Blended Social Impact Investment Transactions: Why Are They So Complex?

Abstract

Blended social impact investment (SII) transactions, in which multiple types of capital are combined to support attainment of social impact, are a pervasive, yet not closely examined, feature of the SII market. This paper seeks to describe and understand blended SII transactions through the lens of institutional theory. Specifically, we use the institutional logics theoretical frame to shed light on the implications of combining several institutional logics in SII transactions. Consistent with other SII research, we find that parties to blended SII transactions combine financial/commercial and social welfare logics. However, in blended SII transactions, different combinations of these logics are enacted by different stakeholders in a multi-hybrid-logic structure. As such, we propose that blended SII transactions are hybrids-of-hybrids. We argue that it is this hybrids-of-hybrid characteristic that differentiates blended SII transactions from other forms of SII and increases the potential for significant logical misalignment and resultant conflict and contestation. From a business ethics perspective, blended SII transactions cast light on the critical and often unrecognized role that grants and concessionary capital frequently play in enabling SII in not-for-profit, charitable ventures. We speculate that this can distort understanding of SII with adverse implications at the transaction and field levels.