Signalling theory in fundraising for social enterprise: An interview study with impact investors
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School of Business |
Master's thesis
Authors
Date
2020
Department
Major/Subject
Mcode
Degree programme
Entrepreneurship and Innovation Management
Language
en
Pages
75+9
Series
Abstract
Abstract This master’s thesis addresses the knowledge gap on how external funding is obtained for financial intermediation for social enterprise, which pursue both financial and prosocial goals through market-based mechanisms. The goal of the thesis is to draw on signalling theory to structure the fundraising process for impact investments and explicate how signals resolve or reduce information problems (Connelly et al., 2011; Spence, 2002; Spence, 1973) between the impact investment funds and potential investors regarding the implementation of the concept of social value creation into information-sharing taking place in fundraising. This thesis follows a qualitative postpositivist interview study methodology and develops a thematic analysis and a conceptual argument for organizational signaling in the context of the study. Seven semi-structured interviews were carried out with Finnish and German participants from organizations engaged in the practice of impact investing with presence on developing and developed markets. The interview data was then conveyed into a thematic data structure grounded on the theoretical constructs from signaling theory, social entrepreneurship and entrepreneurial finance literature. The study is then concluded with the conceptual framework for signaling in fundraising for social enterprise. The results of the qualitative data analysis suggest that in addition to sharing information about organizational characteristics, financial intermediaries engaging in fundraising activities for dual-goals actively manage conceptual interpretations around the loosely defined practice of impact investing and express how social value is created through the choice of investment strategy. These themes expand the cognitive approach on organizational signaling (Drover et al., 2018) by addressing role of receiver interpretation and attention in the context of fundraising and reflecting the role of institutional environment on social value creation in financial intermediation. This study contributes to qualitative theory-building by providing a description of signaling in context of resource acquisition for social enterprise, while assessing how the complex concept of social value creation is effectively communicated through a signal-set expressing information on organizational characteristics, financial intermediation strategies and conceptual interpretations about impact investing. The theoretical arguments hold relevance for practitioners engaging in fundraising for impact investing by developing a strategic framework for integrating intentional social impacts as a dimension of fundraising communication along with organizational characteristics and intermediation strategy.Description
Thesis advisor
Kroeger, ArneKeywords
social entrepreneurship, signalling theory, impact investing, social value creation