The Influence of Mutual Trust at the Pre-Investment Stage of Collaboration between Social Enterprise and Impact Investors: An Emerging Economy Perspective

Abstract

Collaboration between social enterprise (SEs) and impact investors (IIs) is not always a smooth process due to several organisational level factors, particularly in relation to trusting an investment partner. Yet there are limited studies that examine factors influencing mutual trust between SEs and IIs. This article empirically explores organisational level factors that influence mutual trust between SEs and IIs with dyadic relations in Nigeria. Through in-depth interview and thematic analysis of data from six pairs of SEs and IIs, we found due diligence, genuine intention, firm reputation, adherence to ethical standards, formal and informal social network as organisational level factors that influenced mutual trust between SEs and IIs. These insights extend knowledge of factors influencing mutual trust in the context of hybrid organisations distinct from purely commercial enterprises. We empirically demonstrate the role of mutual trust at the pre-investment stage of collaboration between organisations with blended motive. Actors in the social entrepreneurial space can utilise findings from this study as guide to make informed investment decision in both emerging and developed economies.