Abstract
This article studies institutional investor allocations to the socially responsible asset class. We propose two elements influence socially responsible institutional investment in private equity: internal organizational structure, and internationalization. We study socially responsible investments from Dutch institutional investments into private equity funds, and compare socially responsible investment across different asset classes and different types of institutional investors (banks, insurance companies, and pension funds). The data indicate socially responsible investment in private equity is 40–50% more common when the decision to implement such an investment plan is centralised with a single chief investment officer. Socially responsible investment in private equity is also more common among institutional investors with a greater international investment focus, and less common among fund-of-fund private equity investments.
Article PDF
Similar content being viewed by others
Avoid common mistakes on your manuscript.
References
Ali, P. U. and M. L. Gold: 2002, An Appraisal of Socially Responsible Investments and Implications for Trustees and Other Investment Fiduciaries. University of Melbourne Public Law Research Paper No. 32
Angel, D. P. and M. T. Rock: 2004, Global Standards and the Environmental Performance of Industry. Working Paper 04-13. Oxford, School of Geography and the Environment, University of Oxford
Bello, Z. Y.: 2005, ‹Socially Responsible Investing and Portfolio Diversification’, Journal of Financial Research, 28, 41–57
Black B. S., Gilson R. J. (1998) Venture Capital and the Structure of Capital Markets: Banks Versus Stock Markets. Journal of Financial Economics 47:243–277
Cowton C. J. (2002) Integrity, Responsibility and Affinity: Three Aspects of Ethics in Banking. Business Ethics. A European Review 11:393–400
Cowton C. J. (2004) Managing Financial Performance at an Ethical Investment Fund. Accounting, Auditing and Accountability Journal 17:249–275
Cumming D. J., Fleming G., Suchard J. (2005) Venture Capitalist Value Added Activities, Fundraising and Drawdowns. Journal of Banking and Finance 29:295–331
Cumming D. J., Johan S. A. (2006) Is it the Law or the Lawyers? Investment Covenants Around the World. European Financial Management 12:535–574
Derwall, J. and K. C. G. Koedijk: 2005, The Performance of Socially Responsible Bond Funds. Working Paper, Erasmus University Rotterdam
Dillenburg S., Greene T., Erekson O. H. (2003) Approaching Socially Responsible Investment with a Comprehensive Ratings Scheme: Total Social Impact. Journal of Business Ethics 43:167–177
Doh J., Rodriguez P., Uhlenbruck K., Eden L. (2003) Coping with Corruption in Foreign Markets. Academy of Management Executive 17:114–127
Dowell G., Hart S., Yeung B. (2000) Do Corporate Global Environmental Standards Create or Destroy Market Value? Management Science 46:1059–1074
Dunning J. H. (2003) Making Globalization Good. The Moral Challenges of Global Capitalism. Oxford University Press, Oxford
Geczy, C., R. F. Stambaugh, and D. Leven: 2003, Investing in Socially Responsible Mutual Funds. Wharton School Finance Working Paper
Gompers P. A., Lerner J. (1999) The Venture Capital Cycle. MIT Press, Cambridge, MA
Guay T., Doh J. P., Sinclair G. (2004) Non-governmental Organizations, Shareholder Activism, and Socially Responsible Investments: Ethics, Strategic, and Governance Implications. Journal of Business Ethics 52:125–139
Guyatt, D.: 2005, A Summary of the Findings of a Survey into: “Investment Beliefs Relating to Corporate Governance and Corporate Responsibility”. Working Paper, University of Bath
Guyatt, D.: 2006, Institutional Investors and the Promotion of CSR: The Investor Perspective. Working Paper, University of Bath
Hanna, J.: 2004, How Corporate Responsibility is Changing in Asia. Harvard Business School Working Knowledge (February 23, 2004)
Hannafey F. T. (2003) Entrepreneurship and Ethics: A Literature Review. Journal of Business Ethics 46: 99–110
Heckman J. (1976) The Common Structure of Statistical Models of Truncation, Sample Selection, and Limited Dependent Variables and a Simple Estimator for such Models. Annals of Economic and Social Measurement 5:475–492
Heckman J. (1979) Sample Selection Bias as a Specification Error. Econometrica 47:153–161
Hillman A. J., Kleim G. D. (2004) Corporate Political Activity: A Review and Research Agenda. Journal of Management 30: 837–857
Kolk A. (2005) Corporate Social Responsibility in the Coffee Sector: The Dynamics of MNC Responses and Code Development. European Financial Management 23:228–236
Kolk A., van Tulder R. (2001) Multinationality and Corporate Ethics: Codes of Conduct in the Sporting Goods Industry. Journal of International Business Studies 32: 267–283
Kolk A., van Tulder R., Welters C. (1999) International Codes of Conduct and Corporate Social Responsibility: Can Transnational Corporations Regulate Themselves? Transnational Corporations 8:143–180
Lockett, A., J. Moon, and W. Visser: 2006, ‹Corporate Social Responsibility in Management Research: Focus, Nature, Salience and Sources of Influence’, Journal of Management Studies, 43, 115–136
Mallin C. (2001) Institutional Investors and Voting Practices: An International Comparison. Corporate Governance: An International Review 9:118–126
Mallin C., Mullineux A., Wihlborg C. (2005) The Financial Sector and Corporate Governance: The U.K. Case. Corporate Governance: An International Review 13:532–541
Manigart S., De Waele K, Wright M., Robbie K., Desbrières P., Sapienza H., Beekman A. (2000) Venture Capital, Investment Appraisal, and Accounting Information: A Comparative Study of the U.S., U.K., France, Belgium and Holland. European Financial Management 6:380–404
Manignan I., Ralston D. A. (2002) Corporate Social Responsibility in Europe and the U.S.: Insights From Businesses’ Self-presentations. Journal of International Business Studies 33:497–514
Maula M. V. J., Autio E., Murray G. C. (2003) Prerequisites for the Creation of Social Capital and Subsequent Knowledge Acquisition in Corporate Venture Capital. Venture Capital: An International Journal of Entrepreneurial Finance 5:117–134
Mayer C., Schoors K., Yafeh Y. (2005) Sources of Funds and Investment Activities of Venture Capital Funds: Evidence from Germany, Israel, Japan and the U.K. Journal of Corporate Finance 11:586–608
McInerney, T. F.: 2005, Putting Regulation Before Responsibility: The Limits of Voluntary Corporate Social Responsibility. GWU Law School Public Law Research Paper No. 123
Miles M. P., Munilla L. S., Covin J. G. (2004) Innovation, Ethics and Entrepreneurship. Journal of Business Ethics 54:97–101
Mill G. A. (2006) The Financial Performance of a Socially Responsible Investment Over Time and a Possible Link with Corporate Social Responsibility. Journal of Business Ethics 63: 131–148
Montgomery, D. B. and C. A. Ramus: 2003, Corporate Social Responsibility Reputation Effects on MBA Job Choice. Stanford GSB Working Paper No. 1805
Plantinga, A. and B. Scholtens: 2001, Socially Responsible Investing and Management Style of Mutual Funds in the Euronext Stock Markets. Working Paper, Depaul University – Driehaus Center for Behavioral Finance
Sapienza H., Manigart S., Vermeir W. (1996) Venture Capital Governance and Value-added in Four Countries. Journal of Business Venturing 11:439–469
Schroder, M.: 2003, Socially Responsible Investments in Germany, Switzerland and the United States – an Analysis of Invest Funds and Indices. ZEW Discussion Paper No. 03–10
Shaffer B. (1995) Firm Level Responses to Government Regulation: Theoretical and Research Approaches. Journal of Management 21:495–514
Small III, A. A. and J. G. Zivin: 2002, A Modigliani-Miller Theory of Corporate Social Responsibility. Working Paper, Columbia University
Sparkes R., Cowton C. J. (2004) The Maturing of Socially Responsible Investment: A Review of the Developing Link with Corporate Social Responsibility. Journal of Business Ethics 52:45–57
Spence L. J., Schmidpeter R., Habisch A. (2003) Assessing Social Capital: Small and Medium Sized Enterprises in Germany and the U.K. Journal of Business Ethics 47:17–29
Social Investment Forum: 2003, 2003 Report on Socially Responsible Investing Trends in the United States. Social Investment Forum, Washington DC, United States, http://www.socialinvest.org/areas/research/trends/sri_trends_report_2003.pdf
Waring P., Lewer J. (2004) The Impact of Socially Responsible Investment on Human Resource Management: A Conceptual Approach. Journal of Business Ethics 52:99–108
Wempe J. (2005) Ethical Entrepreneurship and Fair Trade. Journal of Business Ethics 60: 211–220
Wright M., Lockett A. (2003) The Structure and Management of Alliances: Syndication in the Venture Capital Industry. Journal of Management Studies 40:2073–2104
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Cumming, D., Johan, S. Socially Responsible Institutional Investment in Private Equity. J Bus Ethics 75, 395–416 (2007). https://doi.org/10.1007/s10551-006-9261-8
Received:
Accepted:
Published:
Issue Date:
DOI: https://doi.org/10.1007/s10551-006-9261-8