The project is structured around three sub-projects that are tightly interlinked. Each sub-project is also tied to specific practical considerations for business and other stakeholders. The sub-projects and their interlinkages and relationship to managerial implications are visualized in the figure below.

Figure 1. Research context: Impact investing as a nascent market category

In this project, we collect a data set consisting of interviews among actors from the financial sector (e.g. venture capitalists, fund managers, banks and institutional investors), impact entrepreneurs, innovation intermediaries, government actors and other policy bodies, as well as corporations from traditional industries. We also conduct participatory observations at industry events, conferences and business development programs in the field, and collect industry reports, news articles and academic research articles on the topic. This will create a rich data set on the emerging impact investing market in the Nordics.

Research privacy notice in Aalto University Impact Investment Project

Sub-project #1

Changing norms and practices of valuation among management

The financial sector has well-established practices and tools for evaluating the performance and potential of companies. In addition to considering a company’s profit, impact investing measures social and environmental value. This new form of investing challenges traditional norms of valuation in the financial sector, providing a fruitful context to explore how novel valuation practices emerge in strongly institutionalized settings. The purpose of this sub-project is to focus on the processes by which managers adopt new assessment strategies and business goals that might be contradictory in nature.

Sub-project #2

“Hyped” market categories and the emergence of category boundaries

Impact investing as an emerging asset class relates to sustainable development challenges such as climate change and poverty alleviation. Overall, such societal trends create a ‘demand’ for social and environmental businesses. Sometimes “hypes” can emerge in new market categories. Studies have shown that in such settings companies may both substantially and symbolically exhibit certain values and features and adopt novel practices. The attachment of firms to hyped categories, such as impact investing, differs widely. In this sub-project, we study how boundaries are negotiated in impact investing, and the role of different communities in both expanding the meaning of the market category and protecting its boundaries.

Sub-project #3

Novel forms of public-private partnerships – the social impact bond as a governance model

Impact investing creates new forms of cross-sector governance and partnerships between the public and private sector. The impact investing business model can take on a social impact bond (SIB) structure, in which private and public assets come together to fund and execute a project and achieve social and economic goals. In the typical SIB model, the public sector commissions a private sector service provider to deliver public services, financed by external investors who are promised a return if the planned impact is delivered. The intention of this sub-project is to explore cross-sector collaboration in the SIB context, and how government and business actors can operate at the intersection of profit and public good.

Targeted deliverables and outcomes

With our study, we aim to
– map out the impact investing ecosystem in the Nordics
– craft understanding on the current opportunities and challenges experienced by the ecosystem actors
– craft understanding on the social mechanisms by which the new market category emerges.

We will share our insights with the research participants.