Impact investments are emerging as a new asset class of social finance, sometimes driven by multinational enterprises as part of their strategic corporate social responsibility strategy. These investments intend to create positive societal impact beyond a financial return through the development of social enterprises. Scholars have highlighted the conflicting institutional logics that these later hybrid organizations must face when combining social welfare and profitability.
Yet we lack in-depth insight into how impact investing funds are building their own accountability and legitimacy, and more specifically how they are responding to their investor’s pressure to manage societal impact. This paper builds on a three year action research program conducted with Schneider Electric, a multinational enterprise specialized in energy management. The company initiated and sponsored an impact investing fund targeting energy access ventures in Sub-Saharan Africa, alongside four Development Finance Institutions.
Grounded in neo-institutional and resource dependence theories, the article analyses the perceptions of the fund’s managers and suggests a pattern of strategic responses. The fund initially conformed to the emerging values and practices of the industry motivated by a search for salient legitimacy. Then they turned to find a compromise when facing operational complexity, and negotiated the increasing number of requirements from their investors. The paper further provides recommendation for social innovation actors in adopting a performance-oriented approach for managing societal value creation.