Non-financial Value Research Articles

Impact investments opportunities and limitations

In recent decades, global economic community has increasingly emphasized the need to balance financial returns with social, environmental, and other non-financial values. In this context, the impact investing concept is an important step in investment strategies development aimed at achieving not only financial returns, but also positive social and environmental impacts. The purpose of the study is to provide a comprehensive and objective analysis of the opportunities and constraints accompanying impact investing in order to develop a deeper understanding of its essence and contribution to sustainable economic and social development and, as a consequence, to ensure its informed and effective use to achieve positive social and environmental transformation. The research methodology provides for the search and collection of scientific information with the subsequent use of meta-analysis and meta-synthesis methods, the application of Goldratt’s constraints theory and the use of system analysis. The theoretical basis is provided by studies and publications in the field of impact investing, sustainable development, social responsibility, and standards of non-financial, integrated reporting, including articles, monographs, reports, and official documents of organizations engaged in the investments’ development with positive social and environmental impact. The study has identified three significant perspectives provided by the impact investing paradigm and articulated three inherent limitations to the use of this investment practice. The paper has also confirmed that the identified perspectives and limitations show a strong interconnection and influence on each other, which is important for a full and deep understanding of the role and significance of impact investing in the contemporary context.

A Family's Non-Financial Values Shape Its Sustainability Strategy

A Family's Non-Financial Values Shape Its Sustainability Strategy

Exploring the relationship among ESG, innovation, and economic and financial performance: evidence from the energy sector

PurposeThis study aims to investigate the effect of innovation on environmental, social and governance (ESG) performance and, consequently, its influence on the economic and financial performance of companies.Design/methodology/approachA quantitative and descriptive research was carried out based on secondary data from the Refinitiv Eikon® database, using the panel data regression technique, considering the constructs: innovation, ESG performance and economic and financial performance.FindingsThe results showed that companies that tend to invest more financial resources in R&D are more likely to have higher ESG performance. In addition, companies that have higher ESG performance tend to have higher economic and financial performance.Practical implicationsManagers may consider investing more resources in R&D to achieve superior ESG performance. They should be aware that ESG is a strategic tool for creating financial and nonfinancial value for the organization. More than the traditional preparation of a financial report, stakeholders demand another type of information: ESG information.Originality/valueThe results confirm the basis of Stakeholder Theory, showing that the companies that meet the needs of all stakeholders tend to have greater economic and financial performance. ESG practices can include keeping employees motivated to work, improved corporate image in the eyes of customers, more satisfied suppliers and community and environment aligned with management. Therefore, these ESG initiatives are instrumental in protecting organizational objectives as well as increasing shareholder value.

The Difference in Perceptions of ESG Activities: Focusing on the Individual Characteristics and the Company Size

This study examined the impact of differences in perception of ESG activities on individual characteristics and enterprise size. Due to the COVID-19 pandemic and the economic downturn, companies must come up with measures to cope with sustainability and coexist with each other. In particular, companies are participating in creating a healthy society by directly experiencing climate change and recognizing the seriousness of the situation. In the past, ESG has focused only on financial value, so it has now become a representative concept of non-financial value, and companies are solving these solutions through ESG management. The main purpose of this paper is to see how ESG activities change depending on gender, age, length of service, and size of the company. Also, the study emphasizes the need for ESG activities and provides practical implications through empirical analysis.

Does intellectual capital matter for value creation of companies? evidence from Sri Lanka

Value creation is the ultimate purpose of any company and it is affected by many factors including capital. In knowledge-based economy, not only the financial capital but also non-financial capital play a pivotal role for creating value for the organizational stakeholders. The non-financial capital includes specially, the intellectual capital and its components; human capital, structural capital and relational capital. Thus, this study tried to explore the impact of intellectual capital and its components on value creation of Sri Lankan companies. The study was carried on the views obtained from the top personnel of 263 Sri Lankan companies out of 814 Sri Lankan companies including both Public Listed Companies and private companies. Further, the value creation was quantified using both financial and non-financial value drivers in this study. Data were analyzed using multivariate data analysis through Partial Least Square Structural Equation Modeling. Intellectual capital and structural capital have a significant positive impact on value creation according to the study’s findings. Human capital and relational capital do not have a significant impact on value creation. Furthermore, the explanatory power of the intellectual capital on value creation was lower than the explanatory power of the components of intellectual capital on value creation. Further, the findings of the study support to the theory, specially they confirm the stakeholder theory, knowledge based theory and intellectual capital based theory. Moreover, the study adds more value to the practice by identifying intellectual capital, human capital, structural capital and relational capital as the major predecessors of value creation of Sri Lankan companies.

National IoMT platform strategy portfolio decision model under the COVID-19 environment: based on the financial and non-financial value view.

The Internet of Medical Things (IoMT) is an emerging technology in the healthcare revolution which provides real-time healthcare information communication and reasonable medical resource allocation. The COVID-19 pandemic has had a significant effect on people’s lives and has affected healthcare capacities. It is important for integrated IoMT platform development to overcome the global pandemic challenges. This study proposed the national IoMT platform strategy portfolio decision-making model from the non-financial (technology, organization, environment) and financial perspectives. As a solution to the decision problem, initially, the decision-making trial and evaluation laboratory (DEMATEL) technology were employed to capture the cause-effect relationship based on the perspectives and criteria obtained from the insight of an expert team. The analytic network process (ANP) and pairwise comparisons were then used to determine the weights for the strategy. Simultaneously, this study incorporated IoMT platform resource limitations into the zero–one goal programming (ZOGP) method to obtain an optimal portfolio selection for IoMT platform strategy planning. The results showed that the integrated MCDM method produced reasonable results for selecting the most appropriate IoMT platform strategy portfolio when considering resource constraints such as system installation costs, consultant fees, infrastructure costs, reduction of medical staff demand, and improvement rates for diagnosis efficiency. The decision-making model of the IoMT platform in this study was conclusive and significantly compelling to aid government decision makers in concentrating their efforts on planning IoMT strategies in response to various pandemic and medical resource allocations.

A TWO-STAGE MATHEMATICAL PROGRAMMING MODEL FOR DISTRIBUTED PHOTOVOLTAIC PROJECT PORTFOLIO SELECTION WITH INCOMPLETE PREFERENCE INFORMATION

With the rapid growth of the solar photovoltaic (PV) market, many distributed PV power projects are introduced to the market. Selecting a rational project investment portfolio is a complex and challenging task for energy enterprises as both financial and non-financial factors of projects are needed to be considered under limited information and resources. This study presents a two-stage hybrid multi-attribute decision-making and integer programming model for distributed PV project portfolio selection. In Stage I, a multiple attribute group decision-making method based on mathematical programming is used to evaluate the non-financial value of projects under incomplete preference information. Compensative weighted averaging operators with an adjustable parameter are utilized to capture the subjective attitudinal character of an expert in the aggregation process. Then, a rank acceptability index is developed to measure each project’s group support degree in non-financial dimension. In Stage II, a bi-objective integer programming model is constructed to optimize project portfolios, which considers both financial and non-financial values of projects under resource, carbon emission and other strategic constraints. The applicability and effectivity of the proposed approach are demonstrated by a case study of a distributed PV project portfolio selection.

State-sponsored price transparency programs for ophthalmic services

ObjectivesTo characterize the information provided by state-sponsored price transparency programs and describe price variation for ophthalmic services. MethodsWe searched for state-sponsored price transparency programs and reviewed all available information on ophthalmic services. ResultsIn total, 55% (6/11) of state-sponsored price transparency programs included ophthalmic services. Three provided nonfinancial value metrics, five provided prices by clinician organization, and none reported out-of-pocket costs, insurance costs, or prices by insurers for ophthalmic services. The median within-state price ratio was 3.65 (interquartile ratio [IQR]: 2.04–7.91). Mean prices for cataract surgery ranged from $2575 to $5097 and from $873 and $27,801.66 for retinal detachment repair. DiscussionMost of the eleven state-sponsored price transparency programs included pricing information for ophthalmic services. No programs provided specific out-of-pocket costs, insurance costs, or prices by insurers for ophthalmic services. There was substantial variation in prices for all included ophthalmic services within and between states.

The Effects of Shareholding of the National Pension Fund on Environmental, Social, Governance, and Financial Performance: Evidence from the Korean Manufacturing Industry

With the growing number of environmental, social, and governance (ESG) problems, many companies have begun to implement more sustainable business practices. In the midst of this change, institutional shareholders declare and adopt socially responsible investment procedures, which is a way of engaging in investor activism. Despite the growing interest in investor activism following the introduction of the stewardship code, little attention has been paid to how socially responsible investment practices of institutional investors affect the non-financial value of the pillars of environmental, social, and governance as well as financial performance, including short-term accounting (ROE, ROA) and long-term market performance (Tobin q). The current study examines whether the national pension fund (NPF), the world’s third-largest Korean pension fund, can increase the ESG performance of investee firms in addition to accounting and market performance through institutional investors’ shareholding. This study, by applying path analysis, attempts to explore the relationship between the NPF’s socially responsible investing, ESG, and the financial performance of the investee firms. This research offers evidence that ESG performance acts as a moderator or a mediator between NPF’s shareholding and financial performance.

Data Asset Disclosure and Nonprofessional Investor Judgment: Evidence from Questionnaire Experiments

The development of computer technology, such as data mining, has made data a productive resource. However, there are currently no relevant codes or guidelines in countries around the world that stipulate or recommend whether information on corporate data assets needs to be disclosed. This article organized a questionnaire experiment through an Internet questionnaire platform. This article finds that the disclosure of corporate data assets can significantly improve the evaluation judgment of nonprofessional investors on corporate nonfinancial performance and investment value, which is mediated by the product development ability and user stickiness of the company, by controlling the experimental variable of whether corporate data assets are disclosed or not. Therefore, this article suggests that enterprises should further improve the level of information disclosure and increase the disclosure of information related to data assets to show their investment value. It is also necessary for regulators to consider increasing the mandatory disclosure of data assets when adjusting policies and regulations in the future to reduce the level of information asymmetry in the capital market and protect the interests of nonprofessional investors.

A Comparative Research on Communities of Practice, University Knowledge Exchange and Business Model Changes between the United Kingdom and Vietnamese Agri-tech Start-ups

The paper explores the expectations that agritech startups in the United Kingdom and Vietnam have of the benefits of Communities of Practice (CoPs), and how CoPs help these businesses to tackle the challenges of business model changes for their growth enhancement. The co-creational collaboration between academics and agritech startups when working together on knowledge/experience-sharing through CoPs is also investigated. The research uses a case-study approach, meetings, interviews, and documentary data to capture the events, actions and changes of attitudes, behaviors, and expectations of eight agritech startups towards their use of CoPs. The research indicates a significant change in the business models of the startups when integrating temporal CoPs. These agritech startups often exploit their existing business models, while exploring a portfolio of new business opportunities that could generate new growth engines. Some of them quickly move into a value creation phase by which they achieve quick-wins and medium-term actions that generate both financial and non-financial business value. The research results may have implications for policymakers and practitioners who want to develop these types of interventions. Businesses in other fields can also better understand the value and potential of temporal COPs and start applying them.

Nonfinancial value creation of integrated reporting

PurposeThis paper aims to explore the nonfinancial drivers of value creation that influence an investment decision and present a set of drivers that contribute with a useful integrated reporting to its providers of financial capital using evidence from Brazil.Design/methodology/approachThis paper is based on a systematic literature review in the Scopus, Web of Science and Google Scholar databases in the period from 2005 to 2020. Interpretive content analysis is used in 42 documents identified to explore nonfinancial drivers to demand by providers of financial capital, which are classified according to the capitals nonfinancial suggested by the integrated report (IR). Then, the results are evaluated by Brazilian professional investors in a focus group.FindingsThe members of the focus group do not consider the IR relevant to investment decision and neither the information about natural capital nor social capital. They highlighted two nonfinancial drivers of value not identified in the previous literature.Research limitations/implicationsThe focus group is limited by subjects’ availability and by the participants’ number. But its results represent initial discussions on the subject in the Brazilian context.Practical implicationsThe results of this study have value, principally, to investors, target audience of IR, because it aligns your demands with the IRs content, improving its usefulness.Originality/valueTo the best of the authors’ knowledge, this manuscript is the first study to investigate the perception of Brazilian professional investors about the importance of the IR in investment decision-making and to identify content relevant to the financial capital provider’s investment decision, which can improve the usefulness of IR.

Non-financial value creation in corporate venture capital: a systematic review of empirical studies

Non-financial value creation in corporate venture capital: a systematic review of empirical studies

Towards Inclusive and Sustainable Infrastructure Development through Blockchain-enabled Asset Tokenization: An Exploratory Case Study

Infrastructure development is a key to supporting the economy and building social resilience. Unfortunately, existing infrastructure financing models struggle with multiple issues to close the widening financial gap and integrate environmental, social, and governance (ESG) factors to improve resilience and achieve sustainable growth. With the emergence of innovative technology, blockchain-enabled asset tokenization shows the potential to create a new economic model to integrate non-financial values, such as positive social and environmental impacts, into tradable cryptographic tokens. Tokenization offers opportunities to generate long-term positive social and environmental impacts, along with better financial returns, which further improves the profitability and bankability of infrastructure projects. SolarCoin, WePower Token, and ZiyenCoin are analyzed in this exploratory case study research to demonstrate how blockchain-enabled asset tokenization can be applied to infrastructure development. It is identified that tokenization promotes inclusiveness and sustainability through shareholder empowerment, incentive monetization, and finance optimization. Obstacles hindering the broader adoption of tokenization and policy implications are also discussed.

Non-financial value creation in corporate venture capital: a systematic review of empirical studies

Non-financial value creation in corporate venture capital: a systematic review of empirical studies

Leveraging smart capital through corporate venture capital: A typology of value creation for new venture firms

Corporate Venture Capital (CVC) units position themselves as smart capital providers in new venture firm New Venture Firm (NVF) financing. In line with the resource-based view and social capital theory, extant research postulates that CVCs contribute complementary assets beyond capital to their NVFs. However, the non-financial value for NVFs is mainly created through a corporate business unit within the CVC's corporate parent company. As agency theory implies, the strategic agendas of CVCs, NVFs, and corporate business units may not always align and thereby often hamper value creation. Hence, our qualitative research builds on a cross-industry case study of eleven CVC units to show how they leverage resources from their corporate sponsors to add value for NVFs. We reveal the mechanism behind CVC value creation holistically by identifying eight design elements that lead to a typology of four distinctive CVC forms. This classification offers a representation of the CVC landscape based on their institutional environment.

The Impact of ESG Factors on Asset Returns: Empirical Research

The subject of the research is the assessment of Investment decision-making efficiency considering the sustainable development requirements. The article aims to identify the relationship between environmental, social and governance (ESG) performance and market returns for investors and the reasons for it. The relevance of the paper is determined by the need to develop research in the field of ESG integration and evaluation of the portfolio investment effectiveness in the context of responsible investment practices popularity. Scientific novelty: the study develops the theory of ESG integration and allows the authors to conclude that ESG commitment is a driver of market profitability for investors. The authors apply methods such as theoretical analysis of scientific publications (analysis, synthesis, generalisation) and quantitative methods, including statistical data analysis, regression analysis, financial modelling. The research base is scientific works of domestic and foreign authors, analytical reports of rating agencies, ESG funds, historical stock market data on companies analysed in the course of this study. All the information used in this study is publicly available or provided by the Bloomberg database. In the course of the study, authors form model portfolios of ESG-oriented and ESG-neutral companies shares and perform a comparative analysis of their fundamental indicators and financial returns. The authors conclude that the portfolio of ESG-oriented companies demonstrates profitability no lower than the portfolio of ESG-neutral companies, considering the risks. At the same time, the values of the fundamental indicators of ESG-oriented companies are inferior to the values of ESG-neutral companies. The relationship between the degree of a company’s ESG compliance and its investment attractiveness is due, among other things, to non-financial value drivers. The authors recommend integrating ESG into the analysis of investment portfolios, significant for the development of investment strategies.

Creating value: sustainability and accounting for non-financial matters in the pre- and post-corona environment

PurposeThis paper aims to introduce the special issue on “sustainability and accounting for non-financial matters: qualitative and quantitative research approaches”. This special issue was organised at the time when the entire globe was affected by the Coronavirus and accordingly, this paper has taken this opportunity to discuss the implications of this pandemic on accounting for non-financial issues, especially in relation to sustainability accounting research and practice.Design/methodology/approachAn analysis of public documents and limited academic research on the Coronavirus was undertaken in this paper to highlight how life as it existed has fundamentally changed. The authors also review the papers published in this special issue and identifies research opportunities arising from the current environment.FindingsThe onslaught of the Coronavirus provides both challenges and opportunities for the practice of, and research into, accounting for non-financial matters, such as sustainability. The papers published in this special issue promote understanding and linking of sustainability reporting practices, to creating firm values, as well as identifying current and emerging challenges. The special issue explores criteria for the construction of accounting technology that is consistent with agnostic-based critical accounting and accountability, a business case for managers and practitioners to formulate strategic and management control systems in response to climate change issues, legitimacy and the use of photographs in sustainability reporting to create value, effective disclosures of business and sustainability ethics practiced by the firm for reputation building and value creation, indigenous accounting in mining companies, public sector policy framing of non-financial value, the barriers to sustainability reporting because of lack of awareness and knowledge and inadequate regulatory support in developing countries and the significance of sustainability accounting education to improve sustainability reporting practices in developing countries.Research limitations/implicationsFuture research opportunities in relation to the impact of the Coronavirus on accounting for non-financial value are identified. Given that COVID-19 is a societal matter, the practical implications of the Coronavirus in accounting for non-financial value creation are highlighted. The Coronavirus has challenged the existing economic paradigm and non-financial issues will capture the attention of corporations, other institutions, civil society and governments.Practical implicationsThe Coronavirus has challenged the existing economic paradigm and non-financial issues will capture the attention of corporations, other institutions, civil society and governments.Social implicationsGiven that COVID-19 is a societal matter, the practical implications of the Coronavirus in accounting for non-financial value creation are highlighted.Originality/valueThis study, to the knowledge, is one of the pioneer academic studies that has explored the implications of the Coronavirus on accounting for non-financial value. In addition, this special issue includes papers that highlight how non-financial reporting matters are increasingly being given attention by companies to enhance business practices on sustainability through different perspectives.

Entrepreneur fund-seeking: toward a theory of funding fit in the era of equity crowdfunding.

Why do entrepreneurs prefer to seek one equity form of funding over another? To address this question, we develop a contingency-based model of perceived funding fit that delineates several factors that influence strategic fund-seeking decisions by entrepreneurs. In prior research, entrepreneur fund-seeking has largely been explained using models that rely on rule-based approaches (e.g., the pecking order assumption) or value capture considerations. In contrast, we propose a dynamic contingency-based model that delineates several factors that influence entrepreneur perceptions of funding fit over and above transactional efficiency, including atypical value creation from the fundraising process itself and external stakeholder values. We inductively assess our model in the context of equity crowdfunding (ECF) and find that perceived funding fit can motivate some strategic fund-seekers to opt to pursue ECF, even when they have a reasonable opportunity to obtain other more established sources of funding such as angel or seed-stage venture capital. This indicates that ECF in several cases is not a funding mode of last resort as proposed in prior literature.Plain English Summary Raising capital is a complex and dynamic process. Strategic entrepreneurs seek “funding fit” for their particular ventures leading some to opt for less established forms of funding such as equity crowdfunding for a variety of reasons beyond efficiency. Prior venture funding research has largely taken the view of the investor, emphasizing what entrepreneurs must do to win the favor of angel investors and other seed funders, and deeming equity crowdfunding (ECF) a funding mode of last resort for discouraged entrepreneurs. Inductively analyzing hundreds of regulatory filings, entrepreneur interviews, public information, and media pieces about ECF-funded firms, we find evidence that in several cases, strategic entrepreneurs may prefer to opt for ECF if they perceive it to be a better fit due to novel forms of nonfinancial value. We explain our findings by proposing an emergent contingency-based model of “funding fit.”

The CSR and greenwashing concepts knowledge and perceptions among employees of Polish organizations – a pilot study

Purpose: The involvement of enterprises in corporate social responsibility (CSR) reporting is one of the most important aspects of contemporary business ethics. The purpose of the study is to examine the perception and knowledge of employees who work in enterprises declaring and to record their observations in case of CSR, its reporting and greenwashing phenomenon. Design/methodology/approach: The article presents a pilot study. A partially categorized interview method was used. The interview was divided into three parts: Part I – Employee satisfaction with work in an organization that declares to act socially responsible. Part II is connected to an employee's view of the corporate social responsibility of the organization in which he works. Part III – the concept of corporate social responsibility and greenwashing. Additionally the survey was conducted. All data was collected and conclusions were drawn. The research sample consisted of 10 people who were interviewed and among whom a survey was conducted. All respondents work in enterprises that declare and report corporate social responsibility. Findings: The vast majority of employees of enterprises are aware of issues related to CSR reporting. They also know the concept of greenwashing. However, the soft aspects related to informing employees about CSR and reporting are problematic. Research limitations/implications: The main limitation of this paper is research sample, which was 10 respondents/participants of survey/interviews. However, it should be remembered that this is a pilot study that is to initiate research on a larger scale. Practical implications: The results of the study proposed in the article, which would be conducted on a larger scale, may provide a picture of the insights of employees directly involved in the business process declared as socially responsible. This may allow determining the most important factors for the organization, which determine the satisfaction and commitment to work of people employed in socially responsible enterprises. Also their work efficiency, commitment to building organizational culture and conviction to the values well-established in the company can be improved Originality/value: On the basis of the literature analysis, it can be noticed that research on the perception of CSR mainly relates to building the non-financial value of enterprises or consumer perceptions/attitudes. On this basis, a research gap was identified in the field of knowledge and CSR perception and job satisfaction of employees actively participating in socially responsible business processes or CSR reporting