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Mission impossible: diffusion and drift in the microfinance industry

Mission impossible: diffusion and drift in the microfinance industry Purpose – The purpose of this paper is to thoroughly examine sources of mission diffusion and mission drift in the microfinance industry and to identify consequences of and remedies to these problems. Design/methodology/approach – Extensive field experience relating to individual microfinance institutions (MFIs) and industry trends provides the grounding for a review of the trade and academic literatures in microfinance and social enterprise management. Findings – Mission diffusion arises from pursuing diverse approaches to poverty alleviation and addressing disparate and changing stakeholder interests. Mission drift arises from commercialization and conversion activities aimed toward enhancing ratings and achieving scale. Mission clarity can be regained through clarification of the mission along with more effective corporate governance and performance management systems. Practical implications – The tension between financial and social performance is not merely ideological – economic realities make it almost impossible to stay on mission. Understanding these realities can help MFIs maintain and regain clarity of mission. Originality/value – The paper sheds new light on reasons the microfinance industry has not been able to deliver on promises of poverty alleviation during a period of heavy demand rapid scaling. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Sustainability Accounting, Management and Policy Journal Emerald Publishing

Mission impossible: diffusion and drift in the microfinance industry

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Publisher
Emerald Publishing
Copyright
Copyright © 2010 Emerald Group Publishing Limited. All rights reserved.
ISSN
2040-8021
DOI
10.1108/20408021011089248
Publisher site
See Article on Publisher Site

Abstract

Purpose – The purpose of this paper is to thoroughly examine sources of mission diffusion and mission drift in the microfinance industry and to identify consequences of and remedies to these problems. Design/methodology/approach – Extensive field experience relating to individual microfinance institutions (MFIs) and industry trends provides the grounding for a review of the trade and academic literatures in microfinance and social enterprise management. Findings – Mission diffusion arises from pursuing diverse approaches to poverty alleviation and addressing disparate and changing stakeholder interests. Mission drift arises from commercialization and conversion activities aimed toward enhancing ratings and achieving scale. Mission clarity can be regained through clarification of the mission along with more effective corporate governance and performance management systems. Practical implications – The tension between financial and social performance is not merely ideological – economic realities make it almost impossible to stay on mission. Understanding these realities can help MFIs maintain and regain clarity of mission. Originality/value – The paper sheds new light on reasons the microfinance industry has not been able to deliver on promises of poverty alleviation during a period of heavy demand rapid scaling.

Journal

Sustainability Accounting, Management and Policy JournalEmerald Publishing

Published: Oct 28, 2010

Keywords: Microeconomics; Financial services; Poverty; Stakeholder analysis

References