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 institu...

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Bibliographic Details
Published in:Sustainability accounting, management and policy journal (Print) management and policy journal (Print), 2010-10, Vol.1 (2), p.201-221
Main Authors: Epstein, Marc J., Yuthas, Kristi
Format: Article
Language:English
Subjects:
Commercialization
Economic growth
Economic theory
Financial institutions
Financial services
Funding
Government grants
Interest rates
Loans
Microeconomics
Microfinance
NGOs
Nongovernmental organizations
Poverty
Profits
Stakeholder analysis
Stakeholders
Studies
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Summary: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.
ISSN:2040-8021
2040-803X
DOI:10.1108/20408021011089248