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How impact investing firms are responding to sustain and grow social economy enterprises in light of the COVID-19 pandemic

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  • Islam, Syrus M.
  • Habib, Ahsan

Abstract

The COVID-19-induced disruptions have hardest hit social economy enterprises. While impact investing is considered a promising vehicle to stimulate and grow social economy enterprises, little is known about how impact investors are actually responding to sustain and grow social economy enterprises amidst the COVID-19 pandemic. We find that impact investors sacrifice additional financial returns in pandemic-focused impact investments where they see the potential for attaining significantly higher than usual social impact by protecting hundreds of vulnerable social economy enterprises and beneficiaries amidst the pandemic. We also find that guarantees are introduced as an innovative impact investment instrument to tackle the pandemic, although they have remained heavily underutilized. Furthermore, debt instruments tend to dominate in pandemic-focused impact investments. Finally, in response to the pandemic, impact investors emphasize developing and strengthening a supportive social impact ecosystem to protect both portfolio and non-portfolio social economy enterprises and their beneficiaries. We also explain how the impact investing market has evolved during pandemic times and how it might evolve post-pandemic to support social economy enterprises.

Suggested Citation

  • Islam, Syrus M. & Habib, Ahsan, 2022. "How impact investing firms are responding to sustain and grow social economy enterprises in light of the COVID-19 pandemic," Journal of Business Venturing Insights, Elsevier, vol. 18(C).
    • Handle: RePEc:eee:jobuve:v:18:y:2022:i:c:s2352673422000452
    DOI: 10.1016/j.jbvi.2022.e00347
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    References listed on IDEAS

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    1. Chen, Suwen & Harrison, Richard, 2020. "Beyond profit vs. purpose: Transactional-relational practices in impact investing," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
    2. Islam, Syrus M., 2020. "Unintended consequences of scaling social impact through ecosystem growth strategy in social enterprise and social entrepreneurship," Journal of Business Venturing Insights, Elsevier, vol. 13(C).
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    6. Islam, Syrus M., 2020. "Towards an integrative definition of scaling social impact in social enterprises," Journal of Business Venturing Insights, Elsevier, vol. 13(C).
    7. Roundy, Philip T. & Lyons, Thomas S., 2022. "Humility in social entrepreneurs and its implications for social impact entrepreneurial ecosystems," Journal of Business Venturing Insights, Elsevier, vol. 17(C).
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    10. Smith, Brett R. & Bergman, Brian J., 2020. "The other side of the coin: Investor identity and its role in resource provision," Journal of Business Venturing Insights, Elsevier, vol. 14(C).
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    Cited by:

    1. Marta Szczepańczyk & Paweł Nowodziński & Adam Sikorski, 2023. "ESG Strategy and Financial Aspects Using the Example of an Oil and Gas Midstream Company: The UNIMOT Group," Sustainability, MDPI, vol. 15(18), pages 1-24, September.
    2. Syrus M. Islam & Ahsan Habib, 2024. "How impact investing firms use reference frameworks to manage their impact performance: An industry‐level study," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 64(1), pages 161-184, March.
    3. Sofia Karagiannopoulou & Nikolaos Sariannidis & Konstantina Ragazou & Ioannis Passas & Alexandros Garefalakis, 2023. "Corporate Social Responsibility: A Business Strategy That Promotes Energy Environmental Transition and Combats Volatility in the Post-Pandemic World," Energies, MDPI, vol. 16(3), pages 1-21, January.
    4. Syrus M. Islam & Asheq Rahman, 2023. "Impact investment deal flow and Sustainable Development Goals: “Mind the gap?”," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 63(4), pages 3797-3813, December.
    5. 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.
    6. Gimede Gigante & Emiliano Sironi & Caterina Tridenti, 2023. "At the Frontier of Sustainable Finance: Impact Investing and the Financial Tradeoff; Evidence from Private Portfolio Companies in the United Kingdom," Sustainability, MDPI, vol. 15(5), pages 1-21, February.
    7. Nachyła, Pola & Justo, Rachida, 2024. "How do impact investors leverage non-financial strategies to create value? An impact-oriented value framework," Journal of Business Venturing Insights, Elsevier, vol. 21(C).

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