An institutional logics perspective to evolution of Indian microcredit business models

• DOI: http://doi.org/10.1002/jsc.2204
• Author: Nadiya Parekh,Arvind Ashta
• Published date: 01 July 2018
• Date: 01 July 2018

RESEARCH ARTICLE

DOI: 10.1002/jsc.2204

Strategic Change. 2018;27(4):313–327. wileyonlinelibrary.com/journal/jsc © 2018 John Wiley & Sons, Ltd. 313

Abstract

Insঞtuঞonal deelorment o= microcredit in India has been inYuenced by ]lobal rressures, interin-

sঞtuঞonal contradicঞons, and intrainsঞtuঞonal conYicts in lo]ics. $he hybrid model used in India

o[en created dissonance amon] insঞtuঞons that orerated =or a common cause with comret-

in] lo]ics. Lo]ics clashed and di@erences in their le]iঞmacy and sustainability status resulted in

mission dri[, in =aor o= the dominant insঞtuঞonal actor. Desi]n issues in social enterrrises can

result in =ailed alliances een when a ]rowin] marhet eists and has =acilitated ererimentaঞon

=or years.

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Deelorment historians hae been interested in the history o= laws

and insঞtuঞons which rroide relie= to the roor (arh, 2017; Solar,

1ƖƖƔ). $his includes the history o= recent insঞtuঞons that emer]ed

to rroide eclusie banhin] =or the roor (ollis & Sweetman, 1ƖƖ8).

$he laer are rorularly termed as microCnance insঞtuঞons (Is) and

hae emer]ed as a deelormental insঞtuঞonal =orm when commercial

banhs were not always willin] to sere the roor. In this arঞcle, we looh

at how these recently eoled insঞtuঞonal =orms brid]ed the insঞtu-

ঞonal oid in deelorment banhin], ]enerated interest amon] com-

mercial banhs to join hands in the deelorment rrocess, and resulted

in the desi]n o= hybrid insঞtuঞonal models that ererienced lo]ical

clashes. We use an insঞtuঞonal lo]ics rersrecঞe, at the or]ania-

ঞonal tyre leel, to understand how the lo]ics o= deelorment and

economic rroCtability conYict and inYuence the trajectory o= or]ani-

aঞons. $hese conYicts are o= interest as they may ]o beyond micro-

credit and may a@ect other social enterrrises which are con=ronted

with the dilemma as to whether the social entrerreneurs should =orm

enterrrises which are =or-rroCt or nonrroCt in nature. ore recently,

these debates ]ae way to the creaঞon o= systems that calls =or hybrid

models that combine =or-rroCt and nonrroCt rublic, rriate, and third

sector rlayers in a sector (aমlana, Lee, Walher, & Dorsey, 2012;

Dahan, Doh, Oetel, & +aiji, 2010; $homrson & acillan, 2010;

+unus, oin]eon, & Lehmann-Orte]a, 2010).

Our account o= the microcredit industryĽs ererience with hybrid

models and its desi]n issues could be o= interest to emer]in] social

enterrrise =orms that are deliberaঞn] on desi]nin] hybrid insঞtu-

ঞonal tyres to aain its deelormental ]oals. We beliee microcredit

would sere as a ]ood eamrle as it is a more eoled =orm o= social

entrerreneurshir that has =aced sustainability issues. It has tran-

scended =rom not-=or-rroCt models to =or-rroCt and hybrid models

to achiee scale and sustainability while searchin] =or imract. ow-

eer these transiঞons hae resulted in unintended consetuences

(ai & Da[, 201ѵ) which has been widely accused as mission dri[ in

the deelorment srace (ersland & Strpm, 2010; orduch, 2000;

(anroose & DĽsrallier, 2013). $his is why it is interesঞn] to study

the history o= these transiঞons and insঞtuঞonal eoluঞons to brin]

out the comreঞn] lo]ics which cause this dri[. ccordin] to !eed,

arsden, !iera, Orte]a, and !o]ers (2014), India rerresents oer

hal= o= microcredit world-wide and there=ore we chose to study this

country. In the Indian Cnancial inclusion sector, iniঞally, the concert

o= microcredit was considered as a cuমn] ed]e social entrerreneur-

shir model. oweer, as India adarted the model to its needs, it ]ae

birth to the anh-I artnershir odel, which is a classic case o= a

hybrid model. $his model ]ained rorularity in addressin] the sustain-

ability challen]es and imrlementaঞon issues inoled in microcredit

deliery in India.

Am bmsঞtঞomaѴ Ѵo]bcs r;rsr;cঞ; to ;oѴঞom o= m7bam

lbcrocr;7bt bsbm;ss lo7;ѴsŖ2

a7ba ar;h_1Պ|ՊArbm7 As_ta2

1 Inderendent !esearcher, Social inance,

hiladelrhia,  1Ɩ428, &S

2 !,  7477, ur]undy School o=

usinessŌ&niersit࣐ our]o]ne ranche-

omt࣐, Dijon, rance

orr;srom7;mc;

rind shta, ur]undy School o= usiness,

2Ɩ rue Sambin, 21000 Dijon, rance.

mail: rind.shtaŠbsb-educaঞon.com

* JL classiCcaঞon codes: Ɣ2, 8Ɣ, O1ѵ.

2 $he Crst dra[ o= this arঞcle was rresented at the remi࣏res Journ࣐es Scien-

ঞCtues anc࣐ennes de icroCnance at ancy, December Ɩ–10, 2014 and we

thanh the rarঞcirants o= that con=erence =or their comments and some reiew-

ers who remain anonymous. $his worh was surrorted by the onseil !࣐]ional

de our]o]ne-ranche-omt࣐ under rant Œ!I2œ and the antue orulaire.

1

Thefirst draftof thisarticle waspresentedat the PremièresJournéesScientifiques

Nancéennes de Microfinanceat Nancy, December 9–10, 2014 and we thank the

participantsof that conferencefor their comments and some reviewers who remain

anonymous. This work was supported by the Conseil Régional de Bourgogne‐

Franche‐Comtéunder Grant [PARI2] and the Banque Populaire.

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Strategic Change. 2018;27(4):313–327. wileyonlinelibrary.com/journal/jsc © 2018 John Wiley & Sons, Ltd. 313