The Role of Trust-Control Mechanisms in Operations Processes: Mitigating Mission Drift in a Microfinance Institution in Gujarat, India

Viresh Amin
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Viresh Amin: Department of Management, Birkbeck College University of London

No 7, Management Working Papers from Birkbeck Department of Management

Abstract: This study explores how managers of microfinance institutions (MFIs) use trust-control mechanisms in the operation processes to mitigate the problem of mission drift arising out of the need to meet the dual goals of social development and financial self-sustainability. Using a case study methodology, purposive sampling, and replication logic, data from the operations processes of four geographically different sites of a microfinance institution in Gujarat, India were analyzed. The findings suggest that the managers of microfinance institutions balance integrity-trust, benevolence-trust, competence-trust, and control mechanisms to achieve dual goals of social development and financial self-sustainability. The conditions and contingencies under which trust-control mechanisms are most effective for mitigating mission drift are identified. The findings also indicate that managers of the microfinance institution use calculative and relational forms of trust to achieve the empowerment of women borrowers along with the fulfilment of the aims of financial self-sustainability. Finally, the study places mission drift mitigation within its ethical context by examining client vulnerability and the MFI’s operational responses.

Pages: 45 pages
Date: 2014-06, Revised 2014-06
New Economics Papers: this item is included in nep-ban, nep-mfd and nep-soc
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Published on Birkbeck Deparment of Management web site, June 2014, pages 1-45

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