Investing for a better tomorrow: Values-driven antecedents of investment in socially responsible equity funds by Indian retail investors

Abstract

Socially responsible investment (SRI) has recently gained major prominence for attaining sustainable development goals. While institutional investors have made remarkable efforts to mobilize resources toward socially responsible funds, retail investors remain apprehensive. Using the behavioral reasoning theory (BRT) framework, this study has examined the determinants of investment behavior in socially responsible equity funds (SREF) among Indian retail investors. A structured questionnaire was administered to 370 participants using a multi-stage stratified random sampling technique over 5 months starting June 2022. For data analysis, artificial neural network (ANN) and fuzzy set qualitative comparative analysis (fsQCA) complement the disjoint two-stage partial least square-structural equation modelling (PLS-SEM) approach to ensure the robustness of results and provide crucial practical insights. The result suggests that religious values shape investors' justifications for and against investment in SREF. “Reasons for” positively influence the global motives (attitude, subjective norms, and perceived behavioral control), whereas “reasons against” share a negative relationship with the attitude and perceived behavioral control. All global motives positively affect the intention towards investment in SREF, which in turn translates into actual investment behavior. The study provides theoretical insights to researchers and policy implications for corporations, fund managers, policymakers and regulators in light of the findings.