The institutional context of poverty: State fragility as a predictor of cross-national variation in commercial microfinance lending

Joshua K. Ault, Andrew Spicer

Research output: Contribution to journalArticle

41 Scopus citations

Abstract

We examine cross-national variation in the global growth of commercial microfinance from 1998 to 2009 as a natural experiment to analyze the role of national institutions in shaping the ability of commercial enterprises to reach the global poor. Our results demonstrate that a country's level of state fragility represents an important institutional context of poverty that explains significant cross-national variation in the commercial microfinance industry's ability to grow its client base, control costs, and attract commercial capital. Moreover, we find that commercial microfinance lenders have experienced greater difficulty than nonprofit lenders in growing their client base in more fragile state settings. Our results support the proposition that the state shapes both institutional hazards and opportunities for business-led efforts to combat global poverty.

Original languageEnglish (US)
Pages (from-to)1818-1838
Number of pages21
JournalStrategic Management Journal
Volume35
Issue number12
DOIs
StatePublished - Dec 1 2014
Externally publishedYes

Keywords

  • business and poverty
  • institutional hazards
  • less-developed countries
  • microfinance
  • state fragility

ASJC Scopus subject areas

  • Business and International Management
  • Strategy and Management

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