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Socially responsible investment and avoidance of controversial sectors: on isomorphic processes and the quest for legitimacy

Socially responsible investment and avoidance of controversial sectors: on isomorphic processes... A common method for shareholders with a 'Socially Responsible Investment' (SRI) approach is to systematically avoid controversial sectors, such as alcohol, weapons, gambling and tobacco. This article seeks to understand why the avoidance method is so prevalent among SRI funds and indices even though it can be argued that it is not efficient in influencing corporations' social responsibility. Based on neo-institutional theory, the study finds that the widespread use of the method can be understood as a way to comply with society's expectations, reduce ambiguity, and enhance legitimacy, and thereby improve the prospects of survival. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Progress in Industrial Ecology, an International Journal Inderscience Publishers

Socially responsible investment and avoidance of controversial sectors: on isomorphic processes and the quest for legitimacy

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References (36)

Publisher
Inderscience Publishers
Copyright
Copyright © Inderscience Enterprises Ltd. All rights reserved
ISSN
1476-8917
eISSN
1478-8764
DOI
10.1504/PIE.2008.019124
Publisher site
See Article on Publisher Site

Abstract

A common method for shareholders with a 'Socially Responsible Investment' (SRI) approach is to systematically avoid controversial sectors, such as alcohol, weapons, gambling and tobacco. This article seeks to understand why the avoidance method is so prevalent among SRI funds and indices even though it can be argued that it is not efficient in influencing corporations' social responsibility. Based on neo-institutional theory, the study finds that the widespread use of the method can be understood as a way to comply with society's expectations, reduce ambiguity, and enhance legitimacy, and thereby improve the prospects of survival.

Journal

Progress in Industrial Ecology, an International JournalInderscience Publishers

Published: Jan 1, 2008

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