Impact Investing and Firm Financial Performance Aligned With SDG 8 (Decent Work and Economic Growth): A Conceptual Framework

The concept of impact investing has received greater recognition as a form of strategic investing that embodies the financial performance alongside social and environmental performance. Specifically, it has become the trend to align with Sustainable Development Goal 8 (SDG 8), that facilitates decent work and economic growth, in order to access sustainable and inclusive development in firms. Nonetheless, even with the increased use of impact investing, the conceptual understanding about the impact of such investments on the financial performance of a firm and how social impact can be converted into financial value is still lacking. The purpose of this study is to build a conceptual framework of impact investing and firm financial performance, where SDG 8 alignment is a mediator variable. The paper, based on the stakeholder theory, resource-based view, and institutional theory suggests that impact investing improves financial performance by the company by bettering employee welfare, job creation, and the productivity of workforce to bolster organizational efficiency, competitive advantage, and legitimacy. The framework further proposes that alignment with SDG 8 improves the trust and corporate reputation of the stakeholders and investor confidence to boost financial results. This work can make a contribution to the literature as it offers a thorough theoretical description of the mechanisms through which impact investing has the ability to generate social and financial value. The suggested framework provides valuable implications to managers, investors, and policymakers as it attracts attention to the strategic position of impact investing as a tool to attain financial sustainability and at the same time contribute to global development objectives. The research also offers a basis of the future empirical studies on the relationship of sustainable finance and firm performance.

Impact Investing; Sustainable Development Goal 8; Firm Financial Performance; Decent Work; Economic Growth

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