Is there a difference in performance by the legal status of microfinance institutions?

Based on some cases of notable successes in Latin America, some microfinance practitioners advocate a transformation of non-profit microfinance organizations into private and regulated companies. The performance of the latter is supposed to be higher than those of non-profit organizations. From this point of view, there is a relationship between the legal status of MFIs and their performance. This article's main objective is to test this relationship from the comparison of performance of 202 MFIs in the period from 2001 to 2006. Rather than restricting the comparison to NGOs and private companies, cooperatives have also been taken into account to compare the performance by the dominant legal forms of MFIs. The results show that the performance of private corporations is better than that of NGOs only when portfolio quality is used as an indicator for measuring performance. Also, our results show that for profit MFIs are more socially efficient than not-for-profit MFIs. The commercial approach of microfinance does not seem inconsistent with the social mission of MFIs.     

Do Powerful CEOs Determine Microfinance Performance?

Recently, microfinance has been coming under public and media attacks. The microcredit crisis following from microfinance‐induced suicides in 2010 in the Indian state of Andhra Pradesh indicates that weak corporate governance and imprudent risk taking have far‐reaching consequences. Yet, analyses of corporate governance mechanisms among microfinance institutions (MFIs) remain underdeveloped. As a response, this study examines the impact of CEO power on MFI risk taking by deriving explicit predictions of this effect from a characterization of the microfinance industry. Based on a sample of 280 microfinance institutions, our results suggest that powerful CEOs of microfinance non‐governmental organizations (NGOs) have more decision‐making freedom than powerful CEOs of other types of MFIs. This induces them to make more extreme decisions that increase risk. Furthermore, the decision‐making freedom powerful CEOs have in NGOs appears to lead to worse decisions, because the presence of powerful CEOs in microfinance NGOs is associated with lower performance.     

Gender Diversity on Boards and Firms’ Environmental Policy

This paper tests the relationship between gender diversity on boards and firms’ environmental policy. Based on prior research, we predict that gender diversity on boards of directors should have a positive relationship with firms’ environmental policy. Moreover, firm character in terms of pollution creation likelihood moderates the relationship between gender diversity on boards and firms’ environmental policy. Analyzing data from 865 publicly listed firms in the United States, we found direct and significant empirical evidence for our predictions. According to the findings, we highlight the importance of gender diversity for the development of good firm environmental policy as well as for the improvement of corporate governance. Moreover, the more likely firms in a given industry are to cause environmental pollution, the more salient will be the beneficial effect of gender diversity on boards on firms’ environmental policy in the industry. Copyright © 2016 John Wiley & Sons, Ltd and ERP Environment     

The liquidity risk–financial performance nexus: Evidence from hybrid financial institutions

This paper uses a sample of 532 microfinance institutions (MFIs) in 73 countries to investigate the effect of liquidity risk on the financial performance of MFIs and also enquires whether this effect changes in the presence of credit risk. It observes that liquidity risk exhibits a robust negative and statistically significant effect on the financial performance of MFIs. However, in the presence of credit risk, this negative effect transmutes into a positive effect. The paper also observes that in the presence of liquidity risk, credit risk impacts the financial performance of MFIs positively.     

Entrepreneurial orientation and firm performance in family SMEs: the moderating effects of family,women, and strategic involvement in the board of directors

Entrepreneurial success in family SMEs is largely determined by the knowledge, skills, and new ideas contributed by board directors, the most important actors in the formulation of corporate strategy and decision making. The composition of family SME boards has traditionally been homogeneous, as such boards usually comprise male family members. Boards’ contributions, however, depend on their level of diversity and strategic involvement. This study analyzes the moderating effects of two main sources of board diversity in family firms, family involvement level and gender diversity, as potential means of enhancing family firms’ success when exploiting entrepreneurial initiatives. This study also explores whether these two potential moderators depend on the strategic involvement of the board directors. Based on a sample of 230 Spanish family firms, we found that the link between entrepreneurial orientation and performance is stronger in firms with lower levels of family involvement and higher levels of gender diversity in the board. Moreover, the board’s high strategic involvement may strengthen the positive impact of gender diversity and change the moderating influence of family involvement from negative to positive.     

Gender diversity and firm performance: evidence from Dutch and Danish boardrooms

Drawing on the business case for gender diversity, this article examines whether board gender diversity has a positive effect on firm performance, based on evidence from the Netherlands and Denmark. We use empirical data on 186 listed firms observed in 2007. Almost 40% have at least one woman in the boardroom. Within boards, the average share of women is only 5.4%. To investigate the impact of board gender diversity, two-stage least-squares estimation is applied, using Tobin’s Q as a measure of performance. Our findings indicate that on the basis of this data-set, there is no relation between board diversity and firm performance.     

Board diversity and risk-taking of family firms: Evidence from China

Using a sample of more than 1,500 Chinese listed firms over four years of observation (2015–2018), this study examines the effects of family ownership and certain features of board diversity (gender diversity, age diversity, and education diversity) on the risk-taking of Chinese listed firms. First, a two-way fixed effects regression model is proposed. Then, this study finds that the examined Chinese family firms’ risk-taking, which is measured by their Z-scores and innovation intensity, is lower than that of the nonfamily firms. This result confirms the prediction of social-emotional wealth theory. Second, a diversity index is formulated to summarize the above three dimensions of board diversity. By regressing risk-taking measures on these board diversity features, this study finds that firms with less-diverse boards take more risks. Finally, the effects of the interaction between family ownership and board diversity are explored. The results reveal that the examined dimensions of board diversity have significant influences on risk-taking: family firms with lower levels of board diversity generally take more risks than those with higher levels of board diversity. Our study contributes to the literature on risk-taking of family business and has important practical implications for motivating family business innovation in China.

     

Gender diversity,gender norms and firm performance: Evidence from India

This paper examines the effect of gender diversity on the financial performance of firms in India. Specifically, we examine two specific aspects of gender diversity- how the implementation of gender diversity across various workforce levels affects firm performance and the role of gender norms and culture in the external environment where the firm operates in influencing the relation. Using the World Bank Enterprise Survey, 2014, we use propensity score matching and instrumental variable estimation techniques to test the effect of gender diversity on firm performance. The results suggest that better women’s representation at higher levels of the workforce is associated with better performance. In contrast, women’s representation at the worker level of the workforce does not affect performance. Additionally, the state-level gender empowerment norms strongly condition the effect of gender diversity on performance. In states with better gender empowerment indicators, firms with better female representation at all levels of permanent employment also have better performance. In contrast, there is no effect of gender diversity on performance in states with worse women empowerment indicators.     

Marketing micro-finance to women: integrating global with local

• Since the 2005 ‘International Year of Microfinance’, how well are micro-finance interventions (MFIs) working? MFIs are often seen as a panacea for poverty reduction, particularly among women and through enterprise development. Yet MFIs in Africa have often failed, and may even cause more harm than good. In East Africa for example, MFIs continue to advocate that one size (credit only) fits all strategy. Such a generic remedy is by definition relatively (i) harmonized but not necessarily (ii) aligned with the full diversity of preferences and norms at a local grassroots level. To improve any marketing ‘fit’ between MFIs and local market contexts in East Africa, interventions can become more pluralistic, blending global with local solutions. Based on a review of research with economically poor women in East Africa, a blend of ‘credit only’ and communal-based systems like ‘rotating savings’ and ‘credit associations’, is suggested. Diversified delivery systems like this are antithetical to (i) harmonisation, but would improve the degree of (ii) alignment between MFIs and the adaptively pluralistic belief systems already in place. Hence a key to making MFIs more sustainable, and thereby reducing poverty more effectively, is to respect their global–local interface, or ‘glocality’.

Copyright © 2009 John Wiley & Sons, Ltd.     

Expect the unexpected: examining the shaping role of entrepreneurial orientation on causal and effectual decision-making logic during economic crisis

ABSTRACT

While many firms operate in dynamic environments, the competitive conditions faced by firms during an economic crisis are especially unstable and turbulent. We examine firm strategic decision-making in this distinctive context and investigate the question of whether causal and effectual logic provide similar paths to performance during such challenging economic times. Further, we examine the potential impact that a firm’s level of entrepreneurial orientation (EO) has upon the relationship between managers’ predominant decision-making logic and their firm’s overall performance in this crisis. To test these relationships, we employ a robust national random sample of 447 Russian small and medium-sized enterprises (SMEs) collected from 2015 to 2016 during a period of economic crisis. Our results indicate that EO plays an important moderating role, shaping the nature of the relationships between managers’ decision-making logic and financial performance. Moreover, additional analysis identifies the presence of a non-linear relationship between both logics and the performance of SMEs.     

Demographic Diversity in the Boardroom: Mediators of the Board Diversity–Firm Performance Relationship

Whereas the majority of research on board diversity explores the direct relationship between racial and gender diversity and firm performance, this paper investigates mediators that explain how board diversity is related to firm performance. Grounded in signalling theory and the behavioural theory of the firm, we suggest that this relationship operates through two mediators: firm reputation and innovation. In a sample of Fortune 500 firms, we find a positive relationship between board racial diversity and both firm reputation and innovation. We find that reputation and innovation both partially mediate the relationship between board racial diversity and firm performance. In addition, we find a positive relationship between board gender diversity and innovation.     

The U-shaped effect of R&D intensity on employee downsizing: evidence from Spanish manufacturing firms (1994–2010)

Abstract

This study explores an empirically untested issue: the relationship between the level of a firm’s R&D intensity and employee downsizing. Basing our conceptual development on the Resource-Based View of the firm, we argue that a linear relationship is a poor approximation of the proposed relationship. Instead, we find theoretical insights supporting the logic that employee downsizing decreases as firms shift from low to moderate levels of R&D intensity but increases as firms change from moderate to high levels. This prediction suggests that a U-shaped link is a better representation of the way in which a firm’s R&D intensity can affect downsizing. This hypothesis is tested and confirmed using a sample of Spanish manufacturing firms during the 1994–2010 period. We also propose a novel empirical tool (i.e. dynamic probit models) that is especially useful for addressing the potential endogeneity and simultaneity problem in studying this relationship. Implications for future research and practice are presented along with the conclusions of our findings.     

The influence of cultural context on the relationship between gender diversity and team performance: a meta-analysis

The impact of gender diversity on team performance has become a central topic in the field of human resource management for researchers and practitioners alike. Extant research provides conflicting evidence on the relationship between gender diversity and team performance. To resolve these contradictory findings, we meta-analyze the relationship between gender diversity and two performance outcomes, namely task performance and contextual performance. Grounded in categorization-elaboration model, we simultaneously consider the positive and negative aspects of gender diversity. We further examine the effect of cultural context as a moderator on the relationship between gender diversity and team performance. Based on 71 independent samples from 68 studies published between 1996 and 2013, we find a significant negative relationship ( ? 0.10) between gender diversity and contextual performance. Additionally, we find that the cultural dimensions gender egalitarianism and collectivism have significant moderating influences on the relationship between gender diversity and task performance.     

Age diversity and firm performance in an emerging economy: Implications for cross‐cultural human resource management

This study tests the effect of age diversity on firm performance among international firms. Based on the resource‐based view of the firm, it argues that age diversity among employees will influence firm performance. Moreover, it argues that two contextual variables—a firm's level of market diversification and its country of origin—influence the relationship between age diversity and firm performance. By testing relevant hypotheses in a major emerging economy, that is, the People's Republic of China, this study finds a significant and positive effect of age diversity and a significant interactive effect between age diversity and firm strategy on profitability. We also find a significant relationship between age diversity and firm profitability for firms from Western societies, but not for firms from East Asian societies. The paper concludes by discussing the implications of this study's findings. © 2011 Wiley Periodicals, Inc.     

Surplus distribution and characteristics of social enterprises: Evidence from microfinance

The issue of surplus distribution has hardly been analyzed in the context of the social economy. This paper highlights the main drivers of distribution between various stakeholders of microfinance institutions (MFIs), which are an example of social enterprises. We focus on three major variables: size, governance structure and subsidies. Our results show that the size of the institution is the main indicator of the surplus that the organization keeps as a self-financial margin. Moreover, MFIs with a cooperative ownership structure allocate a larger part of their surplus to their employees, whereas non-profit organizations and shareholder-firm MFIs do not allocate their surplus in a significantly different way among their main stakeholders. Finally, we do not find any clear-cut effect of subsidies on the surplus allocation process.     

Political Connections and Accounting Quality under High Expropriation Risk

Abstract

We examine the impact of political connections and accounting quality among Venezuelan industrial firms, which face one of the highest levels of expropriation risk worldwide. Based on prior literature, we expect a negative relationship between expropriation risk and accounting quality as firms manage earnings to avoid ‘benign’ state intervention. We find that politically connected firms have higher accounting quality than non-connected firms, which is consistent with connected firms’ lower risk of expropriation due to connections with high-level government officials or ruling party members. The relationship between accounting quality and political connections appears to be strongly moderated by institutional features like expropriation risk.     

A Matter of Experience? Understanding the Decline in Group Lending

Group lending, often considered a key innovation driving the successful expansion of microcredit across the world, appears to be on the decline. Using MIX data on microfinance institutions (MFIs), we study this time trend, focusing on macroeconomic predictors of group lending and MFI experience. Results suggest that any movement away from group lending is better explained via MFIs gaining experience rather than a secular time trend. We also find that group lending is used more extensively in poorer and low‐growth economies. We argue that these findings can be understood within established views of group lending, and carry important implications for the historical and continuing importance of group lending.     

Board gender diversity and corporate environmental performance: The moderating role of family and dual‐class majority ownership structures

While prior work has investigated the impact of (a) ownership structure and (b) board gender diversity separately on corporate environmental performance, researchers have not studied the potentially important relationship between ownership control and female board diversity in influencing corporate environmental performance jointly. We do so in the context of majority ownership in family‐controlled and dual‐class firms whose motives and influence are theoretically different from that of the firm's minority shareholders. Drawing on resource dependency, socioemotional wealth theory, and secondary agency theory, we hypothesize that majority family owners and dual‐class owners likely choose women directors to help advance their personal preferences for environmental corporate social responsibility. Our empirical tests utilizing 2,755 U.S. firm years over the 2010–2015 show that, as hypothesized, these two majority ownership types interact with board gender diversity to positively influence corporate environmental performance.     

Do external diversity practices boost focal firm performance? The case of supplier diversity

Based on the resource-based view, we propose that external diversity practices such as supplier diversity may affect firm performance. We find that the relationship between supplier diversity and short-term performance (i.e. productivity) is moderated by context such that firms in declining industries experience positive productivity effects while firms in munificent industries witness negative effects. For longer-term profitability (i.e. Tobin's q), we do not find support for a positive relationship between supplier diversity and long-term performance. However, positive supplier diversity effects emerge in munificent environments. Overall, in support of the strategic human resource management approach, we conclude that the effect of external supplier diversity on firm performance is contingent upon environmental munificence, which documented the necessity to include supplier diversity as a relevant component of a comprehensive diversity and equality management system.     

Effects of HRM practices,lean production practices and lean duration on performance

Abstract

The purpose of this research is to investigate the structural relationships between HRM practices, lean production practices, operational performance and firm performance of manufacturing firms that have implemented lean production. The data were collected from the firms operating in Sri Lanka, which fulfilled the selection criteria set for the study. Statistical techniques were used to test the hypothesized relationships. It was found that lean production practices and operational performance mediate the relationship between HRM practices and firm performance; lean duration moderates the relationship between HRM practices and lean production practices in such a way that the longer the duration, the greater would be the adoption of lean production practices. The essential contribution of the findings lie in presenting empirical data valuable for the advancement of research in HRM as well as for making decisions on people management when implementing advanced manufacturing technologies.