Wealthy Private Investors and Socially Responsible Investing: The Influence of Reference Groups

David Risi, Falko Paetzold and Anne Kellers
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David Risi: Business School, Institute for Innovation and Entrepreneurship, Institute for Sustainable Business, Berne University of Applied Sciences, 3005 Berne, Switzerland
Falko Paetzold: EBS Business School, EBS University of Business and Law, 65375 Oestrich-Winkel, Germany
Anne Kellers: Center for Sustainable Finance and Private Wealth, Department of Banking and Finance, University of Zurich, 8001 Zurich, Switzerland

Sustainability, 2021, vol. 13, issue 22, 1-24

Abstract: Sustainable development requires a shift from traditionally invested assets to socially responsible investing (SRI), bringing together financial profits and social welfare. Private high-net-worth individuals (HNWIs) are critical for this shift as they control nearly half of global wealth. While we know little about HNWIs’ investment behavior, reference group theory suggests that their SRI engagement is influenced by their identification with and comparison to reference groups. We thus ask: how do reference groups influence the investment behavior of SRI-oriented HNWIs? To answer this question, we analyzed a unique qualitative data set of 55 semi-structured interviews with SRI-oriented HNWIs and industry experts. Our qualitative research found that, on the one hand, the family serves as a normative reference group that upholds the economic profit motive and directly shapes HNWIs to make financial gains from their investments at the expense of social welfare. On the other hand, fellow SRI-oriented HNWIs serve as a comparative reference group that does not impose any concrete requirements on social welfare performance, indirectly influencing SRI-oriented HNWIs to subordinate social concerns to financial profits. Our scholarly insights contribute to the SRI literature, reference group theory, and practice.

Keywords: high-net-worth individuals (HNWIs); qualitative research; reference group theory; socially responsible investing (SRI) (search for similar items in EconPapers)
JEL-codes: O13 Q Q0 Q2 Q3 Q5 Q56 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:gam:jsusta:v:13:y:2021:i:22:p:12931-:d:685228

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