Scaling Social Ventures under Institutional Fragility

Abstract

Inclusive growth, driven by social venture, is the most critical factor in alleviating poverty at the bottom of the pyramid. How do institutional changes influence the growth of social ventures? We develop the concept of institutional fragility to emphasise the mutual conflict and contradictions among multiple dimensions of institutions. The empirical analysis uses the Microfinance Information Exchange dataset to analyse the scaling growth of 3,241 microfinance institutes (MFIs) across 81 countries in the industry emergence period. Our findings reveal that institutional fragility significantly curtails the expansion of social ventures. Additionally, institutional fragility negatively affects the dynamic between the borrowing community and MFIs’ growth, as well as the relationship between a gender-focused approach and MFIs’ growth.