The Institutionalization of Social Investment: The Interplay of Investment Logics and Investor Rationalities

<title>Abstract</title> Across the world, a new landscape of social investment has been developing rapidly over the last 10--15 years, yet there has not been an academic study of the phenomenon to date. This paper aims to address this important gap in social entrepreneurship research with new empirical and theoretical work. Theoretically, the paper takes an interpretive approach drawing on institutional theory and other work on the sociology of markets to conceptualize social investment as a socially constructed space within which different investment logics and investor rationalities are currently in play. Using a Weberian analytic lens this paper identifies two ideal type investor rationalities (<italic>zweckrational</italic>; <italic>wertrational</italic>) that drive different institutional forms of social investment but also suggests that a third -- systemic -- rationality can be discerned that combines aspects of both in practice. This analysis suggests a three-part typology of social investment organized according to investor rationality that, in turn, generates a Social Investment Matrix consisting of nine distinct models. Empirically, this paper presents -- for the first time -- an attempt to quantify the flows of capital within the inchoate social investment landscape. The paper concludes by setting out three possible future scenarios for social investment each representing the ultimate dominance of a singular investor rationality.