Individual investors’ intention towards SRI in India: an implementation of the theory of reasoned action

Abstract

Purpose This study aims to explore and comprehend the reasons behind individual investors’ intention towards socially responsible investment (SRI) in the Indian stock market along with examining the validity of the theory of reasoned action (TRA) model to predict such phenomenon in the Indian context. Design/methodology/approach The TRA has been used as an underlying framework and has been extended by adding four variables, namely, moral norms, environmental concern, financial literacy and financial performance. The study used a self-administered questionnaire and adopted a convenience sampling method for a survey to collect the data from the individual investors from the capital cities of three states of India. Further, the collected data have been analysed using two-step structural equation modelling. Findings Results of this study indicate a significant impact of attitude, subjective norms, moral norms, financial literacy and financial performance on investors’ intention towards SRI; however, no significant relation was found between environmental concern and investors’ SRI intention. The multiple squared correlation (R2) shows that the final model could explain 71% of the variance in investors’ intention towards SRI, which signifies a successful implementation of TRA model along with new additions to predict investors’ decision-making behaviour for SRI. Moreover, investors are found to be highly concerned primarily about their financial goals and then for their personal obligation towards society as far as SRI is concerned. Practical implications This study reports significant and prominent importance of subjective norms in SRI which could be a strategic theme for the government and the policymakers to influence investors through their opinion leaders to promote SRI. The government should also increase its efforts to facilitate financial literacy among citizens. Originality/value Using the TRA model and four variables, namely, moral norms, environmental concern, financial literacy and financial performance addition to its original variables, this study extends the understandings of SRI which is perhaps the novelty of this paper because such examination of SRI has not been conducted, especially in the case of developing countries such as India.