Microfinance, Mission Drift and the Impact on the Base of the Pyramid: A Resource-based Approach
R. Mitch Casselman, Linda M. Sama, The Peter J. Tobin College of Business, Department of Management
This paper utilizes the theoretical construct of strategic intent and invokes the resource-based view of the firm to examine capability development, performance outcomes and impacts on the Base of the Pyramid (BOP) in microfinance institutions (MFIs). We argue that the differential strategic intents of commercially oriented, for-profit and socially oriented non-profit organizations drive the acquisition of disparate resources and capabilities, which in turn drives distinct performance outcomes, including a focus on different markets within the overall BOP. We present a model that outlines these relationships and helps to explain expected differences in different categories of MFIs. This paper also suggests that it is the dynamic aspects of changing strategic intent and the consequent timing delays in the development of associated resources and capabilities that leads to various issues of mission drift. First, MFIs that transition to the for-profit sector alter their strategic intent and revamp their mission and performance objectives in such a way that they will experience perceived mission drift. Second, the nature and speed of the development of resources and capabilities associated with changes in strategic intent can exacerbate perceptions of mission drift. Finally, we suggest that cross-sector alliances between for-profit and non-profit MFIs may benefit from the unique capabilities of both types of organizations and deliver the most and broadest impact on poverty alleviation in BOP markets.