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Segmenting socially responsible investors: The influence of financial return and social responsibility
Umeå University, Faculty of Social Sciences, Umeå School of Business.
2009 (English)In: International Journal of Bank Marketing, ISSN 0265-2323, E-ISSN 1758-5937, Vol. 27, no 1, 5-31 p.Article in journal (Refereed) Published
Abstract [en]

Purpose – This article address reasons for consumer investment in socially responsible investment (SRI) profiled mutual funds. Specifically, the paper deals with the relative influence of financial return and social responsibility on the decision to invest in SRI profiled mutual funds.

Methodology/approach - A cluster analytic approach was used where 563 SR-investors were classified into different segments based on their perception of importance of financial return and social responsibility. Furthermore, discriminant analysis and chi2 tests were used to profile the segments.

Findings - Three segments of SR-investors were formed. The “primarily concerned about profit” SR-investors value financial return over social responsibility. The “primarily concerned about social responsibility” value social responsibility over financial return. The “socially responsible & return driven” SR-investors value both return and social responsibility when deciding to invest in SRI. The segments displayed distinct differences with regard to various profiling variables.

Research limitations/implications – As respondents were generated from one SRI provider, it is possible that the respondents are not fully representative of all SR-investors.

Practical implications - Since there are segments of SR-investors that invest in SRI because of different reasons, there is an opportunity for SRI providers to target and adapt communication to certain segments.

Originality/value - For both academia and the SRI industry this study provides useful knowledge on how private SR-investors handle the issue of financial return and social responsibility when investing in SRI. This understanding of the differing motivations of the SR-investor also holds practical importance for developing appropriate marketing strategies within the SRI industry.

Place, publisher, year, edition, pages
Emerald Group Publishing Limited , 2009. Vol. 27, no 1, 5-31 p.
Keyword [en]
Ethical investment, Unit trusts, Investors, Market segmentation
National Category
Business Administration
Research subject
Business Studies
Identifiers
URN: urn:nbn:se:umu:diva-33924DOI: 10.1108/02652320910928218OAI: oai:DiVA.org:umu-33924DiVA: diva2:318685
Note
Most of the work on this paper was performed while the author was at the School of Business, Economics, and Law at Gothenburg University, Sweden.Available from: 2010-05-10 Created: 2010-05-10 Last updated: 2017-12-12Bibliographically approved
In thesis
1. Consumer decision making in a complex environment: Examining the decision making process of socially responsible mutual fund investors
Open this publication in new window or tab >>Consumer decision making in a complex environment: Examining the decision making process of socially responsible mutual fund investors
2010 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

During the last few decades, "regular people" have become increasingly involved with investing in the stock market. One way of doing this, which has become more and more popular, is to invest in mutual funds. The mutual fund industry has, due to its explosive growth, been described as a success story of the 20th century. These days, sources report that over 70% of the Swedish population actively invests in mutual funds.

This thesis is an investigation into consumer decision making regarding one specific type of mutual fund: Socially Responsible Investment (SRI). SRI profiled mutual funds are different from "regular" mutual funds in that they incorporate social, ethical, and environmental (SEE) criteria. In this manner, SRI profiled mutual funds could be said to have two separate dimensions. The regular financial dimension has the purpose of generating a high level of financial return while managing risk. The socially responsible dimension, on the other hand, focuses on incorporating SEE issues into the investment process.

However, consumers that desire to choose mutual funds that will both perform well financially and have a good socially responsible dimension face a more difficult decision than consumers who choose to invest in "regular" mutual funds. As each of the dimensions come with its own set of challenges which the consumer must overcome, choosing an appropriate combination of these is a difficult task. In this manner, consumers of SRI profiled mutual funds have to navigate through a complex decision making environment to arrive at a good choice.

Based in this notion of decision making in complex environments, this thesis investigates how consumers combine their "traditional" financial objectives with their "additional" SEE consideration and examines the impact of personal factors related to these two areas on consumer investment in SRI profiled mutual funds. Four separate essays on these topics, each investigating a specific stage in the Engel-Kollat-Blackwell (1968) consumer decision making process, are presented. Moreover, in order to understand how complexity impacts consumer decision making in the area, the results of each study are analyzed against a conceptual framework focusing on the complexity of the market.

The results show that consumers of SRI profiled mutual funds care about both financial and SEE issues. However, how consumers combine these in their decision making differs. Factors, such as the stage of the purchase decision making process, personal abilities, preferences, and perceptions are found to impact consumer decision making.  Against this background, this thesis generates an increased understanding of consumer decision making in complex decision making environments in general and of SRI profiled mutual funds in particular.

Place, publisher, year, edition, pages
Umeå: Umeå School of Business, Umeå University, 2010. 108 p.
Series
Studier i företagsekonomi. Serie B, ISSN 0346-8291 ; 73
Keyword
Consumer decision making, complex decision making environments, socially responsible investment, ethical investment, mutual funds, private investment
National Category
Business Administration
Research subject
Business Studies
Identifiers
urn:nbn:se:umu:diva-35607 (URN)978-91-7459-035-7 (ISBN)
Public defence
2010-09-17, Samhällsvetarhuset, Hörsal B, Umeå universitet, Umeå, 13:15 (English)
Opponent
Supervisors
Available from: 2010-08-27 Created: 2010-08-25 Last updated: 2011-11-07Bibliographically approved

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