Exploring heterogeneity among socially responsible investors: a critical analysis of an ethical building society's investors in the UK

TLDR: In this paper, the authors explore heterogeneity among socially responsible investors in terms of the importance they place on both financial and social returns when selecting socially responsible investment (SRI) and suggest heterogeneity among SR-investors, suggesting that the balance an investor acquires between these two motives vary from person to person.

Abstract: Socially responsible investment (SRI) has seen a massive growth in the last 10 to 15 years. Much of the literature on SRI is a result of research which has examined SR-investors as a homogeneous group of truly socially responsible investors. However, recent studies have started acknowledging the significance of two motivational criteria that an individual looks at when selecting SRI: these being financial return and social return aspects of SRI. Both these return aspects together determine an individual’s selection of socially responsible investment. Additionally, the balance an investor acquires between these two motives vary from person to person. Thus, suggesting heterogeneity among SR-investors in terms of the importance they place on the two return aspects of SRI. The aim of this study is to empirically explore heterogeneity among SR-investors in terms of the importance they place on both financial and social returns when selecting SRI. Analysis of survey data, (N=298) obtained from investors of Ecology Building Society, showed that SR-investors could be sub-grouped into three unique segments on the basis of the importance these segments hold for the financial and the social return aspects of SRI. These groups are: financial-return driven investors, social-return driven investors and dual-return driven investors. One-way ANOVA, post- hoc tests, discriminant analysis, chi2 tests and regression analysis were employed to rigorously validate this typology of investors. Pro-social attitude, perceived consumer effectiveness, trust, value orientations, age, education, income and gender were used as external variables for the validation of the typology/segments of SR investors. The three groups in the typology exhibit different psychographic and demographic profiles according to the specific combination of financial and social return that they exhibit. Also, the values motivating SRI-attitude of each cluster vary, thus highlighting the uniqueness of each cluster. These findings bring new understanding of investors in the 21st century, thus adding to the existing knowledge of investment behaviour and marketing. Marketers can benefit from the findings of this study as they can develop strategies for each segment so as to cater to their specific needs. Policy-makers striving to attain sustainability can benefit from this knowledge as they can determine which values to promote so as to sway people to invest in a sustainable way.