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Selected Works of Subrata Chakrabarty
Article
Encouraging entrepreneurship: Microfinance, knowledge support, and the costs of operating in institutional voids
Thunderbird International Business Review (2013)
  • Subrata Chakrabarty
  • A E Bass
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Abstract
This study focuses on the supplemented strategies of microfinance institutions (MFIs), in which the MFI offers nonfinancial services, such as entrepreneurship related knowledge, in addition to financial services to impoverished borrowers at the bottom of the pyramid (BoP). We examine two contextual factors— foreign direct investment (FDI) and loan defaults— to better understand the relationship between providing knowledge support to encourage entrepreneurship and costs of operating at the BoP for MFIs. In contexts where FDI is low and loan defaults are high, providing knowledge support to encourage entrepreneurship aggravates the MFI's costs of operating at the BoP. However, in contexts where FDI is high and loan defaults are low, providing knowledge support to encourage entrepreneurship among impoverished borrowers does not aggravate the MFI's costs of operating at the BoP. Hence, in emerging markets where governments welcome FDI and curb loan defaults, MFIs can viably support entrepreneurship among the poor. 

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Keywords
  • Emerging Markets,
  • Entrepreneurship,
  • Foreign Direct Investment,
  • Institutional Voids,
  • Knowledge,
  • Microfinance
Disciplines
Publication Date
2013
DOI
10.1002/tie.21569
Publisher Statement

Citation Information
Chakrabarty, S., & Bass, A. E. 2013. Encouraging entrepreneurship: Microfinance, knowledge support, and the costs of operating in institutional voids. Thunderbird International Business Review, 55(5): 545-562.