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Beyond profit vs. purpose: Transactional-relational practices in impact investing

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  • Chen, Suwen
  • Harrison, Richard

Abstract

The emergence of impact investing over the past decade has been accompanied by increased interest in impact measurement to understand both social and financial returns. One of the constantly re-occurring themes in the research on impact measurement is the tension between financial return and social/environmental mission. However, we challenge this binary view by addressing the following questions: is the profit/purpose trade-off dilemma an immutable feature of impact investing? And, if so, how are investor-investee relationships negotiated through those tensions to keep the impact measurement process flowing productively? Using an exploratory multi-round Delphi Method study (15 panellists) and 22 semi-structured interviews, we discover a new set of impact measurement practices, which are relational and non-transactional in nature. These two levels of engagement, the transactional and the relational, occur in sequence and reinforce each other, ultimately creating both instrumental and intrinsic value. In the end, we propose the Transactional-Relational Spiral model and encourage further research and validation.

Suggested Citation

  • Chen, Suwen & Harrison, Richard, 2020. "Beyond profit vs. purpose: Transactional-relational practices in impact investing," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
    • Handle: RePEc:eee:jobuve:v:14:y:2020:i:c:s235267342030038x
    DOI: 10.1016/j.jbvi.2020.e00182
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    4. Laura Toschi & Elisa Ughetto & Andrea Fronzetti Colladon, 2023. "The identity of social impact venture capitalists: exploring social linguistic positioning and linguistic distinctiveness through text mining," Small Business Economics, Springer, vol. 60(3), pages 1249-1280, March.
    5. Syrus M. Islam, 2022. "Impact investing in social sector organisations: a systematic review and research agenda," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 62(1), pages 709-737, March.
    6. Eduardo da Silva Fernandes & Inês Hexsel Grochau & Carla Schwengber Ten Caten, 2023. "Impact Investing: Determinants of External Financing of Social Enterprises in Brazil," Sustainability, MDPI, vol. 15(15), pages 1-21, August.
    7. Irene Bengo & Alice Borrello & Veronica Chiodo, 2021. "Preserving the Integrity of Social Impact Investing: Towards a Distinctive Implementation Strategy," Sustainability, MDPI, vol. 13(5), pages 1-19, March.
    8. Annebeth Roor & Karen Maas, 2024. "Do impact investors live up to their promise? A systematic literature review on (im)proving investments' impacts," Business Strategy and the Environment, Wiley Blackwell, vol. 33(4), pages 3707-3732, May.
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    11. Pieniazek, Rebecca & Unsworth, Kerrie L. & Dean, Hannah, 2024. "How and why do social entrepreneurs experience goal conflict differently?," Journal of Business Venturing Insights, Elsevier, vol. 21(C).

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