Advertisement

Financialization and Social Impact Investing

  • Philipp Golka
Chapter

Abstract

This chapter provides a much-needed link between the state, financialization, and financial innovations such as social impact investing. Reviewing empirical literature, Golka shows how current scholarly perspectives either see the state as a constraint or an enabler for the spread of financial innovations. Sketching the development of social impact investing in Britain, Golka shows the limitations of both of these perspectives as the state not only had constraining and enabling influences but also broader ideational ones. However, state influence varies considerably across the numerous practices that are typically subsumed under the impact investing label. The author reveals these differences by analyzing social impact investing through his relational perspective that focuses on the link between financial and nonfinancial actors.

References

  1. Aguilera, R. V., & Jackson, G. (2003). The cross-national diversity of corporate governance: Dimensions and determinants. Academy of Management Review, 28(3), 447–465.CrossRefGoogle Scholar
  2. Aitken, R. (2007). Performing capital: Toward a cultural economy of popular and global finance. New York: Palgrave Macmillan.CrossRefGoogle Scholar
  3. Arrighi, G. (1994). The long twentieth century: Money, power, and the origins of our times. London: Verso.Google Scholar
  4. Barman, E. (2015). Of principle and principal: Value plurality in the market of impact investing. Valuation Studies, 3(1), 9–44.CrossRefGoogle Scholar
  5. Barman, E. (2016). Caring capitalism: The meaning and measure of social value. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  6. Battilana, J., & Lee, M. (2014). Advancing research on hybrid organizing: Insights from the study of social enterprises. Academy of Management Annals, 8(1), 397–441.CrossRefGoogle Scholar
  7. Baud, C., & Durand, C. (2012). Financialization, globalization and the making of profits by leading retailers. Socio-Economic Review, 10(2), 241–266.CrossRefGoogle Scholar
  8. Beech, M., & Lee, S. (Eds.). (2015). The conservative-liberal coalition. Examining the Cameron-Clegg government. Basingstoke: Palgrave Macmillan.Google Scholar
  9. Belfrage, C. (2008). Towards ‘universal financialisation’ in Sweden? Contemporary Politics, 14(3), 277–296.CrossRefGoogle Scholar
  10. Blyth, M. (2013). Austerity: The history of a dangerous idea. Oxford: Oxford University Press.Google Scholar
  11. Chiapello, E., & Medjad, K. (2009). An unprecedented privatisation of mandatory standard-setting: The case of European accounting policy. Critical Perspectives on Accounting, 20(4), 448–468.CrossRefGoogle Scholar
  12. Chiapello, E., & Walter, C. (2016). The three ages of financial quantification: A conventionalist approach to the Financiers’ metrology. Historical Social Research, 41(2), 155–177.Google Scholar
  13. Connell, A. (2010). Welfare policy under new labour: The politics of social security reform. London: I.B. Tauris.Google Scholar
  14. Coombs, N. (2016). What is an algorithm? Financial regulation in the era of high-frequency trading. Economy and Society, 45(2), 278–302.CrossRefGoogle Scholar
  15. Crotty, J. (2005). The neoliberal paradox: The impact of destructive product market competition and ‘modern’ financial markets on nonfinancial corporation performance in the neoliberal era. In G. A. Epstein (Ed.), Financialization and the world economy (pp. 77–110). Cheltenham: Edward Elgar.Google Scholar
  16. Crotty, J. (2008). If financial market competition is intense, why are financial firm profits so high? Reflections on the current ‘golden age’of finance. Competition & Change, 12(2), 167–183.Google Scholar
  17. Crouch, C. (2011). The strange non-death of neo-liberalism. Cambridge: Polity Press.Google Scholar
  18. Davies, S. (2008). Contracting out employment services to the third and private sectors: A critique. Critical Social Policy, 28(2), 136–164.CrossRefGoogle Scholar
  19. Davis, A., & Walsh, C. (2015). The role of the state in the financialisation of the UK economy. Political Studies, 64(3), 666–682.CrossRefGoogle Scholar
  20. Deakin, N., & Parry, R. (2000). The treasury and social policy: The contest for control of welfare strategy. Basingstoke: Macmillan Press.CrossRefGoogle Scholar
  21. Deeg, R., & Jackson, G. (2007). Towards a more dynamic theory of capitalist variety. Socio-Economic Review, 5(1), 149–179.CrossRefGoogle Scholar
  22. Deutschmann, C. (2008). Finanzmarkt-Kapitalismus und Wachstumskrise. In C. Deutschmann (Ed.), Kapitalistische Dynamik: Eine gesellschaftstheoretische Perspektive (pp. 151–174). Wiesbaden: VS Verlag für Sozialwissenschaften.Google Scholar
  23. Dobrowolsky, A., & Lister, R. (2008). Social investment: The discourse and the dimensions of change. In M. Powell (Ed.), Modernising the welfare state: The Blair legacy. Bristol: Policy Press.Google Scholar
  24. Dore, R. (2008). Financialization of the global economy. Industrial and Corporate Change, 17(6), 1097–1112.CrossRefGoogle Scholar
  25. Dowling, E., & Harvie, D. (2014). Harnessing the social: State, crisis and (big) society. Sociology, 48(5), 869–886.CrossRefGoogle Scholar
  26. Du Gay, P., & Pryke, M. (2002). Cultural economy: Cultural analysis and commercial life. Thousand Oaks, CA: Sage.Google Scholar
  27. Duménil, G., & Lévy, D. (2004). Capital resurgent: Roots of the neoliberal revolution. Cambridge, MA: Harvard University Press.Google Scholar
  28. Dünhaupt, P. (2012). Financialization and the rentier income share–evidence from the USA and Germany. International Review of Applied Economics, 26(4), 465–487.CrossRefGoogle Scholar
  29. Esping-Andersen, G. (1990). The three worlds of welfare capitalism. Princeton, NJ: Princeton University Press.Google Scholar
  30. Feist, M., & Fuchs, D. (2014). Was heißt hier nachhaltig? In M. Heires & A. Nölke (Eds.), Politische Ökonomie der Finanzialisierung (pp. 225–240). Wiesbaden: Springer.CrossRefGoogle Scholar
  31. Finlayson, A. (2009). Financialisation, financial literacy and asset-based-welfare. British Journal of Politics and International Relations, 11(3), 400–421.CrossRefGoogle Scholar
  32. Fiss, P. C., & Zajac, E. J. (2004). The diffusion of ideas over contested terrain: The (non) adoption of a shareholder value orientation among German firms. Administrative Science Quarterly, 49(4), 501–534.Google Scholar
  33. Flaherty, E. (2015). Top incomes under finance-driven capitalism, 1990–2010: Power resources and regulatory orders. Socio-Economic Review, 13(3), 417–447.CrossRefGoogle Scholar
  34. Fligstein, N. (1990). The transformation of corporate control. Cambridge, MA: Harvard University Press.Google Scholar
  35. Fligstein, N., & Goldstein, A. (2012). A long strange trip: The state and mortgage securitization, 1968-2010. In K. Knorr Cetina & A. Preda (Eds.), The Oxford handbook of the sociology of finance (pp. 339–356). Oxford: Oxford University Press.Google Scholar
  36. Fligstein, N., & McAdam, D. (2012). A theory of fields. Oxford: Oxford University Press.CrossRefGoogle Scholar
  37. Fligstein, N., & Shin, T.-J. (2004). The shareholder value society: A review of the changes in working conditions and inequality in the United States, 1976 to 2000. In K. Neckermann (Ed.), Social inequality (pp. 401–432). New York: Russell Sage Foundation.Google Scholar
  38. G-8. (2014). Impact Investing: The invisible heart of markets. Retrieved from http://www.socialimpactinvestment.org
  39. Giddens, A. (1998). The third way: The renewal of social democracy. Cambridge: Polity Press.Google Scholar
  40. Godechot, O. (2015). Financialization is marketization! A study on the respective impact of various dimensions of financialization on the increase of global inequality. Sociological Science, 3, 495–519.CrossRefGoogle Scholar
  41. Hall, P. A., & Soskice, D. (2001). Varieties of capitalism: The institutional foundations of comparative advantage. Oxford: Oxford University Press.CrossRefGoogle Scholar
  42. Harvey, D. (2005). A brief history of neoliberalism. Oxford: Oxford University Press.Google Scholar
  43. Hebb, T. (2013). Impact investing and responsible investing: What does it mean? Journal of Sustainable Finance & Investment, 3(2), 71–74.CrossRefGoogle Scholar
  44. Hiß, S. (2013). The politics of the financialization of sustainability. Competition & Change, 17(3), 234–247.CrossRefGoogle Scholar
  45. Hiß, S. (2014). Was bleibt von der Nachhaltigkeit nach ihrer Finanzialisierung? In M. Heires & A. Nölke (Eds.), Politische Ökonomie der Finanzialisierung (pp. 211–224). Wiesbaden: Springer.CrossRefGoogle Scholar
  46. Ho, K. (2009). Liquidated: An ethnography of wall street. Durham, NC: Duke University Press.CrossRefGoogle Scholar
  47. Höpner, M., & Jackson, G. (2006). Revisiting the Mannesmann takeover: How markets for corporate control emerge. European Management Review, 3(3), 142–155.CrossRefGoogle Scholar
  48. Jackson, G., & Deeg, R. (2012). The long-term trajectories of institutional change in European capitalism. Journal of European Public Policy, 19(8), 1109–1125.CrossRefGoogle Scholar
  49. Jessop, B. (2010). Cultural political economy and critical policy studies. Critical Policy Studies, 3(3–4), 336–356.CrossRefGoogle Scholar
  50. Jessop, B. (2011). Imagined recoveries, recovered imaginaries: A cultural political economy perspective. Retrieved from http://www.lancs.ac.uk/cperc/docs/E-2012 Jessop-CPE-SwanseaRecovery.pdf
  51. JP Morgan. (2010). Impact investments: An emerging asset class. Retrieved from https://thegiin.org/knowledge/publication/impact-investments-an-emerging-asset-class
  52. Jung, J. (2015). A struggle on two fronts: Labour resistance to changing layoff policies at large US companies. Socio-Economic Review, 15(1), 213–239.Google Scholar
  53. Jung, J., & Dobbin, F. (2012). Finance and institutional investors. In K. Knorr Cetina & A. Preda (Eds.), The Oxford handbook of the sociology of finance (pp. 52–74). Oxford: Oxford University Press.Google Scholar
  54. Kädtler, J. (2011). Financialisation of capitalist economies: Bargaining on conventional economic rationalities. Historical Social Research, 36(4), 169–191.Google Scholar
  55. Kädtler, J. (2015). Macht und Machtverhältnisse im Rahmen und außerhalb des konventionenökonomischen Programms. In L. Knoll (Ed.), Organisationen und Konventionen: Die Soziologie der Konventionen in der Organisationsforschung. Wiesbaden: Springer VS.Google Scholar
  56. Kelly, J. (2007). Reforming public services in the UK: Bringing in the third sector. Public Administration, 85(4), 1003–1022.CrossRefGoogle Scholar
  57. Khurana, R. (2007). From higher aims to hired hands: The social transformation of American business schools and the unfulfilled promise of management as a profession. Princeton, NJ: Princeton University Press.Google Scholar
  58. Knorr-Cetina, K. (2009). What is a financial market? In J. Beckert & C. Deutschmann (Eds.), Wirtschaftssoziologie (Kölner Zeitschrift für Soziologie und Sozialpsychologie 49) (pp. 326–342). Wiesbaden: VS-Verlag für Sozialwissenschaften.Google Scholar
  59. Konings, M. (2009). The construction of US financial power. Review of International Studies, 35(01), 69–94.CrossRefGoogle Scholar
  60. Krippner, G. R. (2005). The financialization of the American economy. Socio-Economic Review, 3(2), 173–208.CrossRefGoogle Scholar
  61. Krippner, G. R. (2011). Capitalizing on crisis. Cambridge, MA: Harvard University Press.Google Scholar
  62. Lake, R. W. (2015). The financialization of urban policy in the age of Obama. Journal of Urban Affairs, 37(1), 75–78.CrossRefGoogle Scholar
  63. Langenohl, A., & Wetzel, D. (2011). Finanzmärkte und ihre Sinnformen: Handlungskoordination und Signalkommunikation. Berliner Journal für Soziologie, 21(4), 539–559.CrossRefGoogle Scholar
  64. Langley, P. (2006). Securitising suburbia: The transformation of Anglo-American mortgage finance. Competition & Change, 10(3), 283–299.CrossRefGoogle Scholar
  65. Langley, P. (2008). Financialization and the consumer credit boom. Competition & Change, 12(2), 133–147.Google Scholar
  66. Larsen, T. P., Taylor-Gooby, P., & Kananen, J. (2006). New labour’s policy style: A mix of policy approaches. Journal of Social Policy, 35(4), 629–649.CrossRefGoogle Scholar
  67. Lazonick, W. (2014). Profits without prosperity. Harvard Business Review, 92(9), 46–55.Google Scholar
  68. Lazonick, W., & O’Sullivan, M. (2000). Maximizing shareholder value: A new ideology for corporate governance. Economy and Society, 29(1), 13–35.CrossRefGoogle Scholar
  69. Lee, S. (2006). Gordon Brown and the ‘British way’. The Political Quarterly, 77(3), 369–378.CrossRefGoogle Scholar
  70. Lee, S. (2008). Best for Britain? The politics and leagcy of Gordon Brown. Oxford: Oneworld Books.Google Scholar
  71. Lin, K.-H., & Tomaskovic-Devey, D. (2013). Financialization and US income inequality, 1970–20081. American Journal of Sociology, 118(5), 1284–1329.CrossRefGoogle Scholar
  72. Lister, R. (1998). From equality to social inclusion: New labour and the welfare state. Critical Social Policy, 18(2), 215–225.CrossRefGoogle Scholar
  73. MacKenzie, D. (2008). An engine, not a camera: How financial models shape markets. Cambridge, MA: MIT Press.Google Scholar
  74. MacKenzie, D., & Millo, Y. (2003). Constructing a market, performing theory: The historical sociology of a financial derivatives exchange1. American Journal of Sociology, 109(1), 107–145.CrossRefGoogle Scholar
  75. Mader, P. (2015). The political economy of microfinance: Financialising poverty. London: Palgrave Macmillan.CrossRefGoogle Scholar
  76. Mader, P. (2016). Questioning three fundamental assumptions in financial inclusion (IDS evidence report, 176). Brighton: IDS.Google Scholar
  77. Mair, J., & Marti, I. (2009). Entrepreneurship in and around institutional voids: A case study from Bangladesh. Journal of Business Venturing, 24(5), 419–435.CrossRefGoogle Scholar
  78. Martin, R. (2002). Financialization of daily life. Philadelphia, PA: Temple University Press.Google Scholar
  79. Milberg, W. (2008). Shifting sources and uses of profits: Sustaining US financialization with global value chains. Economy and Society, 37(3), 420–451.CrossRefGoogle Scholar
  80. Mizruchi, M. S. (1996). What do interlocks do? An analysis, critique, and assessment of research on interlocking directorates. Annual Review of Sociology, 22(1), 271–298.CrossRefGoogle Scholar
  81. Morin, F. (2000). A transformation in the French model of shareholding and management. Economy and Society, 29(1), 36–53.CrossRefGoogle Scholar
  82. Mortensen, J. L., & Seabrooke, L. (2008). Housing as social right or means to wealth? The politics of property booms in Australia and Denmark. Comparative European Politics, 6(3), 305–324.CrossRefGoogle Scholar
  83. Mulderrig, J. (2011). The grammar of governance. Critical Discourse Studies, 8(1), 45–68.CrossRefGoogle Scholar
  84. Nicholls, A. (2010). The institutionalization of social investment: The interplay of investment logics and investor rationalities. Journal of Social Entrepreneurship, 1(1), 70–100.CrossRefGoogle Scholar
  85. Nölke, A., & Perry, J. (2007). The power of transnational private governance: Financialization and the IASB. Business Power and Global Governance, 9(3), 1–25.Google Scholar
  86. Pacewicz, J. (2012). Tax increment financing, economic development professionals and the financialization of urban politics. Socio-Economic Review, 11(3), 413–440.CrossRefGoogle Scholar
  87. Piketty, T. (2014). Capital in the twenty-first century. Cambridge, MA: Harvard University Press.CrossRefGoogle Scholar
  88. Powell, M. (2000). New labour and the third way in the British welfare state: A new and distinctive approach? Critical Social Policy, 20(1), 39–60.CrossRefGoogle Scholar
  89. Powell, M. (Ed.). (2008). Modernising the welfare state: The Blair legacy. Bristol: Policy Press.Google Scholar
  90. Quinn, S. L. (2010). Government policy, housing, and the origins of securitization, 1780–1968. (PhD), Berkeley, CA: University of California.Google Scholar
  91. Schelkle, W. (2012). A crisis of what? Mortgage credit markets and the social policy of promoting homeownership in the United States and in Europe. Politics and Society, 40(1), 59–80.CrossRefGoogle Scholar
  92. Schmidt, V. A. (2008). Discursive institutionalism: The explanatory power of ideas and discourse. Annual Review of Political Science, 11, 303–326.CrossRefGoogle Scholar
  93. Schwartz, H. (2012). Housing, the welfare state, and the global financial crisis: What is the connection? Politics and Society, 40(1), 35–58.CrossRefGoogle Scholar
  94. Seabrooke, L. (2007). Everyday legitimacy and international financial orders: The social sources of imperialism and hegemony in global finance. New Political Economy, 12(1), 1–18.CrossRefGoogle Scholar
  95. Seabrooke, L. (2010). Everyday legitimacy and institutional change. In A. Gofas & C. Hay (Eds.), The role of ideas in political analysis: A portrait of contemporary debates (pp. 78–93). New York: Routledge.Google Scholar
  96. Smith, A. (2010). The third sector, regeneration and sustainable communities: “Rolling” with the new labour agenda. International Journal of Sociology and Social Policy, 30(1/2), 48–65.CrossRefGoogle Scholar
  97. Stockhammer, E. (2004). Financialisation and the slowdown of accumulation. Cambridge Journal of Economics, 28(5), 719–741.CrossRefGoogle Scholar
  98. Streeck, W. (2013). Gekaufte Zeit. Die vertagte Krise des demokratischen Kapitalismus. Frankfurt/Main: Suhrkamp.Google Scholar
  99. Streeck, W., & Thelen, K. A. (2005). Beyond continuity: Institutional change in advanced political economies. Oxford: Oxford University Press.Google Scholar
  100. Sturm, R. (2009). Politik in Großbritannien. Wiesbaden: Springer VS.CrossRefGoogle Scholar
  101. Tomaskovic-Devey, D., & Lin, K.-H. (2011). Income dynamics, economic rents, and the financialization of the US economy. American Sociological Review, 76(4), 538–559.CrossRefGoogle Scholar
  102. Van der Zwan, N. (2014). Making sense of financialization. Socio-Economic Review, 12(1), 99–129.CrossRefGoogle Scholar
  103. Vitols, S. (2002). Shareholder value, management culture and production regimes in the transformation of the German chemical-pharmaceutical industry. Competition and Change, 6(3), 309–325.CrossRefGoogle Scholar
  104. Widmer, F. (2011). Institutional investors, corporate elites and the building of a market for corporate control. Socio-Economic Review, 9(4), 671–697.CrossRefGoogle Scholar
  105. Windolf, P. (2005). Finanzmarkt-Kapitalismus: Analysen zum Wandel von Produktionsregimen. Wiesbaden: VS Verlag für Sozialwissenschaften.CrossRefGoogle Scholar
  106. Windolf, P. (2008). Eigentümer ohne Risiko. Zeitschrift für Soziologie, 37(6), 516–535.CrossRefGoogle Scholar
  107. Zorn, D. (2004). Here a chief, there a chief: The rise of the CFO in the American firm. American Sociological Review, 69(3), 345–364.CrossRefGoogle Scholar
  108. Zorn, D., Dobbin, F., Dierkes, J., & Kwok, M.-S. (2005). Managing investors: How financial markets reshaped the American firm. In K. Knorr Cetina & A. Preda (Eds.), The sociology of financial markets (pp. 269–289). Oxford: Oxford University Press.Google Scholar

Copyright information

© Springer Nature Switzerland AG 2019

Authors and Affiliations

  • Philipp Golka
    • 1
  1. 1.Sociology of Markets, Organizations and GovernanceFriedrich Schiller University JenaJenaGermany

Personalised recommendations