Essays on social impact investment: adoption and evolution outside anglo-saxon countries

This thesis is a collection of four essays aimed to add an original contribution to theory and practice through the analysis of the practices in the Social Impact Investment marketplace. Social Impact Investment is a strategy of asset allocation in which expectations of financial and social returns are blended together in a unique value proposition. At now, the studies have focused largely on the adoption and evolution of this practice in the Anglo-Saxon countries. Currently, the Anglo-Saxon model of Social Impact Investment has been criticized for the excessive inference of the government that exerts its power by establishing what social investees should be and do, the neoliberal policy discourse that surrounds the practice, and its social genuineness. The argument sustained in this collection is that the path dependency of history, culture, institutional forces and the differences of the welfare states might cause a variation in the way in which the Social Impact Investment marketplace develops in different institutional contexts. Thus, moving from the critics, the essays challenge the established paradigm and support the idea that, even if the Anglo-Saxon countries are usually pinpointed as a model, different alternatives of building a Social Impact Investment marketplace can exist. Moreover, this research builds upon the calls of scholars for segmenting the field in different practices, models and needs. Specifically, the research theorizes the contextual conditions and the actors that play an enabling function for the development of the Social Impact Investment marketplace in the Anglo-Saxon paradigm. Once these characteristics have been defined (in paper 1), the thesis proceeds by analyzing the cases where they are absent, with the aim to study the on-going practices and theorize alternatives models. In doing so, the thesis elaborates a rich and original description of the Italian Social Impact Investment market, proposing the roles that organizations can play in the absence of market enablers and the market configurations that results from their interactions (paper 2); the drivers that influence the Social Impact Investment decisions outside the paradigmatic context and the strategies that result from their combination (paper 3); the role of conflicts and barriers in developing the Social Impact Investment ecosystems (paper 4). III This thesis demonstrated that even if the market enablers fail to be present, it does not prevent the adoption and development of Social Impact Investments, but the market actors find several difficulties especially because of the lack of connection and intermediation in the market. The dearth of targeted public policies is only partially compensated by the private initiative and the lack of regulation, connection and public stewardship leaves space to uncoordinated and experimental small pilots. Some of them toil to be proper a Social Impact Investment and still conserve a charitable imprint. Nevertheless, there are also more audacious cases, which have properly the form of profitable investments. To compensate the lack of market enablers, the practice assumes a networked style, involving a larger group of organizations, which share competences and risks and experiment a superior degree of flexibility. As a result, the social embedded nature of organizations can act as an enabler in the start-up of Social Impact Investment initiatives and partners’ selection. Moreover, this thesis finds out that while some factors are relevant to the adoption and development of Social Impact Investment in the road runners countries (i.e.: the possibility to benefit from market incentives and public funding), they have a limited relevance in other contexts, where the private initiative is encouraged by different drivers, both financial and non-financial. The external pressures exerted by non-profit organizations, professional networks and working groups, the achievement of a first mover advantage, the financial attractiveness, the envisage of a segment of unserved demand and reputational reasons are all important factors that drive the decision when market enablers are absent. Depending on the prevalent drivers, organizations use Social Impact Investments for different strategies: for their financial stability or competitive returns, with the intent to achieve a first mover advantage in a profitable segment of unserved demand; for those companies that come to the world with a blended mission, it is a way to achieve their social and financial objectives; for the organizations that are driven mainly by external pressures and reputational aim, it is mainly an instrument to send a positive signal to the market and achieve external legitimation. Finally, this research identifies the conflicts that arise when organization collaborate to set a Social Impact Investment initiative and a typology of managerial strategies to cope with them, namely the reduction of formalism, the use of facts to compensate the difficulties of accounting the social outcomes and the mediation between views by allocating organizations to different sub-tasks. IV Theoretically, the collection is rooted in the prior research in the field and also builds upon consolidated theoretical frameworks, such as network theory and institutional theory. It concludes with the limitations of the studies, the relevance for professionals and academicians and paths for further research.