On operations and marketing in microfinance-backed enterprises: Structural embeddedness and enterprise viability
27 Mar 2019-International Journal of Physical Distribution & Logistics Management (Emerald Publishing Limited)-Vol. 49, Iss: 5, pp 514-533
TL;DR: In this paper, the authors investigated the impact of micro-finance access on marketing infrastructure and operational scale of women entrepreneurs in the context of structural embeddedness in the network, and found that the structural embeddings have a weakening effect on this relationship for operational scale while having a strengthening effect on the relationship for marketing infrastructure.
Abstract: Financial inclusion remains one of the most promising avenues to bring about development for the poorest segments of society. A substantial body of work has looked into financial inclusion, especially in terms of microfinance, but much of it has been anecdotal and case-based. There is little scholarship that broadly investigates how microfinance-funded businesses choose to use the loans, especially given the ever-present competition for resources that such businesses face regarding which investment priority to pursue. In addition, the efficacy of these investments in terms of subsequent profitability remains unexplored, and so too does the influence of the entrepreneur’s embeddedness in the local community. The paper aims to discuss these issues.,This study reports the results from a field investigation of 927 women entrepreneurs who received a microfinance loan from a leading Indian microfinance institution. Logit and OLS regression models are employed in a moderation analysis by way of hierarchical regression.,Results indicate that access to microfinance increases the likelihood that the enterprise invests in marketing infrastructure and operational scale. In addition, structural embeddedness has a weakening effect on this relationship for operational scale while having a strengthening effect on the relationship for marketing infrastructure. Finally, operational scale is related to enterprise profitability, while marketing infrastructure is not. These findings suggest that embeddedness in the community is associated with the entrepreneur making sub-optimal choices regarding microfinance utilization.,To our knowledge, this is the first study to investigate the simultaneous marketing and operational impacts of microfinance access. It is also the first study to relate these measures to the profitability of the enterprise, especially in the context of structural embeddedness in the network.
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TL;DR: In this article , the authors systematically review and integrate previous studies dealing with constraints of the base of the pyramid producers and provide an extended typology of constraints faced by BoP producers.
Abstract: The Base of Pyramid (BoP) narrative has been dominated by the consumption perspective, as compared to producers’ perspective. The literature on the constraints faced by BoP producers in such resource-constrained environments remains scattered and fragmented. This paper, therefore, systematically reviews and integrates previous studies dealing with constraints of the base of the pyramid producers. Synthesizing various strands of literature, we suggest eight propositions related to BoP producers’ constraints. We also provide an extended typology of constraints faced by BoP producers. The psycho-social constraints, organizational constraints and institutional constraints are three constituent categories of this extended typology. Drawing from the marketing system view, the article also provides a conceptual framework for advancing a multi-level, recursively related and process-based understanding of these constraints. The article also provides useful directions for future enquiry and explicates several implications for researchers, managers and policymakers.
5 citations
04 Oct 2019
TL;DR: Nordin et al. as mentioned in this paper examined the mediating effect of micro-entrepreneurs' psychological and social capital on the relationship between micro-finance provisions and the business growth of microenterprises.
Abstract: This paper is set out to uncover the phenomena of micro-enterprises business growth by hypothesizing microfinancing, social and psychological capital as factors. This research is important due to the fact that the paucity of information on how microfinancing, social and psychological capital relate to micro-enterprises business growth would obscure the ways in which they survive. In Malaysia, microfinance is used as one of the tools to alleviate poverty, as well as to improve the livelihood and standards of living of the poor and those who are financially excluded. However, almost three decades after the introduction of microfinancing programmes, the performance of microfinancing recipients’ i.e. micro-enterprises in Malaysia is not satisfactory. Besides providing loans to these micro-entrepreneurs, other aspects of facilitation, including the inculcation of the entrepreneur’s intangible resources, need to be addressed. Therefore, this research examines the mediating effect of micro-entrepreneurs’ psychological and social capital on the relationship between microfinance provisions and the business growth of micro-enterprises. The samples are identified from two microfinance providers, i.e., Amanah Ikhtiar Malaysia (AIM) and the National Entrepreneur Group Economic Fund (TEKUN) micro credit financing scheme recipients’ databases. A total of 250 useable survey questionnaires was collected and analysed to test the hypothesised relationship. The data was analysed using Partial Least Square-SEM and the structural model was examined to test the hypotheses. The findings show that micro-entrepreneurs’ psychological and social capital have a significant mediating effects on the relationship between provision of microfinance and the business growth of micro-enterprises in Kelantan. This research offers the practical implication that the effects of micro finance provision on the business growth of micro-enterprises are better exerted through micro-entrepreneurs’ psychological and social capital. This theoretically supports the applicability of the Resource-based View (RBV) theory to explain the mediating effect of psychological and social capital on the relationship between microfinance provisions and business growth. Research paper Keywords: Micro-enterprise, Business growth, Psychological capital, Social capital, Mediation, Microfinance institutions Reference to this paper should be made as follows: Nordin, N., Siti-Nabiha, A.K., & Kamalia, Z. (2019). Microfinancing Influence on Micro-Entrepreneurs Business Growth: Mediating Role of Psychological and Social Capital, Journal of Entrepreneurship, Business and Economics , 7 (2), 130–161.
4 citations
TL;DR: The authors provided an overview of the current state of research on base/bottom of the pyramid (BoP) producers and subsistence entrepreneurs and developed an organizing framework for classifying these articles.
Abstract: The extant review studies on the Base/bottom of the Pyramid (BoP) have paid inadequate attention to the producer and entrepreneur roles of the poor. This review article exclusively focused on BoP producers and subsistence entrepreneurs provides an overview of the current state of research on BoP producers and subsistence entrepreneurs. It encompasses 130 articles from 67 peer-reviewed academic journals and develops an organizing framework for classifying these articles. The conceptual model of entrepreneurship in poverty contexts presented in this article illustrates the drivers, barriers, facilitators and consequences of subsistence entrepreneurship. The conceptual model helps to highlight the relevance of contextually informed public support and advocates adopting a collaborative approach for addressing various challenges faced by BoP producers. We also discuss the implications of our article and provide directions for future research.
3 citations
TL;DR: In this paper , the authors analyze how ICTs that provide information, financial access, and transaction applications serve as enablers for transaction cost reductions and supply chain management (SCM) improvements in the agricultural sector.
Abstract: The rapid development of information and communication technology (ICT) has created opportunities for supply chain performance improvements to address challenges in base-of-the-pyramid (BoP) contexts. The article aims to analyze how ICTs that provide information, financial access, and transaction applications serve as enablers for transaction cost (TC) reductions and supply chain management (SCM) improvements in the agricultural sector. The objectives of the article are reached by deducting explanations from a framework of existing TC and SCM theories while analyzing six exemplary case studies in Sub-Saharan Africa and South Asia. ICT enables the BoP market to improve its SCM activities. Three different ICT models can be identified: Some ICTs impact 1) information flows only, while others influence 2) financial flows or 3) material flows. TC reductions in the form of screening and selection, measurement, communication, negotiation, and coordination costs serve as explanations and theoretical foundations for these models. Future empirical research should evaluate the application of ICTs in more detail and validate the proposed framework with the help of other methods. The current study will help BoP actors, such as farmers or agricultural dealers, capture more value and reduce poverty through TC reductions and improved SCM. The findings are also applicable to other small businesses considering their industrial contexts. The main contribution of the article is that it brings together theoretical arguments from TC theory, SCM, and practical ICT developments in BoP markets. The framework provides a foundation for developing more in-depth empirical research.
3 citations
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Book•
01 Jan 1990
TL;DR: In this article, a new approach to describing both stability and change in social systems by linking the behavior of individuals to organizational behavior is proposed. But the approach is not suitable for large-scale systems.
Abstract: Suggests a new approach to describing both stability and change in social systems by linking the behavior of individuals to organizational behavior.
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TL;DR: A growing number of sociologists, political scientists, economists, and organizational theorists have invoked the concept of social capital in the search for answers to a broadening range of questions being confronted in their own fields as mentioned in this paper.
Abstract: A growing number of sociologists, political scientists, economists, and organizational theorists have invoked the concept of social capital in the search for answers to a broadening range of questions being confronted in their own fields. Seeking to clarify the concept and help assess its utility for organizational theory, we synthesize the theoretical research undertaken in these various disciplines and develop a common conceptual framework that identifies the sources, benefits, risks, and contingencies of social capital.
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TL;DR: The central premise of upper echelons theory is that executives' experiences, values, and personalities greatly influence their interpretations of the situations they face and, in turn, affect their choices as mentioned in this paper.
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05 Aug 2004
TL;DR: The Bottom of the Pyramid (BOP) market as discussed by the authors is the most exciting, fastest-growing new market in the world and it's where people least expect it: at the bottom of the pyramid.
Abstract: The world's most exciting, fastest-growing new market? It's where you least expect it: at the bottom of the pyramid. Collectively, the world's billions of poor people have immense entrepreneurial capabilities and buying power. You can learn how to serve them and help millions of the world's poorest people escape poverty.It is being done-profitably. Whether you're a business leader or an anti-poverty activist, business guru Prahalad shows why you can't afford to ignore "Bottom of the Pyramid" (BOP) markets.In the book and accompanying CD videos, Prahalad presents...Why what you know about BOP markets is wrong A world of surprises-from spending patterns to distribution and marketingUnlocking the "poverty penalty"The most enduring contributions your company can make Delivering dignity, empowerment, and choice-not just productsCorporations and BOP entrepreneurs Profiting together from an inclusive new capitalism "C. K. Prahalad argues that companies must revolutionize how they dobusiness in developing countries if both sides of that economic equation areto prosper. Drawing on a wealth of case studies, his compelling new bookoffers an intriguing blueprint for how to fight poverty with profitability." Bill Gates, Chairman and Chief Software Architect,Microsoft "The Bottom of the Pyramid belongs at the top of the reading list forbusiness people, academics, and experts pursuing the elusive goal ofsustainable growth in the developing world. C. K. Prahalad writes withuncommon insight about consumer needs in poor societies andopportunities for the private sector to serve important public purposes whileenhancing its own bottom line. If you are looking for fresh thinking aboutemerging markets, your search is ended. This is the book for you." Madeleine K. Albright, Former U.S. Secretary of State "Prahalad challenges readers to re-evaluate their pre-conceived notionsabout the commercial opportunities in serving the relatively poor nations ofthe world. The Bottom of the Pyramid highlights the way to commercialsuccess and societal improvement--but only if the developed worldreconceives the way it delivers products and services to the developingworld." Christopher Rodrigues, CEO, Visa International "An important and insightful work showing persuasively how the privatesector can be put at the center of development, not just as a rhetoricalflourish but as a real engine of jobs and services for the poor." Mark Malloch Brown, Administrator, United Nations Development Programme
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TL;DR: The authors examined the relationship between the demography of top management teams and corporate strategic change, measured as absolute change in diversification level, within a sample of Fortune 500 companies, and found that top management team demography was correlated with strategic change.
Abstract: This study examined the relationship between the demography of top management teams and corporate strategic change, measured as absolute change in diversification level, within a sample of Fortune ...
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