Mechanisms with payment for social impact: characteristics and determinants

• Grant number: 16/03818-2
• Support Opportunities: Scholarships abroad - Research
• Start date: December 01, 2016
• End date: January 31, 2017
• Field of knowledge: Applied Social Sciences - Administration - Business Administration
• Principal Investigator: Sérgio Giovanetti Lazzarini
• Grantee: Sérgio Giovanetti Lazzarini
• Host Investigator: Ilze Kivleniece
• Host Institution: Instituto de Ensino e Pesquisa (Insper). São Paulo , SP, Brazil
• Institution abroad: Imperial College London, England

Abstract

In recent decades, management scholars have tried to understand whether it is possible to combine profitability with socio-environmental impact as performance variables in various sectors. More recently, the debate gained new momentum with the emergence of so-called "impact investors," which, in many cases, seek to invest in projects that effectively generate social impact beyond pure profitability. These investors often demand metrics of impact, and part of their financial result can be conditional on those metrics. This is the case of the so-called social impact bonds, a funding mechanism for projects in the social interest, so that investors can receive extra compensation if the activity generates real impact to the public sector. This research project aims at increasing our understanding of these mechanisms, how they have been contractually structured, and what are the main techniques to measure and compensate for impact. The proposed research should involve a combination of quantitative and qualitative data. Quantitative data will be consolidated into a database of social impact bonds and other pay-for-performance contracts throughout the world. Qualitative data, in turn, will be obtained from interviews with investment funds, social entrepreneurs, nonprofit organizations, research centers and other relevant actors in the field. I intend to broaden our understanding of how social business can be financed, and especially the mechanisms that investors and entrepreneurs employ to attract more capital for projects in the public interest.