Architectural dimensions of socially driven venture capital firms: social innovation in the capital markets

Raymond J. Jones and Manjula S. Salimath

New England Journal of Entrepreneurship, 2021, vol. 25, issue 1, 26-47

Abstract: Purpose - Private equity and venture capital (VC) firms in the capital markets sector invest capital with the primary goal of delivering economic value. However, some firms in the capital markets sector have started to shift this focus to create (i.e. invest in) social value. More specifically, traditional VC firms are starting socially oriented funds, while other firms have emerged to focus solely on investments in social enterprises. These VC firms are contributing to an interesting paradox – performance metrics are not measured by profit alone but also by social innovation. From an architectural perspective, the authors examine the implications of internal design, i.e. how specific strategic and structural factors influence the financial performance of VC firms with a social orientation to determine if these firms really can “do well and do good.” Design/methodology/approach - Social orientation was determined by content analysis of mission statements of the VC firms. Firm strategies, structures and performance were sourced from secondary data. A moderated mediation model was used to test relationships. Findings - Results suggest that (1) socially responsible VC firms adopt distinct foci of social investing that directs their strategic orientation and (2) these various foci have vastly differing effects on the firm's overall performance, strategic decisions made and the architecture of their structural design. Originality/value - This study is among the first to explore socially responsible VC architectural dimensions, with implications for firm design based on blended measures of success.

Keywords: Social innovation; Venture capital; Strategy; Organizational structure; Performance (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:nejepp:neje-07-2020-0027

DOI: 10.1108/NEJE-07-2020-0027

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