IMPACT INVESTING AND JOB CREATION IN THE CONTEMPORARY BUSINESS ENVIRONMENT : EVIDENCE FROM THE REPUBLIC OF SERBIA

This study focuses on the effects of impact investing, as a subset of socially responsible high-risk investing, on job creation. The research investigates the emerging market of the Republic of Serbia during the period 2007-2013 by tracking six companies, financed by impact investments, representing the entire population. The results indicate that during the period of rising unemployment in the country, the interventional group, consisting of the companies receiving the impact investments, created, on average, 15% of new jobs per year, while the non-interventional group, consisting of the companies not receiving the impact investments, lost, on average, 14% of existing jobs annually. To the best of our knowledge, this study is the first to focus on impact investing and job creation, and it indicates that this type of high-risk investing could be used to deal with major social challenges in the contemporary business environment, such as unemployment.


INTRODUCTION
What is the e ect of impact investing on employment in the contemporary business environment?Are new jobs created in enterprises nanced by impact investors?e purpose of this study is to answer these questions by analyzing impact investments, a special form of socially responsible high-risk investments, in the emerging market of the Republic of Serbia during 2007-2013.Over the past decade, socially responsible investing (SRI) has grown substantially (Leite & Cortez, 2013;Reneeboog et al., 2008), and has received considerable attention from academia (Leite & Cortez, 2015;Nofsinger & Varma, 2014;Ballestero et al., 2012;Renneboog et al., 2008).Although SRI has been analyzed from di erent perspectives, its special form, impact investing, has not been explored to that extent.According to the Global Impact Investing Network (GIIN), impact investors, also known as social nancers, social impact investors, blended value investors, or impact nancers (Maximilian, 2013), are nanciers that invest in organizations and companies with the aim to generate social and environmental bene ts, along with nancial returns.Unlike SRI investors, who would not sacri ce the optimal nancial returns to pursue social and ethical objectives (Reneeboog et al., 2008), impact investors, by de nition, would do so.While SRI investors would only avoid certain industries, perceived to be "irresponsible" (Dam & Heijdra, 2011), such as alcohol, tobacco, arms production, and gambling, impact investors would utilize capital in order to help societies deal with their major social challenges, such as energy e ciency, healthcare, asset accumulation, and job creation (Donohoe et al., 2010).Because of that, impact investing capital, as well as private capital in general, has been playing an increasing role in the areas where governments have limited nancial support, such as in the case of public housing (Phibbs, 2012), clean energy sources, and unemployment.Impact investors have

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Finiz 2016 Rizici u savremenim uslovima poslovanja Radovi po pozivu / Invited papers a "taste for assets" in its purest sense, as suggested by Fama and French (2007).Impact investors include philanthropic investors, angel and early stage investors, professional investors, and private sector corporate partnerships, and they utilize di erent forms of impact investment capital, including grants, debt capital, shareholder capital, and mezzanine/ convertible debt capital (Maximilian, 2013).Although the global impact-investing market is estimated to reach anywhere from about $500 billion (Rangan et al., 2011) to about $1 trillion (Maximilian, 2013) by 2020, while the intergeneration wealth transfer dedicated to venture philanthropy is estimated to reach $6 trillion just in the U.S. (Grossman et al., 2013), the impact investing industry, as well as the e ects of impact investing on employment, have not been explored in the academic literature.To the best of our knowledge, this study is the rst to focus on impact investing and job creation in the contemporary business environment.
During the observed period, the Serbian economy was characterized by a high level of in ation, high trade de cit, rising public debt, and high unemployment rates (National Bank of Serbia, 2015).According to the Statistical O ce of the Republic of Serbia ( 2016), the unemployment in the country increased from 18.10% in 2007 to 22.10% in 2013.
e objective of this study is to show that impact investing could have an e ect on persistent social problems, such as unemployment, even during the most di cult circumstances in the contemporary business environment, such as during the years of high unemployment.For the purpose of this research, the following hypothesis was de ned: impact investing has a positive e ect on employment.

METHODOLOGY
In order to conduct this study, two groups were formed, namely, an interventional group, comprising companies nanced by impact investments, and a non-interventional group, consisting of companies not nanced by impact investments.
e interventional and non-interventional groups were tracked from 2007 to 2013 while the relevant unemployment statistics for the given period were obtained from the Statistical O ce of the Republic of Serbia ( 2016), Labour Force Survey (LFS).

Interventional Group
For the purposes of the study, an interventional group was formed to include all active impact investments focused on job creation in the Republic of Serbia.From 2007 to 2013, six impact investments were identi ed, representing the entire population.e primary time-series data was collected for the six private companies from the time of investment.
e following investments were identi ed and tracked dur-ing the period 2007-2013: a neighborhood supermarket chain, a system integrator value/value added reseller (VAR), an information technology distribution company, a parcel delivery company, a factoring company, and a high-end chocolate producer.
In order to collect the data, a survey was sent to all the companies at the beginning of each year, for the previous year, from 2007 to 2013.e companies were asked to disclose the number of their full-time employees and the number of new jobs created during the year.e base year for recording the number of employees for each company was the year of the investment by the impact investor.For the neighborhood supermarket chain and the information technology distribution company, the base year was 2007; for the system integrator value/VAR and the parcel delivery company, the base year was 2008; and for the factoring company and the high-end chocolate producer, the base year was 2010.
e data was then veri ed using the data from the Serbian Business Registers Agency1 , as reported by the companies themselves.

Non-interventional Group
For the purpose of this study, a non-interventional group was created to resemble the interventional group.e noninterventional group included six private companies, all chosen to closely resemble the companies from the interventional group.For each company in the interventional group, a subgroup of 10 similar companies was formed.en, for the non-interventional group, a company was chosen from each subgroup.e companies in the non-interventional group were the direct competitors (as recognized by the companies in the interventional group) in the same line of business (i.e., a neighborhood supermarket chain, a system integrator value/VAR, an information technology distribution company, a parcel delivery company, a factoring company, and a high-end chocolate producer) and of a size similar to the companies in the interventional group.Furthermore, the companies in the non-interventional group were as nancially stable as the companies in the interventional group, as evidenced by the liquidity, pro tability, debt, and equity ratios.Finally, none of the private companies in the noninterventional group were supported by impact investments.
e data for the companies was extracted from the Serbian Business Registry.In order to re ect the interventional group, the neighborhood supermarket chain, and the information technology distribution company were added to the non-interventional group in 2007, the system integrator value/VAR and the parcel delivery company were added in 2008, while the factoring company and high-end chocolate producer were added in 2010., 2015).Table 1 shows the unemployment rate and total number of unemployed individuals in the Republic of Serbia.e descriptive statistics were then generated.

RESULTS
e results of the study indicate the following:

◆ Interventional and Non-interventional Groups
During the observed period, the companies nanced by impact investments created, on average, 15 % of new jobs per year (i.e., anywhere from 7% to 28% per year).Table 2 shows the number of new jobs created in the enterprises receiving impact investments.
e results show that during the period of high unemployment, the companies not receiving impact investments lost, on average, 14% of existing jobs per year (i.e., anywhere between creating 13% to losing 65% per year).Table 3 shows the number of new jobs created and lost in the enterprises not nanced by the impact investments.

◆ Unemployment in the country
According to the Statistical O ce of the Republic of Serbia ( 2016), Labor Force Survey, unemployment in Serbia increased from 18.10% in 2007 to 22.10% in 2013.e average unemployment rate during the period was 19.43%, while the average unemployment growth rate was 4.82%.On average, each year, 11,775 individuals became unemployed, while the average growth rate of unemployed individuals was 4.91%.Table 5 shows the unemployment rates, the unemployed, and their growth rates in the Republic of Serbia.

DISCUSSION
Over the past years, certain progress has been made in developing a social impact matrix for evaluating the results of impact investing (Edward, 2013).To that end, this research indicates that impact investing, as high-risk investing, could have a positive e ect on job creation in the contemporary business environment.Furthermore, it quanti es the results of impact investments and shows that during the period 2007 -2013, the companies nanced by impact investments generated, on average, 15% of new jobs per year, showing the positive e ects of impact investing on employment.According to the Statistical O ce of the Republic of Serbia ( 2016), the unemployment in Serbia increased from 18.10% in 2007 to 22.10% in 2013, while the average unemployment growth rate was 4.82%.In addition, the companies from the noninterventional group, which did not receive impact investments, lost, on average, 14% of existing jobs per year, in line with the rising general unemployment in the country during the period 2007-2013.Although the results indicate that impact investing could be used to deal with social challenges (Donohoe et al., 2010), such as job creation, it is not readily available in the market.Because of that, and in order for the industry to grow, the government has to assume a more proactive role in building many aspects of the market for impact investments (Wood et al., 2013).

CONCLUSION
e study indicates that impact investing, as a special form of high-risk investing, has a positive e ect on job creation, even during the periods of high unemployment, and it also suggests that countries could use the capital to deal with major social challenges in the contemporary business environment, such as unemployment.To the best of our knowledge, this is the rst study to focus on impact investing and its e ects on employment.
for the country were obtained from the Statistical O ce of the Republic of Serbia, Labour Force Survey, for the period from 2007 to 2013.e period was characterized by the decline in economic activity (National Bank of Serbia Radovi po pozivu / Invited papers INVESTIRANJE SA POZITIVNIM REPERKUSIJAMA NA ŠIRU ZAJEDNICU I OTVARANJE NOVIH RADNIH MESTA U SAVREMENOM POSLOVNOM OKRUŽENJU U SRBIJI Apstrakt:

Table 1 .
Unemployment in the country