Research Digest A holistic view is necessary to investigate the actual impact of impact investing

In Missing the Impact in Impact Investing Research – A Systematic Review and Critical Reflection of the Literature, published in The Journal of Management Studies (2023), Carolin Waldner and her co-authors synthesize knowledge on impact investing, address the shortcomings of previous research, and propose systems theory as a holistic lens for future studies. 

Why study this

Impact investing (II) is meant to both yield financial returns and tackle societal challenges such as climate change and social inequalities. Despite increasing interest in research, the understanding of impact investing is inadequate, as the field remains fragmented, with little interrelation between the various isolated studies and inconsistencies in the terminology. This means that the actual impact of impact investing is not properly assessed. The researchers conducted a systematic literature review of 104 articles to provide a better overview of the current knowledge and address its shortcomings. 


  • The researchers elaborated the definition of II  as follows: “Impact investing is conducted by professional investors in companies, organizations, and funds with the intention to create a measurable social and/or environmental impact, alongside a financial return paid by the investee.”
  • Compared to previous efforts to characterize impact investing, this more precise definition helps distinguish impact investing from other related concepts: social finance, socially responsible investing (including ESG), philanthropic venture capital, social impact bonds, sustainability-based crowdfunding, and microfinance.
  • When scanning the extant literature, the researchers identified nine key topics, which they organized along stages:
    • Pre-investment stage: investee-related determinants from the investor perspective received most scholarly attention (31% of studies), followed by investor-related determinants (19%) while 6% covered deal structuring and contracting.
    • Investment (also called post-investment) stage: measurement and reporting of financial and social achievements (20% of articles) and consequences of investment relationships (19%) received significant and much empirical attention, while non-financial support received scant attention (9%).
    • Plus a third category of external parameters influencing the II process across phases: role of institutional support (20% of studies), networks and intermediaries (13%) and market development (7%).
  • Imbalances were identified in existing contributions: regarding methods, qualitative-empirical research dominates, leaving room for quantitative studies to increase generalizability. Research was mainly conducted in the developed world, despite the important role of II in developing countries.
  • Most importantly, the literature fails to address the real impact of II as previous studies have focused on outcome measurements at individual investee level while taking aggregate social impact for granted.
  • The researchers propose systems theory, which emphasizes the embeddedness of an organization within its stakeholder, resource, and institutional environment, as it can provide a starting point to investigate the actual impact of II by shifting the focus from single elements toward the whole system.

We acknowledge the inherent difficulty in the generation (and measurement) of societal impact in II. The various challenges II aims to tackle (e.g., poverty alleviation or climate change) are usually wicked problems that are difficult to solve due to their complexity and/or incomplete and potentially contradictory requirements.

Key insight

Investigating the true impact of impact investing requires a holistic systems perspective, and a combination of socio-economic research approaches (esp. longitudinal qualitative studies and experimental methods) with socio-technical methods (esp. life cycle analysis).


The researchers' critical review will guide future research, particularly to measure the real impact of II and assist policy-makers in devising regulation aligned with the needs of impact investing actors. 

Final takeaway

From a methodological point of view, longitudinal and large-scale qualitative studies could provide valuable insights into system-spanning (or even system-transcending) questions, while quantitative-empirical approaches are valuable for identifying causal relationships between investor or investee behaviour and outcomes and, ultimately, assessing the impact of II initiatives. A socio-technical approach using life-cycle analysis can be a useful complement.


Deike Schlütter Deike Schlütter PhD student at the Institute of Sustainability Management at Heinrich-Heine University of Düsseldorf (Germany)
Lena Schätzlein Lena Schätzlein PhD student at the Institute of Sustainability Management at Heinrich-Heine University of Düsseldorf (Germany)
Rüdiger Hahn Rüdiger Hahn Henkel-Endowed Chair of Sustainability Management at the Heinrich-Heine University of Düsseldorf (Germany)
Carolin Waldner - ESCP Business School Carolin Waldner Assistant Professor for Sustainability Management (Berlin campus)