Balancing profit and purpose: how impact investors in Africa navigate competing logics

Abstract

This study investigated how impact investors that operate with an Africa mandate can practically navigate the competing logics of profit maximisation and social development. The researcher draws primarily on hybridity theory to help explain why these tensions exist and how hybrid firms, such as impact investors, can easily manage these tensions so as to avoid mission drift and retain mission alignment. The researcher employed a qualitative research design, where 12 semi-structured interviews were conducted with senior practitioners in the field and other stakeholders who are closely related to the field. The findings were then analysed using Atlas.ti, with data saturation being reached after nine of twelve interviews. The findings show that Impact investors in Africa manage the tension between the logics of profit and development by incorporating a sequenced design process to assess the various impact and profitability metrics. This is achieved by combining an impact-first pre-screening with a commercial viability assessment, and it is this commercial viability assessment that acts as a signal of impact durability. Furthermore, impact investors institutionalise hybridity through these design choices, which then embed both logics into everyday decisions.