a case study that serves to illustrate the practical relevance of the viewpoint.

The chapter starts with a brief overview of the origin and rise of responsible investments, followed by a description of mission-related investments and impact investing as its latest development. Microfinance is presented as a special case, thereby focusing on the investors, the asset allocation and the meaning – and application – of the notion of impact.

The chapter shows that a focus on social and financial returns can be combined without having to make serious financial sacrifices. It also demonstrates that investments can come from investors as diverse as pension funds, foundations or high net-worth individuals.

If impact investing really takes off – particularly supported by institutional money – there will be much more opportunity to tackle social and environmental innovation than without those investments.

The chapter challenges (institutional) investors to evaluate their responsible investment strategy and to rethink their asset allocation. Impact investing can become an important addition to the responsible investment landscape.

The purpose of this study is to analyze the intersection of research on impact investing and its closely related financial vehicles.

The paper explores 196 articles collected from Scopus and Web of Science using bibliometric and content analysis methodologies.

Despite a growing academic interest in impact investing, scholars generally investigate impact investing as a social phenomenon, using the specific financial mechanism of social impact bonds. This perspective potentially deflates the complex nature of impact investing, which actually combines both social and financial targets and uses a plurality of financial vehicles to reach its goals.

The emerging themes identified will provide both academics and practitioners additional tools to further the debate on impact investing and the understanding of its potential and limits according to the different financial forms it takes. This review should pave the way for a discussion about the boundaries of the social impact sector itself.

Despite the strong international commitment toward impact investing, tensions still exist. A comprehensive overview on the relevant aspects not yet thoroughly investigated will foster the growth of impact investments.

To the best of the authors’ knowledge, this is the first holistic overview of impact investing, that jointly examines both literature on impact investing and literature on the correlated financial products used in the industry. The result is a comprehensive report of what is known about impact investing in its different financial forms, opening up new pathways for future studies.

Impact investors differ from venture capital firms as they invest to create social and commercial value. This paper pursues the question: how do impact investors select social enterprises? The aim of this study is to understand the selection and investing process of impact investors.

This study developed a database of 115 impact-investing firms across different geographies. Emails were sent to investors associated with each of the impact-investing firms found in the database, out of which 32 replied with consent for a telephonic or in-person interview.

The significant findings presented in the paper are the following. First, this study shows the impact-investing selection process model. The four major steps in the selection process are context, investment focus, venture analysis and decision. In each step, social values and missions become the defining characteristics of the selection process. Second, the findings also discuss the typologies of impact investors as a function of their selection approaches.

This paper discusses the impact investing strategy among social enterprises. It provides a framework for impact investing among investee social enterprises. As an impact investing professional, one learns investment strategy through this paper.

Impact investing is a growing field. It is believed that impact investing could greatly impact sustainable development goals, climate change goals and help in inclusive development. This study helps to further understand impact investing process and hopes to help social enterprises and impact investors make a better match, thereby, creating a greater overall social and environmental impact.

This study helps both practitioners and academics to understand the complexity of impact investing. This study helps develop heuristics that impact investors may use to make investments. This study provides a framework for investing, which the impact investing firms may use to invest.

Impact investing, a type of values-based investing that combines financial investment with philanthropic goals, is receiving heightened scholarly and practitioner attention. The geography of impact investing, however, is largely unexamined, and it is not clear why some regional impact-investing communities are more vibrant than other communities. Regional differences in entrepreneurial activities are increasingly explained by differences in the vitality of entrepreneurial ecosystems, the set of interconnected forces that promote and sustain regional entrepreneurship. The purpose of this paper is to leverage insights from entrepreneurial ecosystems studies to understand the dynamics of communities that encourage and support impact investing.

To explain inter-regional differences in the prevalence and intensity of impact investing, this conceptual paper draws from research on entrepreneurial ecosystems and impact investment to theorize about the ecosystem attributes and components that drive vibrant impact investing communities.

It is theorized that vibrant impact investing ecosystems have three system-level attributes – diversity, cohesion and coordination – that are influenced by the core components of the ecosystems, including the characteristics of investors, the presence of social impact support organizations and cultural values that promote blending logics.

The theoretical model contributes to research on impact investing and hybrid organizing, produces concrete implications for ecosystem builders and sets an agenda for future research.

The growing prevalence of social entrepreneurship has been coupled with an increasing number of so-called “impact investors”. However, much remains to be learned about this nascent class of investors. To address the dearth of scholarly attention to impact investing, this study seeks to answer four questions that are central to understanding the phenomenon. What are the defining characteristics of impact investing? Do impact investors differ from traditional classes of investors and, if so, how? What are the motivations that drive impact investment? And, what criteria do impact investors use when evaluating potential investments?

A partially inductive study based on semi-structured interviews with 31 investors and ethnographic observation was conducted to explore how impact investors differ from other classes of investors in their motivations and unique criteria used to evaluate ventures seeking investment.

This study reveals that impact investors represent a unique class of investors that differs from socially responsible investing, from other types of for-profit investors, such as venture capitalists and angel investors, and from traditional philanthropists. The varied motivations of impact investors and the criteria they use to evaluate investments are identified.

Despite the growing practitioner and media attention to impact investing, several foundational issues remain unaddressed. This study takes the first steps toward shedding light on this new realm of early-stage venture investing and clarifying its role in larger efforts of social responsibility.

This paper aims to empirically describe the general characteristics and the investment behavior of high-net-worth individuals (HNWIs) who pursue impact investing.

Data was collected from members of a global impact investor network, using an online questionnaire, a portfolio-data collection tool and semi-structured interviews.

Wealthy private impact investors are largely similar in terms of their general characteristics and investment behavior, but they diverge in their interest in specific Sustainable Development Goals (SDGs). They tend to be strongly values-driven and to adopt an investment time horizon of 7+ years for their impact investments, which they expect to yield financial returns that are no different from those of traditional investments. Interestingly, these investors perceive the well-established sustainable investing strategies of exclusion, environmental, social and governance (ESG) integration and best-in-class as not having high impact-generating potential.

Suggestions are provided about how wealthy private investors could use the findings to improve their impact investment decisions. Advice is offered to investment professionals on how to optimize impact investment products and services for this economically and societally highly relevant target group.

To the best of the authors’ knowledge, this is the first scientific study to investigate the general characteristics and investment behavior of HNWIs who pursue impact investing. HNWIs have great relevance for financial markets yet they are out of reach for most researchers. As a result, they are poorly understood, and apparently also often misunderstood, which has substantial economic and social implications that this paper helps mitigate.

Field emergence poses an intriguing problem for institutional theorists. New issue fields often arise at the intersection of different sectors, amidst extant structures of meanings and actors. Such nascent fields are fragmented and lack clear guides for action; making it unclear how they ever coalesce. The authors propose that provisional social structures provide actors with macrosocial presuppositions that shape ongoing field-configuration; bootstrapping the field. The authors explore this empirically in the context of social impact investing in the UK, 2000–2013, a period in which this field moved from clear fragmentation to relative alignment. The authors combine different computational text analysis methods, and data from an extensive field-level study, to uncover meaningful patterns of interaction and structuration. Our results show that across various periods, different types of actors were linked together in discourse through “actor–meaning couplets.” These emergent couplings of actors and meanings provided actors with social cues, or macrofoundations, which guided their local activities. The authors thus theorize a recursive, co-constitutive process: as punctuated moments of interaction generate provisional structures of actor–meaning couplets, which then cue actors as they navigate and constitute the emerging field. Our model re-energizes the core tenets of new structuralism and contributes to current debates about institutional emergence and change.

Impact investing denominates an investment logic that combines social and environmental goals, financial returns as well as personal values. The purpose of this paper is to consider the concept of legitimacy to be an appropriate way to understand how actors in the impact investing market influence discourse in order to overcome the inherent liability of newness – based on hybrid institutional logics – through their financial and non-financial communication.

Based on two theoretically defined sets of codes, a thematic discourse analysis is conducted by analysing meaningful units derived from documents produced by case-selected actors in the impact investing industry, which are then categorised into rhetorical strategies for legitimacy building.

The paper finds that actors use diverse legitimisation strategies based on their relative positioning in the impact investing market. These strategies determine the actors’ main discursive foci and, in turn, are affected by the overall organisational activities, governance and mission. This study proposes and discusses eight legitimacy creating strategies of relevant archetypes of impact investing actors in their financial and non-financial communication. Following these interconnected discursive engagements, a communication gap can be demonstrated between investors, intermediaries and social entrepreneurs.

Such discursive engagement gaps can provide a theoretical lens to explain the almost non-functional market and, as practical implications, show the need for convergence and harmonisation in financial and non-financial reports and communiques. This research further contributes to theory by providing insights into the discursive creation of legitimacy, and by promoting a better understanding of the emerging field of impact investing.

The purpose of this paper is to examine the institutionalization of screening and metrics in conventional finance and reflect upon the implications for Islamic finance.

The study involves the analysis of archival data, interviews and fieldwork with current impact investors in North America and the European Union to trace the historical development of impact investing screening and metrics.

First, the paper explores how conventional investors have applied positive and negative screens in the creation of their values/mission-based investment strategies. This is followed by a historical analysis of the development and implementation of impact metrics and regulatory frameworks that influenced the growth of conventional impact investing. The possible benefits of learning from these experiences for the Islamic finance industry are then considered. The paper concludes with an analysis of the potential value of mission/values-based investing for the economic development of the Middle East and North Africa region.

Though not a comprehensive study of institutionalization, this study supports recent calls for more intentional use of capital for blended returns within Islamic markets. To support these initiatives, it provides scholars and practitioners with multiple recommended points of entry into this growing market.

There has been scant organizational research examining the development of best practices within the impact investment community and how these might be applied to other contexts such as Islamic finance.