Abstract
Purpose: The process of identifying and defining effective delivery mechanisms is a critical issue in the management of microcredit programs to meet the firm's objectives and the customers’ needs. The purpose of this paper is to look at the relative importance of delivery mechanism in microcredit programs. In addition, this paper analyses the relationship between delivery mechanism and business performance among micro enterprises involved in microcredit programs. Methodology: The primary data of the study were obtained from 756 micro entrepreneurs under two major microcredit programs (AIM and TEKUN). Descriptive and t-test analysis were used to explain the findings of the study. Findings: Analysis of the study shows that cooperation from staff, the duration and method of loan repayment and monitoring of loan capital are important mechanism in the management of microcredit programs. T-test analysis revealed a significant difference in delivery mechanism between the two microcredit programs involved. Empirical findings show that the performance of micro enterprises under the AIM microcredit program is better than that of micro enterprises under the TEKUN microcredit program. Practical Implications: The performance of a microcredit program depends largely on their resource management. This involves operational efficiency, credit products offered, and customer support services. These three elements are critical factors in determining the effectiveness of the delivery mechanism in a microcredit program. Originality/value:The efficiency of delivery mechanisms through strategic resource management not only can enhance the competitive advantage of the AIM microcredit program but also affect the performance of the micro enterprises involved. Doi: 10.28991/esj-2021-01281 Full Text: PDF
Highlights
In an increasingly complex economic environment, the need for more innovative and competitive strategies is seen as crucial to achieving business objectives
The efficiency of delivery mechanisms in microcredit programs can create competitive advantage, [7] maintain self-reliance without relying on financial assistance from the government but can ensure the business performance of those involve with the program [8]
The objective of this paper is to examine the relative importance of each delivery mechanism used in the microcredit program, to make a comparative analysis in terms of delivery mechanisms between the two micro-credit programs in Malaysia as well as to analyse the relationship between delivery mechanisms with the performance of micro enterprises
Summary
In an increasingly complex economic environment, the need for more innovative and competitive strategies is seen as crucial to achieving business objectives. According to Gibbons & Meehan (1999) and Yu et al (2020) [5, 6] these competencies include labor and institutional operations that can be achieved through a variety of methods including, understanding customer requirements, using information management systems, establishing strategic planning and maintaining the quality of loan portfolio. These cover the aspects of operational efficiency (including staff development), credit products (e.g. loan size, cost of borrowing, repayment period) and social development programs (such as training, exposure on business fundamental, guidance, supervision and project effectiveness, and customer services support). The efficiency of delivery mechanisms in microcredit programs can create competitive advantage, [7] maintain self-reliance without relying on financial assistance from the government but can ensure the business performance of those involve with the program [8]
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