David Bourget (Western Ontario)
David Chalmers (ANU, NYU)
Rafael De Clercq
Jack Alan Reynolds
Learn more about PhilPapers
Journal of Business Ethics 60 (3):281 - 292 (2005)
Socially responsible investors buy financial securities with two goals: to make a market-based return, and to make companies act in a more socially responsible way. Most research on socially responsible investment deals with investing in stocks traded on major exchanges. We add the case of loaning small amounts of funds to microentrepreneurs through a discussion of a particular case. The case is that of Calmeadow which, in conjunction with the Royal Bank of Canada, set up a microlending project in rural Nova Scotia (Canada). Using Hirschman’s analysis of “exit” and “voice”, we show that while socially responsible investors may make market-based returns for their investments in stocks traded on major exchanges, they have no effect on corporate behaviour because their action consists of exit, and they are easily replaced by other investors. They attain their first goal but not their second. On the other hand, in the Calmeadow/Royal Bank of Canada case, we see that those who lend money to microenterprises can more easily use voice. The relative power difference between the lender and the microentrepreneur enables the lender to make the microentrepreneur act in a more socially responsible way, although only marginally. But because of the market imperfections existing in this case (the very high transactions costs associated with administering small loans), the lender concluded it could not attain a market rate of return. In this case, then, the lender attained its second goal but not its first.
|Keywords||Philosophy Ethics Economic Growth Management|
|Categories||categorize this paper)|
Setup an account with your affiliations in order to access resources via your University's proxy server
Configure custom proxy (use this if your affiliation does not provide a proxy)
|Through your library|
References found in this work BETA
No references found.
Citations of this work BETA
B. D. Mathias, Sean Lux, T. Russell Crook, Chad Autry & Russell Zaretzki (forthcoming). Competing Against the Unknown: The Impact of Enabling and Constraining Institutions on the Informal Economy. Journal of Business Ethics.
Similar books and articles
Neil Stuart Eccles (2010). UN Principles for Responsible Investment Signatories and the Anti-Apartheid SRI Movement: A Thought Experiment. [REVIEW] Journal of Business Ethics 95 (3):415 - 424.
Douglas Cumming & Sofia Johan (2007). Socially Responsible Institutional Investment in Private Equity. Journal of Business Ethics 75 (4):395 - 416.
Tim Benijts (2010). A Framework for Comparing Socially Responsible Investment Markets: An Analysis of the Dutch and Belgian Retail Markets. Business Ethics 19 (1):50-63.
Katherina Glac (2009). Understanding Socially Responsible Investing: The Effect of Decision Frames and Trade-Off Options. [REVIEW] Journal of Business Ethics 87 (1):41 - 55.
Maria Ceu Cortez, Florinda Silva & Nelson Areal (2009). The Performance of European Socially Responsible Funds. Journal of Business Ethics 87 (4):573 - 588.
Joakim Sandberg (2008). The Ethics of Investing: Making Money or Making a Difference? Dissertation, University of Gothenburg
Josep M. Lozano, Laura Albareda & M. Rosario Balaguer (2006). Socially Responsible Investment in the Spanish Financial Market. Journal of Business Ethics 69 (3):305 - 316.
Iain Clacher & Jens Hagendorff (2012). Do Announcements About Corporate Social Responsibility Create or Destroy Shareholder Wealth? Evidence From the UK. Journal of Business Ethics 106 (3):253-266.
Iván Barreda-Tarrazona, Juan Carlos Matallín-Sáez & Mª Rosario Balaguer-Franch (2011). Measuring Investors' Socially Responsible Preferences in Mutual Funds. Journal of Business Ethics 103 (2):305-330.
Jonathan McLachlan & John Gardner (2004). A Comparison of Socially Responsible and Conventional Investors. Journal of Business Ethics 52 (1):11-25.
Added to index2009-01-28
Total downloads6 ( #224,779 of 1,410,305 )
Recent downloads (6 months)1 ( #155,456 of 1,410,305 )
How can I increase my downloads?