IDEAS home Printed from https://ideas.repec.org/a/kap/jbuset/v179y2022i4d10.1007_s10551-022-05160-8.html
   My bibliography  Save this article

Ethical Sensemaking in Impact Investing: Reasons and Motives in the Chinese Renewable Energy Sector

Author

Listed:
  • Tongyu Meng

    (University of Auckland Business School
    Auckland University of Technology)

  • Jamie Newth

    (University of Auckland Business School)

  • Christine Woods

    (University of Auckland Business School)

Abstract

This article explores impact investing within the renewable energy sector. Drawing on ethical decision making and sensemaking, this article contributes to an enhanced understanding of the complex ethical sensemaking process of impact investors when facing plausible situations in a world of contested truths. Addressing the ethical tensions faced by impact investors with mixed motives, this study investigates the way decision makers use context-specific reasons to make sense of and shape the renewable energy investment (REI) process. This represents an initial attempt to understand ethical sensemaking in impact investing made within the renewable energy (RE) sector using a multi-stakeholder approach. Our findings show that prosocial, personal, reputational, and economic motives are the main drivers of REI, with prosocial and personal motives being value-based, and reputational and economic motives being evidence-based. We find three different modes of ethical sensemaking (pragmatic, retrospective, and forecasting), allowing for the construction of the four motives noted above. These motives are based on the context-specific reasons of impact investing decision makers in the RE sector. This article contributes to the academic discourse on ethical sensemaking with some key processes involved in ethical decision making, and a better understanding of the underlying motivations of impact investing in the RE sector.

Suggested Citation

  • Tongyu Meng & Jamie Newth & Christine Woods, 2022. "Ethical Sensemaking in Impact Investing: Reasons and Motives in the Chinese Renewable Energy Sector," Journal of Business Ethics, Springer, vol. 179(4), pages 1091-1117, September.
    • Handle: RePEc:kap:jbuset:v:179:y:2022:i:4:d:10.1007_s10551-022-05160-8
    DOI: 10.1007/s10551-022-05160-8
    as

    Download full text from publisher

    File URL: http://link.springer.com/10.1007/s10551-022-05160-8
    File Function: Abstract
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1007/s10551-022-05160-8?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bacq, Sophie & Alt, Elisa, 2018. "Feeling capable and valued: A prosocial perspective on the link between empathy and social entrepreneurial intentions," Journal of Business Venturing, Elsevier, vol. 33(3), pages 333-350.
    2. Richard A. Bettis & C. K. Prahalad, 1995. "The dominant logic: Retrospective and extension," Strategic Management Journal, Wiley Blackwell, vol. 16(1), pages 5-14.
    3. Andrea Masini & Emanuela Menichetti, 2013. "Investment decisions in the renewable energy sector: An analysis of non-financial drivers," Post-Print hal-00796331, HAL.
    4. Matthew Lee & Arzi Adbi & Jasjit Singh, 2020. "Categorical cognition and outcome efficiency in impact investing decisions," Strategic Management Journal, Wiley Blackwell, vol. 41(1), pages 86-107, January.
    5. Lewis, Alan, 2001. "A focus group study of the motivation to invest: 'ethical/green' and 'ordinary' investors compared," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 30(4), pages 331-341.
    6. Fatien Diochon, Pauline & Nizet, Jean, 2019. "Ethics as a Fabric: An Emotional Reflexive Sensemaking Process," Business Ethics Quarterly, Cambridge University Press, vol. 29(4), pages 461-489, October.
    7. Filipe Santos, 2012. "A Positive Theory of Social Entrepreneurship," Journal of Business Ethics, Springer, vol. 111(3), pages 335-351, December.
    8. Andrea Masini & Emanuela Menichetti, 2013. "Investment Decisions in the Renewable Energy Sector: An Analysis of Non-Financial Drivers," Working Papers hal-01947453, HAL.
    9. Jaana Woiceshyn, 2011. "A Model for Ethical Decision Making in Business: Reasoning, Intuition, and Rational Moral Principles," Journal of Business Ethics, Springer, vol. 104(3), pages 311-323, December.
    10. Masini, Andrea & Menichetti , Emanuela, 2013. "Investment Decisions in the Renewable Energy Sector: An Analysis of Non-Financial Drivers," HEC Research Papers Series 976, HEC Paris.
    11. Gita Surie & Allan Ashley, 2008. "Integrating Pragmatism and Ethics in Entrepreneurial Leadership for Sustainable Value Creation," Journal of Business Ethics, Springer, vol. 81(1), pages 235-246, August.
    12. Berube, Gilles G. & Villeneuve, Francois, 2002. "Ethical dilemmas and the decision-making process. Is a consensus realistic?," Energy Policy, Elsevier, vol. 30(14), pages 1285-1290, November.
    13. Jana Craft, 2013. "A Review of the Empirical Ethical Decision-Making Literature: 2004–2011," Journal of Business Ethics, Springer, vol. 117(2), pages 221-259, October.
    14. Lee, Cheuk Wing & Zhong, Jin, 2014. "Top down strategy for renewable energy investment: Conceptual framework and implementation," Renewable Energy, Elsevier, vol. 68(C), pages 761-773.
    15. Daniel Kahneman, 2003. "Maps of Bounded Rationality: Psychology for Behavioral Economics," American Economic Review, American Economic Association, vol. 93(5), pages 1449-1475, December.
    16. Andrew Jamison, 2010. "Climate change knowledge and social movement theory," Wiley Interdisciplinary Reviews: Climate Change, John Wiley & Sons, vol. 1(6), pages 811-823, November.
    17. Alijani, Sharam & Karyotis, Catherine, 2019. "Coping with impact investing antagonistic objectives: A multistakeholder approach," Research in International Business and Finance, Elsevier, vol. 47(C), pages 10-17.
    18. Tessa Hebb, 2013. "Impact investing and responsible investing: what does it mean?," Journal of Sustainable Finance & Investment, Taylor & Francis Journals, vol. 3(2), pages 71-74, April.
    19. Ernst Fehr & Urs Fischbacher, 2002. "Why Social Preferences Matter -- The Impact of Non-Selfish Motives on Competition, Cooperation and Incentives," Economic Journal, Royal Economic Society, vol. 112(478), pages 1-33, March.
    20. Scott Sonenshein, 2009. "Emergence of Ethical Issues During Strategic Change Implementation," Organization Science, INFORMS, vol. 20(1), pages 223-239, February.
    21. Chase Thiel & Zhanna Bagdasarov & Lauren Harkrider & James Johnson & Michael Mumford, 2012. "Leader Ethical Decision-Making in Organizations: Strategies for Sensemaking," Journal of Business Ethics, Springer, vol. 107(1), pages 49-64, April.
    22. Alex Nicholls, 2010. "The Institutionalization of Social Investment: The Interplay of Investment Logics and Investor Rationalities," Journal of Social Entrepreneurship, Taylor & Francis Journals, vol. 1(1), pages 70-100, March.
    23. Juelin Yin & Ali Quazi, 2018. "Business Ethics in the Greater China Region: Past, Present, and Future Research," Journal of Business Ethics, Springer, vol. 150(3), pages 815-835, July.
    24. Viviani, Jean-Laurent & Maurel, Carole, 2019. "Performance of impact investing: A value creation approach," Research in International Business and Finance, Elsevier, vol. 47(C), pages 31-39.
    25. Safarzynska, Karolina & van den Bergh, Jeroen C.J.M., 2011. "Industry evolution, rational agents and the transition to sustainable electricity production," Energy Policy, Elsevier, vol. 39(10), pages 6440-6452, October.
    26. Benjamin Saunders & Julius Sim & Tom Kingstone & Shula Baker & Jackie Waterfield & Bernadette Bartlam & Heather Burroughs & Clare Jinks, 2018. "Saturation in qualitative research: exploring its conceptualization and operationalization," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(4), pages 1893-1907, July.
    27. Anna Höchstädter & Barbara Scheck, 2015. "What’s in a Name: An Analysis of Impact Investing Understandings by Academics and Practitioners," Journal of Business Ethics, Springer, vol. 132(2), pages 449-475, December.
    28. West, J. & Bailey, I. & Winter, M., 2010. "Renewable energy policy and public perceptions of renewable energy: A cultural theory approach," Energy Policy, Elsevier, vol. 38(10), pages 5739-5748, October.
    29. Max Baker & Stefan Schaltegger, 2015. "Pragmatism and new directions in social and environmental accountability research," Accounting, Auditing & Accountability Journal, Emerald Group Publishing Limited, vol. 28(2), pages 263-294, February.
    30. John Selsky & Barbara Parker, 2010. "Platforms for Cross-Sector Social Partnerships: Prospective Sensemaking Devices for Social Benefit," Journal of Business Ethics, Springer, vol. 94(1), pages 21-37, July.
    31. Hartman, Edwin M., 2008. "Reconciliation in Business Ethics: Some Advice from Aristotle," Business Ethics Quarterly, Cambridge University Press, vol. 18(2), pages 253-265, April.
    32. Masini, Andrea & Menichetti, Emanuela, 2013. "Investment decisions in the renewable energy sector: An analysis of non-financial drivers," Technological Forecasting and Social Change, Elsevier, vol. 80(3), pages 510-524.
    33. Ürge-Vorsatz, Diana & Tirado Herrero, Sergio, 2012. "Building synergies between climate change mitigation and energy poverty alleviation," Energy Policy, Elsevier, vol. 49(C), pages 83-90.
    34. Bhattacharya, Mita & Paramati, Sudharshan Reddy & Ozturk, Ilhan & Bhattacharya, Sankar, 2016. "The effect of renewable energy consumption on economic growth: Evidence from top 38 countries," Applied Energy, Elsevier, vol. 162(C), pages 733-741.
    35. Herbert A. Simon, 1991. "Bounded Rationality and Organizational Learning," Organization Science, INFORMS, vol. 2(1), pages 125-134, February.
    36. Stefan Schaltegger & Marcus Wagner, 2011. "Sustainable entrepreneurship and sustainability innovation: categories and interactions," Business Strategy and the Environment, Wiley Blackwell, vol. 20(4), pages 222-237, May.
    37. Yuan, Xueliang & Zuo, Jian & Ma, Chunyuan, 2011. "Social acceptance of solar energy technologies in China--End users' perspective," Energy Policy, Elsevier, vol. 39(3), pages 1031-1036, March.
    38. Frank Jan Graaf, 2019. "Ethics and Behavioural Theory: How Do Professionals Assess Their Mental Models?," Journal of Business Ethics, Springer, vol. 157(4), pages 933-947, July.
    39. Karl E. Weick & Kathleen M. Sutcliffe & David Obstfeld, 2005. "Organizing and the Process of Sensemaking," Organization Science, INFORMS, vol. 16(4), pages 409-421, August.
    40. Paul Tracey & Nelson Phillips & Owen Jarvis, 2011. "Bridging Institutional Entrepreneurship and the Creation of New Organizational Forms: A Multilevel Model," Organization Science, INFORMS, vol. 22(1), pages 60-80, February.
    41. Samuel Bowles & Sandra Polania-Reyes, 2012. "Economic Incentives and Social Preferences: Substitutes or Complements?," Journal of Economic Literature, American Economic Association, vol. 50(2), pages 368-425, June.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Kai Hockerts & Lisa Hehenberger & Stefan Schaltegger & Vanina Farber, 2022. "Defining and Conceptualizing Impact Investing: Attractive Nuisance or Catalyst?," Journal of Business Ethics, Springer, vol. 179(4), pages 937-950, September.
    2. Jia, Xingping & Wang, Jiangzhe & Liu, Tingting, 2024. "The impact of business-to-government relationship emphasis on green innovation: An empirical analysis," Technovation, Elsevier, vol. 129(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. 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.
    2. Curtin, Joseph & McInerney, Celine & Ó Gallachóir, Brian, 2017. "Financial incentives to mobilise local citizens as investors in low-carbon technologies: A systematic literature review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 75(C), pages 534-547.
    3. Monasterolo, Irene & de Angelis, Luca, 2020. "Blind to carbon risk? An analysis of stock market reaction to the Paris Agreement," Ecological Economics, Elsevier, vol. 170(C).
    4. Joshua Sunday Riti & Deyong Song & Yang Shu & Miriam Kamah & Agya Adi Atabani, 2018. "Does renewable energy ensure environmental quality in favour of economic growth? Empirical evidence from China’s renewable development," Quality & Quantity: International Journal of Methodology, Springer, vol. 52(5), pages 2007-2030, September.
    5. Ackermann, Simon & Szabo, Andrei & Bamberger, Joachim & Steinke, Florian, 2022. "Design and optimization of performance guarantees for hybrid power plants," Energy, Elsevier, vol. 239(PA).
    6. Semmler, Willi & Di Bartolomeo, Giovanni & Minooei Fard, Behnaz & Braga, Joao Paulo, 2022. "Limit pricing and entry game of renewable energy firms into the energy sector," Structural Change and Economic Dynamics, Elsevier, vol. 61(C), pages 179-190.
    7. Radulescu, Doina & Sulger, Philippe, 2022. "Interdependencies between countries in the provision of energy," Energy Economics, Elsevier, vol. 107(C).
    8. Mazzucato, Mariana & Semieniuk, Gregor, 2018. "Financing renewable energy: Who is financing what and why it matters," Technological Forecasting and Social Change, Elsevier, vol. 127(C), pages 8-22.
    9. Michaela Makešová & Michaela Valentová, 2021. "The Concept of Multiple Impacts of Renewable Energy Sources: A Critical Review," Energies, MDPI, vol. 14(11), pages 1-21, May.
    10. Albino, Vito & Ardito, Lorenzo & Dangelico, Rosa Maria & Messeni Petruzzelli, Antonio, 2014. "Understanding the development trends of low-carbon energy technologies: A patent analysis," Applied Energy, Elsevier, vol. 135(C), pages 836-854.
    11. Bertsch, Valentin & Di Cosmo, Valeria, 2018. "Are Renewables Profitable in 2030? A Comparison between Wind and Solar across Europe," ESP: Energy Scenarios and Policy 276178, Fondazione Eni Enrico Mattei (FEEM).
    12. Escoffier, Margaux & Hache, Emmanuel & Mignon, Valérie & Paris, Anthony, 2021. "Determinants of solar photovoltaic deployment in the electricity mix: Do oil prices really matter?," Energy Economics, Elsevier, vol. 97(C).
    13. Evangelia Karasmanaki & Spyridon Galatsidas & Georgios Tsantopoulos, 2019. "An Investigation of Factors Affecting the Willingness to Invest in Renewables among Environmental Students: A Logistic Regression Approach," Sustainability, MDPI, vol. 11(18), pages 1-18, September.
    14. Kathleen M. Saul & John H. Perkins, 2022. "A new framework for environmental education about energy transition: investment and the energy regulatory and industrial complex," Journal of Environmental Studies and Sciences, Springer;Association of Environmental Studies and Sciences, vol. 12(1), pages 149-163, March.
    15. Laktuka, Krista & Pakere, Ieva & Kalnbalkite, Antra & Zlaugotne, Beate & Blumberga, Dagnija, 2023. "Renewable energy project implementation: Will the Baltic States catch up with the Nordic countries?," Utilities Policy, Elsevier, vol. 82(C).
    16. Ronit Yitshaki & Fredric Kropp & Benson Honig, 2022. "The Role of Compassion in Shaping Social Entrepreneurs’ Prosocial Opportunity Recognition," Journal of Business Ethics, Springer, vol. 179(2), pages 617-647, August.
    17. Kveselis, Vaclovas & Dzenajavičienė, Eugenija Farida & Masaitis, Sigitas, 2017. "Analysis of energy development sustainability: The example of the lithuanian district heating sector," Energy Policy, Elsevier, vol. 100(C), pages 227-236.
    18. Gupta, Parul & Chauhan, Sumedha & Paul, Justin & Jaiswal, M.P., 2020. "Social entrepreneurship research: A review and future research agenda," Journal of Business Research, Elsevier, vol. 113(C), pages 209-229.
    19. Overholm, Harald, 2015. "Spreading the rooftop revolution: What policies enable solar-as-a-service?," Energy Policy, Elsevier, vol. 84(C), pages 69-79.
    20. Faissal Jelti & Amine Allouhi & Mahmut Sami Büker & Rachid Saadani & Abdelmajid Jamil, 2021. "Renewable Power Generation: A Supply Chain Perspective," Sustainability, MDPI, vol. 13(3), pages 1-22, January.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:kap:jbuset:v:179:y:2022:i:4:d:10.1007_s10551-022-05160-8. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Sonal Shukla or Springer Nature Abstracting and Indexing (email available below). General contact details of provider: http://www.springer.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.