Socially responsible investing (SRI) is gaining traction in the financial sector, but it is unclear whether the dominant financial logic complements or competes with the social logic in the founding of SRI funds. Based on insights we gained from observation at an Asian SRI industry association, interviews with SRI professionals in the U.S. and Europe, and other fieldwork, we questioned explanations for SRI's conflicted relationship with the financial logic. Our observations prompted us to build a panel database of SRI fund foundings from 1970 to 2014 in 19 countries so that we could examine how a dominant logic interacts with alternative logics to promote or stifle institutional change. We decomposed the financial logic into interdependent dimensions as the provider of means (resources, practices, and knowledge) for novel financial ventures to be founded and the enforcer of profit-maximizing ends that constrain such foundings. Our theory suggests a paradoxical role for the financial logic, which explains an intriguing empirical finding: the founding of SRI funds has a curvilinear, inverted-U-shaped relationship with the prevalence of the financial logic. We propose and find that the relationship between the dominant financial logic and the social logic of SRI shifts from complementary to competing as the financial logic becomes more prevalent in society and its profit-maximizing end becomes taken for granted. We examined how certain alternative logicsthose of unions, religion, and green political parties-moderate these effects. Our results shed light on how and to what extent institutional change can occur in fields in which one institutional logic is dominant. They also reveal countrylevel institutional factors that drive SRI.

No abstract

Environmental protection is widely perceived as a state responsibility, but market-based solutions such as green investing have emerged in the financial sector. Little research has addressed whether green investing can affect corporate environmental performance and how the state would moderate such an impact. Using an institutional logics perspective, we extend the literature on institutional complexity by exploring the factors leading to compatibility of logics and practices. We theorize that the success of green investing as a novel hybrid practice combining financial means and environmental goals depends on the legitimacy it achieves as an appropriate solution to the stated goal, and this legitimacy can be boosted or dampened by other hybrid practices in the field. Analyzing a panel dataset of 3,706 firms from 20 countries between 2002 and 2013, we find a positive relationship between the relative size of green investment in the economy and firm-level environmental performance in that country. This relationship is moderated by state policies: a strong environmental protection policy weakens the positive relationship between green investing and corporate environmental performance, and a strong shareholder protection policy strengthens the relationship. We contribute to research on institutional complexity, logic compatibility, and public–private cooperation in pursuing the common good.

No abstract

No abstract