The institutional context of poverty: State fragility as a predictor of cross-national variation in commercial microfinance lending
Article first published online: 4 OCT 2013
Copyright © 2013 John Wiley & Sons, Ltd.
Strategic Management Journal
How to Cite
Ault, J. K. and Spicer, A. (2013), The institutional context of poverty: State fragility as a predictor of cross-national variation in commercial microfinance lending. Strat. Mgmt. J.. doi: 10.1002/smj.2185
- Article first published online: 4 OCT 2013
- Accepted manuscript online: 5 SEP 2013 12:01PM EST
- Manuscript Accepted: 29 OCT 2012
- Manuscript Revised: 17 OCT 2012
- Manuscript Received: 25 JUN 2011
- business and poverty;
- institutional hazards;
- less-developed countries;
- state fragility
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. Copyright © 2013 John Wiley & Sons, Ltd.