Impact investors are supposed to generate financial returns alongside social and environmental benefits. Increasingly, they must also measure these benefits as a form of performance management to provide robust evidence of impact. However, it is an “open secret” that because of inconsistencies and fragmentation in the applied means of impact measurement, ends are imperfectly met. In this article, we probe how and why means–ends decoupling occurs in impact investing in plain sight. We apply a qualitative and interpretative approach, drawing on 135 interviews and 102 documents gathered from impact investors. We find that impact measurement is not primarily used for performance management but plays a relational role between stakeholders. We uncover and conceptualize three mechanisms that drive decoupling between the ideal and actual functions of impact measurement, namely impact measurement as: (1) communication, (2) categorization, and (3) construction of the domain. We also find an important contingency: decoupling becomes more likely with increasing systemic opacity in an investment field. We outline contributions to the organizational decoupling literature and the sociology of quantification, and we show how the problems that arise from means-ends decoupling could be overcome.
BansalPratimaGaoJijunQureshiIsrar (2014). The extensiveness of corporate social and environmental commitment across firms over time. Organization Studies, 35, 949–966.
BattilanaJulieDoradoSilvia (2010). Building sustainable hybrid organizations: The case of commercial microfinance organizations. Academy of Management Journal, 53, 1419–1440.
4.
BourgeronThéo (2020). Constructing the double circulation of capital and “social impact.” An ethnographic study of a French impact investment fund. Historical Social Research / Historische Sozialforschung, 45, 117–139.
5.
BromleyPatriciaPowellWalter W. (2012). From smoke and mirrors to walking the talk: Decoupling in the contemporary world. Academy of Management Annals, 6, 483–530.
6.
BuschTimoBruce-ClarkPeterDerwallJeroenEcclesRobertHebbTessaHoepnerAndreas, et al. (2021). Impact investments: A call for (re)orientation. SN Business & Economics, 1(2), 1–13.
7.
CasasnovasGuillermoFerraroFabrizio (2022). Speciation in nascent markets: Collective learning through cultural and material scaffolding. Organization Studies, 43, 829–860.
8.
CastillaEmilio J.RanganathanAruna (2020). The production of merit: How managers understand and apply merit in the workplace. Organization Science, 31, 909–935.
9.
CharmazKathy (2006). Constructing grounded theory: A practical guide through qualitative analysis. Thousand Oaks, CA: Sage.
10.
CharmazKathyBelgraveLinda L. (2012). Qualitative interviewing and grounded theory analysis. In GubriumJaber F.HolsteinJames A.MarvastiAmir B.McKinneyKaryn D. (Eds.), The SAGE handbook of interview research: The complexity of the craft (pp. 347–366). Thousand Oaks, CA: Sage.
11.
ChunHyunsikSauderMichael (2022). The logic of quantification: Institutionalizing numerical thinking. Theory and Society, 51, 335–370.
12.
CrillyDonalZolloMaurizioHansenMorten T. (2012). Faking it or muddling through? Understanding decoupling in response to stakeholder pressures. Academy of Management Journal, 55, 1429–1448.
13.
DaggersJessNichollsAlex (2017). Academic research into social investment and impact investing: The status quo and future research. In LehnerOthmar M. (Ed.), The Routledge handbook of social and sustainable finance (pp. 68–82). London: Routledge.
14.
de BreeMartinStoopendaalAnnemiek (2020). De- and recoupling and public regulation. Organization Studies, 41, 599–620.
15.
de la Cruz JaraMarcelo F.SpanjolJelenaDoppstadtTheresa (2024). Strategic social value orientation and sustainability performance: A commensuration perspective. Organization Studies. https://doi.org/10.1177/01708406241242900.
DickPenny (2015). From rational myth to self-fulfilling prophecy? Understanding the persistence of means–ends decoupling as a consequence of the latent functions of policy enactment. Organization Studies, 36, 897–924.
18.
DickPennyCouleTracey (2020). Nonconformance with regulatory codes in the nonprofit sector: Accountability and the discursive coupling of means and ends. Business and Society, 59, 749–786.
19.
EbrahimAlnoor (2019). Measuring social change: Performance and accountability in a complex world. Palo Alto, CA: Stanford University Press.
20.
EcclesRobert G.YoumansTim (2016). Materiality in corporate governance: The statement of significant audiences and materiality. Journal of Applied Corporate Finance, 28(2), 39–46.
21.
EdmondsonAmy C.McManusStacy E. (2007). Methodological fit in management field research. Academy of Management Review, 32, 1155–1179.
22.
EisenhardtKathleen M. (1989). Building theories from case study research. Academy of Management Review, 14, 532–550.
23.
FissPeer C.ZajacEdward J. (2006). The symbolic management of strategic change: Sensegiving via framing and decoupling. Academy of Management Journal, 49, 1173–1193.
24.
GioiaDennis A.CorleyKevin G.HamiltonAimee L. (2013). Seeking qualitative rigor in inductive research: Notes on the Gioia methodology. Organizational Research Methods, 16, 15–31.
25.
GlaserBarney G.StraussAnselm L. (2017). The Discovery of grounded theory: Strategies for qualitative research. New York, NY: Routledge.
GrasDavidCongerMichaelJenkinsAnnaGrasMichael (2020). Wicked problems, reductive tendency, and the formation of (non-)opportunity beliefs. Journal of Business Venturing, 35(3), 105966.
30.
GreenwoodRoystonRaynardMiaKodeihFarahMicelottaEvelyn R.LounsburyMichael (2011). Institutional complexity and organizational responses. Academy of Management Annals, 5, 317–371.
31.
HaackPatrickSchoenebornDennisWickertChristopher (2012). Talking the talk, moral entrapment, creeping commitment? Exploring narrative dynamics in corporate responsibility standardization. Organization Studies, 33, 815–845.
32.
HaackPatrickSiewekeJostWesselLauri (2020). Microfoundations and multi-level research on institutions. In HaackPatrickSiewekeJostWesselLauri (Eds.), Microfoundations of institutions (pp. 11–40). Leeds: Emerald Publishing Limited.
33.
HallettTimHawbakerAmelia (2021). The case for an inhabited institutionalism in organizational research: Interaction, coupling, and change reconsidered. Theory and Society, 50, 1–32.
HazenbergRichardPaterson-YoungClaire (Eds.) (2022). Social impact measurement for a sustainable future. Cham, Switzerland: Springer International Publishing.
36.
HeebFlorianKölbelJulian F.PaetzoldFalkoZeisbergerStefan (2023). Do investors care about impact?Review of Financial Studies, 36, 1737–1787.
37.
HehenbergerLisaMairJohannaMetzAshley (2019). The assembly of a field ideology: An idea-centric perspective on systemic power in impact investing. Academy of Management Journal, 62, 1672–1704.
38.
HengstIris-ArianeJarzabkowskiPaulaHoeglMartinMuethelMiriam (2020). Toward a process theory of making sustainability strategies legitimate in action. Academy of Management Journal, 63, 246–271.
39.
HeimstädtMaxmilian (2017). Openwashing: A decoupling perspective on organizational transparency. Technological Forecasting and Social Change, 125, 77–86.
40.
HertelChristinaBacqSophieLumpkinG. T. (2022). A holistic perspective on social performance in social enterprises: Disentangling social impact from operational sustainability. In VaccaroAntoninoRamusTommaso (Eds.), Social innovation and social enterprises: Toward a holistic perspective (pp. 137–172). Berlin: Springer.
41.
HockertsKaiHehenbergerLisaSchalteggerStefanFarberVanina (2022). Defining and conceptualizing impact investing: Attractive nuisance or catalyst?Journal of Business Ethics, 179, 937–950.
IslamGazi (2022). Business ethics and quantification: Towards an ethics of numbers. Journal of Business Ethics, 176, 195–211.
44.
JabbouriRachidSchneckenbergDirkTruongYann (2022). From policy-practice to means-ends decoupling in organizations: A systematic review and paths for future research. Management international, 26, 123–148.
45.
JabbouriRachidTruongYannSchneckenbergDirkPalmerMark (2019). Institutional means-ends decoupling work in industrial R&D project implementation. Industrial Marketing Management, 80, 296–311.
46.
KaufmannLaurenBothaHelet (2024). Who loses in win-win investing? A mixed methods study of impact risk. Journal of Business Ethics. Advance online publication. https://doi.org/10.1007/s10551-024-05788-8
47.
KernAnjaLaguecirAzizaLecaBernard (2018). Behind smoke and mirrors: A political approach to decoupling. Organization Studies, 39, 543–564.
48.
KotsantonisSakisSerafeimGeorge (2019). Four things no one will tell you about ESG data. Journal of Applied Corporate Finance, 31(2), 50–58.
49.
LeeMatthewAdbiArziSinghJasjit (2020). Categorical cognition and outcome efficiency in impact investing decisions. Strategic Management Journal, 41, 86–107.
50.
LiYuan (2017). A semiotic theory of institutionalization. Academy of Management Review, 42, 520–547.
51.
LockeKaren (2001). Grounded theory in management research. Thousand Oaks, CA: Sage.
52.
LockeKarenFeldmanMartha S.Golden-BiddleKaren (2015). Discovery, validation, and live coding. In ElsbachKimberly D.KramerRoderick M. (Eds.), Handbook of qualitative organizational research (pp. 371–380). New York, NY: Routledge.
53.
LyonThomas P.MaxwellJohn W. (2011). Greenwash: Corporate environmental disclosure under threat of audit. Journal of Economics & Management Strategy, 20, 3–41.
54.
MacLeanTammy L.BehnamMichael (2010). The dangers of decoupling: The relationship between compliance programs, legitimacy perceptions, and institutionalized misconduct. Academy of Management Journal, 53, 1499–1520.
55.
MairJohannaHehenbergerLisa (2014). Front-stage and backstage convening: The transition from opposition to mutualistic coexistence in organizational philanthropy. Academy of Management Journal, 57, 1174–1200.
56.
MarquisChristopherQianCuili (2014). Corporate social responsibility reporting in China: Symbol or substance?Organization Science, 25, 127–148.
57.
MartiEmilioFuchsMartinDesJardineMark R.SlagerRienekeGondJean-Pascal (2024). The impact of sustainable investing: A multidisciplinary review. Journal of Management Studies, 61, 2181–2211.
58.
MazmanianMelissaBeckmanChristine M. (2018). “Making” your numbers: Engendering organizational control through a ritual of quantification. Organization Science, 29, 357–379.
59.
MennickenAndreaEspelandWendy N. (2019). What’s new with numbers? Sociological approaches to the study of quantification. Annual Review of Sociology, 45, 223–245.
60.
MertonRobert K. (1957). Social theory and social structure. New York, NY: Free Press.
61.
MeyerJohn W.RowanBrian (1977). Institutionalized organizations: Formal structure as myth and ceremony. American Journal of Sociology, 83, 340–363.
O’ConnorCliodhnaJoffeHelene (2020). Intercoder reliability in qualitative research: Debates and practical guidelines. International Journal of Qualitative Methods, 19, 1–13. https://doi.org/10.1177/1609406919899220
64.
PalermoTommasoPowerMichaelAshbySimon (2017). Navigating institutional complexity: The production of risk culture in the financial sector. Journal of Management Studies, 54, 154–181.
65.
PowerMichael (2021). Modelling the micro-foundations of the audit society: Organizations and the logic of the audit trail. Academy of Management Review, 46, 6–32.
66.
PuroilaJenniMäkeläHannele (2019). Matter of opinion: Exploring the socio-political nature of materiality disclosures in sustainability reporting. Accounting, Auditing & Accountability Journal, 32, 1043–1072.
67.
PughAllison J. (2013). What good are interviews for thinking about culture? Demystifying interpretive analysis. American Journal of Cultural Sociology, 1, 42–68.
68.
SchemberaStefanHaackPatrickSchererAndreas G. (2023). From compliance to progress: A sensemaking perspective on the governance of corruption. Organization Science, 34, 1184–1215.
69.
SheehanNorman T.VaidyanathanGaneshFoxKenneth A.KlassenMark (2023). Making the invisible, visible: Overcoming barriers to ESG performance with an ESG mindset. Business Horizons, 66, 265–276.
70.
StålHerman I.CorvellecHervé (2022). Organizing means–ends decoupling: Core–compartment separations in fast fashion. Business & Society, 61, 857–885.
71.
TrianaMaría del CarmenMillerToyah L.TrzebiatowskiTiffany M. (2014). The double-edged nature of board gender diversity: Diversity, firm performance, and the power of women directors as predictors of strategic change. Organization Science, 25, 609–632.
72.
VedulaSiddharthDoblingerClaudiaPachecoDesireeYorkJeffreyBacqSophieRussoMichaelDeanThomas (2022). Entrepreneurship for the public good: A review, critique, and path forward for social and environmental entrepreneurship research. Academy of Management Annals, 16, 391–425.
73.
WijenFrank (2014). Means versus ends in opaque institutional fields: Trading off compliance and achievement in sustainability standard adoption. Academy of Management Review, 39, 302–323.
74.
WijenFrankFlowersMallory E. (2023). Issue opacity and sustainability standard effectiveness. Regulation & Governance, 17, 772–790.
75.
YanShipengFerraroFabrizioAlmandozJuan (2018). The rise of socially responsible investment funds: The paradoxical role of the financial logic. Administrative Science Quarterly, 64, 466–501.
76.
ZuckermanEzra W. (2004). Towards the social reconstruction of an interdisciplinary turf war. American Sociological Review, 69, 458–465.
