Microfinance, Mission Drift, and the Impact on the Base of the Pyramid: A Resource‐Based Approach

Abstract

This article draws on resource-based theory and the literature on strategic intent to develop a theoretical model that explains the concept of mission drift in microfinance institutions (MFIs).

Differential Social Performance of Religiously-Affiliated Microfinance Institutions (MFIs) in Base of Pyramid (BoP) Markets

“…Three out of the one hundred and forty MFIs did not have a mission statement. We measured the social orientation of the MFIs' mission statements employing Casselman and Sama's (2013) 4-point scale, where 1 = Commercial Microlenders, 2 = Profitoriented-Socially Responsible MFIs, 3 = Socially-oriented Financially Responsible MFIs and 4 = Social Innovators. To substantiate the reliability of the ratings, three independent researchers well-versed in the microfinance literature reviewed and rated the mission statements independently.…”

Organizational and legal institutions, and the performance of microfinance institutions as hybrid entities

“…These differences in the types of MFIs distinguish characteristics related to how they are operated and managed and, further, increase the general understanding of the flexibility with which management approaches decision-making. The classifications encompass MFIs' structural differences that represent the unique bundling of resources (Casselman and Sama, 2013) or emergence of distinct legal status (Tchakoute-Tchuigoua, 2010) that drive sustainable organizational strategic advantages and performance outcomes (Terziovski, 2010;Hung et al, 2010) to produce distinctive approaches to management. These varying constructs reflect cognitive elements that enable entities to adapt to different environments (Boehe and Cruz, 2013).…”

“…Research on MFIs has sought to understand MFIs from a variety of perspectives such as the impact of governance mechanisms on efficiencies and scale economies (Hartarska, 2005;Hartarska and Nadolnyak, 2007;Mersland and Strøm, 2009), the impact of governance structure on network integration (Desrochers and Fischer, 2005), the role of governance structure and composition and other institution-specific attributes in disclosure practices (Ahmed and Khan, 2016;Akanga, 2017), the impact of financial disclosure on the MFI financial performance (Quayes and Hasan, 2014), the influence of formal and informal institutional differences (Golesorkhi et al, 2019) and capital and organizational forms (El-Sayed Ebaid, 2009;Kyereboah-Coleman, 2007;Tchakoute-Tchuigoua, 2014). While results of prior studies suggest that there could be a complementary relationship between social outreach and MFI financial performance (Quayes, 2012;Quayes, 2015) that may enable MFIs to achieve the dual objectives (Battilana and Dorado, 2010;Battilana et al, 2012;Peredo and McLean, 2006), it often becomes more difficult to maintain the social mission of MFIs (Casselman and Sama, 2013;Hudon and Sandberg, 2013). MFIs "drift" from the mission (i.e.…”

“…MFIs "drift" from the mission (i.e. referred to as "mission drift") when financial performance outweighs the goals of social outreach (Casselman and Sama, 2013;Im and Sun, 2015;Schreiner, 2002). Further, recent studies have emphasized the contingent effects of various factors that contribute to the effectiveness of MFI performance (Golesorkhi et al, 2019).…”