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.
Citations
More filters
15 citations
TL;DR: In this paper, the authors compile a set of articles tackling supply chain issues in BOP contexts that address both demand and supply, and present ideas for businesses that help address the needs of the global poor while enhancing global sustainability performance.
Abstract: The purpose of this paper is to compile a set of articles tackling supply chain issues in BOP contexts that address both demand and supply. Solutions are needed for global sustainability problems from medical aid and food availability to the ability to participate in supply chains for the global poor.,The accepted articles in the special issue used a range of qualitative and quantitative methodologies to answer research questions in a variety of base of the pyramid (BOP) contexts. These approaches and results distinguish between demand (BOP market) and supply, or base of the chain (BOC), perspectives.,The findings in the eight accepted marticles are interesting and applicable across different BOP contexts. Compilation of the articles into the special issue and the accompanying editorial led to a comprehensive future research agenda that addresses demand-side issues by investigating the customers in BOP markets, and supply-side issues focusing on the suppliers and intermediaries (BOC) who supply BOP markets. Future research ideas include a focus on supply chain design issues situated at the intersection of the demand (BOP) and the supply (BOC) concerns that address the needs of the world’s poorest populations.,All of the selected articleshave societal implications related to addressing the needs of BOP populations. Many of these articles also have economic and environmental implications, the other two pillars of the triple bottom line. The detailed future research agenda developed in this editorial presents implications for researchers working in emerging and BOP communities to push research forward and further develop the foundational literature in the BOP context.,From a practical standpoint, each of the eight articles presents ideas for businesses that help address the needs of the global poor while enhancing global sustainability performance. The editorial summarizes these implications and provides new directions and examples of success in the BOP context. Managers are provided with techniques to address the supply and demand side of these growing markets.,The overall conceptual framework and positioning of the final papers into the BOP market, BOC suppliers and a combination of the two is novel and helps provide guidance to both scholars and managers.
13 citations
TL;DR: In this article, the authors evaluate applicability of established supply chain management related constructs in base of the pyramid market setting and evaluate business-to-business interactions among micro-entrepreneurs in the base of pyramid markets employing a survey methodology.
12 citations
TL;DR: In this article, the authors find that high dependency ratios in the family are correlated with such ethical violations, and also find that ethical violations have a significant economic cost, consistent with prior scholarship in family-business domain.
Abstract: The microfinance business model focuses largely on lending to the woman in the household, rather than the man. The belief is that women are more trustworthy borrowers than men, and that lending to women may have increased social impact. Yet in several cases, women do not have control over the loan backed business despite being the borrower of record. Such takeover of the business by the man constitutes an ethical violation. We find that high dependency ratios in the family are correlates of such ethical violations. Further, we also find that ethical violations have a significant economic cost, consistent with prior scholarship in the family-business domain. While access to microfinance increases household welfare, this beneficial impact reduces by over 50% in the presence of an ethical violation. Our results suggest that microfinance lenders need to move beyond the traditional role of just being a lender to providing advice on issues like family planning, and money management, and enforcement, thus moving closer to the solidarity economy paradigm of integrating savings and credit into broader canvases of social relationships and social structures.
11 citations
References
More filters
TL;DR: In this article, the authors reveal distinct groups within rural food marketing channels, separated by intraindustry mobility barriers that limit entry to a few niches, and individuals' place within the rural marketing network is defined largely by a priori social identity, so the experience of food marketing liberalization varies across socially distinct subpopulations.
190 citations
TL;DR: This work examines the Akshaya project, a franchise of computer-service kiosks in Kerala, India, which strives simultaneously for social development through access to computers and financial viability through cost recovery and entrepreneurship.
Abstract: The currently influential model for information and communication technologies for development (ICT4D) is based on increasing the well-being of the poor through market-based solutions, and by using low-cost but advanced technologies. Using ethnographic methods, we chart out the contradictions that could arise when such a development-through-entrepreneurship model is implemented. We examine the Akshaya project, a franchise of computer-service kiosks in Kerala, India, which strives simultaneously for social development through access to computers and financial viability through cost recovery and entrepreneurship. We show that tensions within the state and among entrepreneurs and perceptions of public versus private among consumers make it challenging to meet the twin goals of commercial profitability and social development.
189 citations
159 citations
TL;DR: In this article, a collection of articles brings together reflections from a diversity of locations on prospects for reclaiming these ideas and using them to reframe and revitalise feminist engagement with development, arguing that women need to return to and reaffirm their "liberating" dimensions, reaffirming their association with forms of collective action that involve resisting and transgressing repressive social norms.
Abstract: Neoliberalism - that 'grab-bag of ideas based on the fundamentalist notion that markets are self-correcting, allocate resources efficiently and serve the public interest well' as Stiglitz (2008) puts it - has been a focal point for contestation in development. Feminists have highlighted its deleterious effects on women's lives and on gender relations. They have drawn attention to the extent to which the institutions promoting neoliberal economic and social policies have undermined a more progressive agenda, as they have come to appropriate words such as 'empowerment' and 'agency' and eviscerate them of any association with a project of progressive social change. This collection of articles brings together reflections from a diversity of locations on prospects for reclaiming these ideas and using them to reframe and revitalise feminist engagement with development. To reclaim feminist concepts like 'agency' and 'empowerment', we argue, we need to return to and reaffirm their 'liberating' dimensions, reaffirming their association with forms of collective action that involve resisting and transgressing repressive social norms.
135 citations
TL;DR: The authors showed that if human capital is observable and provides some information about income, a signaling equilibrium can emerge in which expected expenditure on conspicuous consumption as a fraction of total income is decreasing with income, which results in an increasing marginal propensity to save that might generate a poverty trap.
Abstract: Poor families around the world spend a large fraction of their income consuming goods that do not appear to alleviate poverty, while saving at low rates. We suggest that individuals care about economic status and hence we interpret this behavior as conspicuous consumption that is intended to provide a signal about unobserved income. We show that if human capital is observable and provides some information about income, a signaling equilibrium can emerge in which expected expenditure on conspicuous consumption as a fraction of total income is decreasing with income. This equilibrium results in an increasing marginal propensity to save that might generate a poverty trap.
121 citations