Sampling

A purposeful sampling (^{Miles & Huberman, 1994}; ^{Patton, 2014}) was conducted, considering the fit between organizations and the research question. Moreover, this is being combined with the possibility of gathering rich information from the settings and to accomplish the replication logic through multiple experiments, with similar results (literal replication) (^{Yin, 2017}). A priori informants’ willingness to collaborate has also been an important matter (site availability². Each CEO was contacted through a Colombian non-profit organization within the industry that plays the role of a lender for micro-financial institutions. This fact has allowed having the opinion of an expert regarding how well the cases fitted the research objectives, including a reputational case selection (^{Miles & Huberman, 1994}). What’s more, this person has helped the researchers obtain access to key informants and get the green light from the chosen social enterprises.

Four criteria were used to choose these cases in the Colombian context: 1) social impact (outreach and growth), 2) auto-sustainability (financial viability), 3) longevity (at least 10 years), 4) recommendations from an expert in the industry. Likewise, three chosen organizations were ranked by Forbes³ magazine within the world’s top 10 performance micro-financial institutions.

Data sources and collection

The data was collected from three main sources of evidence: 1) interviews as the primary data, 2) archival data (documents), and 3) non-participant observations. Interviews were conducted in a top-down approach with semi-structured templates (protocol guide) with open-ended questions. The researcher began the interviews at the top management level and went down through the hierarchical structure, customizing the interview to the informants’ levels and functions.

This implies collecting data from different perspectives and levels within the organization (^{Leonard-Barton, 1990}). Documents were given to the researchers by each of the informants during the interviews: PowerPoint slides, statistics, financial statements, publicity material, company memories, codes, manuals, magazines, newspaper articles, etc. Organizations Websites were also visited. During the interviews (being within the organizational setting) field notes were taken with details of the interactions and the researcher’s impressions and observations.

Descriptive narratives (histories) were written by the researcher, including and selecting quotes from the informants and triangulating different sources (^{Eisenhardt, 1989}). Three descriptive case reports (narrated neutrally), reviewed and approved by the informant organizations, give the research a broader validity in terms of reducing the researcher’s subjectivity (^{Yin, 2017}) and looking for saturation (^{Patton, 2014}).

Data analysis and conceptualization

As mentioned above, the general chosen strategy integrates the grounded theory, the multiple case studies for analyzing data, and narrative and visual strategy to present the findings. For validity, this research also used different sources of data and triangulated them (different informants, documents and non-participant observations). Moreover, the organizations and the key interviewees reviewed the case reports; an activity that increases validity (^{Yin, 2017}) and credibility (^{Lincoln & Guba, 1985}).

In order to identify the emergent categories, an open codification (coding) process (^{Strauss & Corbin, 1990}) was conducted, having the interviews as a primary source. This source of data was also triangulated with documents and observations (^{Eisenhardt, 1989}; ^{Patton, 2014}; ^{Yin, 2017}).

The aim was to obtain convergent evidence that could support the emergent categories. At this first analysis stage, main resources and capabilities for structuring the commercialization capability were identified. A counting rule (frequency counts) was followed during this phase. An organizational component was considered a code if it was mentioned by three informants within each organization and across three cases.

Simultaneously to the cross-case comparisons, iterations with the conceptual and theoretical frameworks were conducted (^{Eisenhardt, 1989}; ^{Patton, 2014}). This allowed the researcher to develop the categories’ definitions and its dimensions (constructs development). Second, validity emerged from the evidence during the cross-case analysis, and was built through literal replication logic (^{Eisenhardt, 1989}; ^{Yin, 2017}) after saturating (^{Patton, 2014}) the emergent categories that constructed the emergent model.

However, this research cannot be extended to an external generalization. Rather, it has been designed, under the replication logic and qualitative data interaction with the conceptual framework, accomplishing an analytic generalization (^{Miles & Huberman, 1994}; ^{Yin, 2017}) or internal generalization (^{Maxwell, 2013}).

A figure was used to present and summarize the model (^{Eisenhardt, 1989}; ^{Miles & Huberman, 1994}, ^{Langley, 1999}). This is common practice among qualitative researchers.

Finally, for enhancing reliability, a case study protocol was written and a case study database was kept in order to allow other researches and evaluators’ reviews (^{Yin, 2017}). The researcher has protected the integrity and rights of the persons involved in this research. Interviews were conducted in Spanish and were translated in order to incorporate them in this paper.

The emergent model

A performance model emerged from the qualitative data. This model explains how microcredit social enterprises organized the main organizational components (in terms of resources and capabilities) in order to deploy the commercialization capability that creates social and economic value. This model is depicted by Figure 1, and each component will be explained with its dimensions in this section.

Source: Authors

Figure 1 Organizing for commercialization capability. 

Microcredit social strategy

The social strategy has a general intention: the incorporation of micro-entrepreneurs in the financial formal system as worthy borrowers. This is done through a business model that creates simultaneously economic and social value.

The strategy is oriented to take care of those micro-entrepreneurs rejected by traditional commercial banks, and doing this in a profitable way. It is about implementing a tool to address poverty in underdeveloped countries and empowering the poor micro-entrepreneurs.

The social strategy is about creating social and economic value at the same time (hybrid organizations). For example, a microcredit social enterprise CEO said:

At the beginning, I saw there was a lot to do. I wanted to do something for women. I believed that it was important for women to learn how to manage their own lives. This was the reason why I decided to work here and not in other banks. With time and after all these years in this organization, we have realized, after we have given the status of borrower to the micro-entrepreneurs, that women have improved as human beings and they have been given more power at home; so there is an empowerment effect in microcredit.

Another microcredit social enterprise CEO said:

The rural microcredit has a special charm since its main objective is to avoid peasants from migrating to the cities. People from the countryside have understood that our mission is to give them opportunities, to accompany them and to support their improvement. Woman farmers work too much… they manage their family’s food, sell products in the village, buy provisions and help their husbands by generating some additional income. In this respect, women help their family´s life conditions, and microcredit gives them some kind of power; it increases their self-esteem and reassures their rights. Microcredit has an important social impact in the countryside.

Another microcredit social enterprise CEO said:

Our main goal has been to give credit access to the low-income micro-entrepreneurs, with a special focus on women. We are struggling to incorporate low-income people into the economic and productive activity of this country. We want to elevate their life quality, their income, and their assets. This is what we call “social profitability”. We are not a charity. We also work for financial profit. We are in a self-sustaining financial business in the financial industry, but with an additional component: social impact, through including the poor into the market system.

The strategy has been oriented towards the positive impact on micro-businesses, but also in the micro-entrepreneur’s life quality, or in other words, it is about a strategy that contributes directly to economic development and human capacities. These microcredit organizations have a social strategy, because the aim is to improve the customer’s quality of life, and also because they are looking for human empowerment in the midst of profound poverty.

These microcredit organizations offer solutions for their customers’ specific needs. They aim to solve social needs with profit. Their social strategy is client-oriented and relies on five differentiating attributes: easy access, agility (quickness), simplicity (in requirements and procedures), flexibility (in collaterals) and customized service. Under this evidence, and using ^{Porter’s (1996)} framework for competitive strategies, this microcredit social strategy fits into “focus with differentiation”.

Management capability in microcredit social organizations

This category refers specifically to CEOs, senior management, and implies, in first place, a people-oriented style. There is an “open door” policy in order to listen to and discuss things with employees. Senior management takes care of human competences and skills improvement in the whole organization. Second, it is about “management by wandering around”. For these managers, the physical presence, not only in the headquarters but also throughout the branches, and interacting with customers is important. This latter element is very important: it allows the CEO to know directly the micro-entrepreneurs’ conditions and needs.

A third finding was a “team-work-orientation”, allowing active participation from employees. CEOs have a participative style, crystallized, for example, in steering committees with frequent meetings and training people from within, looking for high performance teams. CEOs appreciate different points of view, even if they are contrary to their own. In these teams, people can think out of the box, out of the mental models, without negative consequences. This triggers innovation, an important element to compete at the bottom of the pyramid.

Finally, specific experience in the industry ended up to be a key issue, so it implies the importance of hiring people from within the industry, and much better if you have an internal promotion policy. For example, a vice president said about his CEO:

The long-lasting experience of our CEO has been a key factor for our success. She likes listening to different points of view, discussing them, and she loves having complementary people, different from the way she thinks. She has helped to create a differential culture, oriented towards empowering people, but also towards supporting customer service, growth, and assets management.

A financial director said about his CEO:

The management style has been an important key success factor in this organization´s performance. Throughout the years, she has led through example and supporting employee active participation. She always listens to those who are in continuous interaction with our customers. She is very rigorous, but treats others with respect. She promotes and allows an equilibrated life for our employees. The senior management has managed the complex things in a simple way. She knows how to manage the tension between results and social impact. She customizes her interaction with employees and treats them with respect. This is important because it is also replicated in the way we treat our customers; in other words, in the way we commercialized our products.

Interpreting these citations, we consider that contributive motivation (^{Pérez, 2014}) operates for microcredit management capability. This approach goes beyond the frontiers of the traditional intrinsic-extrinsic motivation model. It is about a management capability that deploys its skills and talents in order to accomplish, with its work, a social mission expressed in the firm’s social strategy: empowering the micro-entrepreneurs by giving them access to credit. This purpose (meaning) gives a specific identity to an organization and ignites commitment in its employees.

Senior management has a strong conviction about the social impact and develops an emotional bond with its customers. It is not only about making “customers fall in love with the company”, but also the other way round. There is an identification between the personal project (personal mission) and the company’s social strategy. It is a leadership focused on the organization’s mission (^{Cardona & Rey, 2008}). A CEO’s work and exemplary behavior become a framework to follow in the whole organization.

Relational Culture

This category also emerged from the qualitative data. Culture is the norms, values, behaviors, symbols, and artifacts that members in the organization practice (^{Schein, 1985}, ^{Rasul, 2018} ). It is clear that the combination of the social strategy and the management capability have help to build a customer-oriented culture which focuses on developing service relationships with clients. A CEO said about the culture in her organization:

Our excellent performance in the microcredit industry can be explained through the quality of interaction with our customers. It is not only about the credit methodology, it is more about how our culture is configured in terms of the customer. It is customer-oriented. We understand this, not only as a good service during the interaction with simple procedures and requirements, but also in terms of how we rescue human dignity in these micro-entrepreneurs.

A senior manager from the same organization said:

If we require excellent customer service from our employees, as senior managers, we must give high-quality service to our collaborators. The organizational values must be reflected within our organizational culture and in our relationships with our customers. The first is a condition for the second.

The social strategy has been implemented through a customer-oriented culture. This culture is focused on the micro-entrepreneur’s well-being and on the value proposition customized with attributes for this specific segment. This is why we can call it a relational culture. Because its norms, behaviors, values, and symbols are configured to develop social value, creating service relationships with customers that triggers a contributive motivation (meaning) for work. However, results also matter in a social enterprise, so it’s important also to be goal-oriented though extrinsic incentives and look for profitability and economic value creation.

Active corporate governance

The board of directors is another important component for organizing commercialization capability. They mobilize resources within the company, make decisions about strategic projects, and approve the strategy. In this case, for microcredit social enterprises, a first element within this category is their compromise with the social mission: to improve the customer’s (micro-entrepreneurs) quality of life (organizational purpose and meaning).

Second, the board of directors closely controls and monitors the social strategy and the CEO’s performance. In a document written by Microrate, an important rating agency in this industry, the following was expressed about the board of directors -in a case-:

The Foundation has an experienced and stable board of directors. This is a true strength. This board has followed a consistent strategy in order to keep the organization in its competitive position in the market.

An important component has been “control”. The board of directors has implemented professional oversight tools (e.g. balanced scorecard). This control, however, is not only about operational or financial excellence, but also includes accomplishing the social mission, and actively participating in board of directors’ thematic committees.

Motivated human talent

Human resource practices (hiring, promoting and socializing) are key success factors for performance and for organizing the commercialization capabilities. These practices, including extrinsic incentives and rewards, create employees who are committed to the social mission. A human resources manager said:

The collaborators’ motivation has different sources: a stable work contract, the institution’s brand, an adequate wage, permanent on the job training, and internal promotion. We think the language managers use to communicate is important. That’s why we refer to our employees as “collaborators”; this implies that they are important for the company. However, beyond all these human resource practices, the main motivation is this company’s activity and its mission: to improve the quality of life at the base of the pyramid.

A financial director said:

What motivates me the most is that I am creating wealth for the community, and not only for the shareholders. We perform a social activity with profitability. We compete against the usurer’s illegal activity, and we do it to empower and protect the micro-entrepreneur.

Besides the extrinsic and intrinsic motivation, employees developed a contributive motivation, like senior managers. This means that they work for a specific purpose: to improve the quality of life of their customers. This is what makes sense in their daily lives at work and what makes them act in a pro-social way. This triggers the contributive motivation and creates an environment for employee commitment.

Commercialization capability

The main element for commercializing microcredit is the “human interaction” between the credit analyst and the micro-entrepreneur. This relationship is deployed “on the street”, which means it takes place at the customer’s home or at their work, not in a bank. The microcredit organization goes to the customer and this means doing things in an innovative way, in a different way from traditional banks. A CEO said:

Since the 80s, we learned how to lend and recover money from the micro-entrepreneurs. We did many things in a way that contradicted the traditional practices in the financial industry. Banks lent money to those who had money; we lent money to those who didn´t have money. We replaced collaterals with information about the micro-entrepreneur payment capacity. However, micro-entrepreneurs didn´t have the information; we had to co-build it with them.

A credit manager said:

Microcredit is a world of close relationships with customers. The credit analyst is a psychologist, a financial advisor, a business consultant, and even a friend. The analyst enters the customers’ houses, talks to them, and even gets to know their husbands. This is important for us as a firm, because we get information from this frequent and close interaction. An emotional relationship is developed that locks-in the customer and influences them to punctually pay back the loans. This relationship educates the micro-entrepreneur to be a good borrower.

The commercial capability, through the creation of a “commercial friendship” between the credit analysts and the micro-entrepreneurs, gives the customer “relational benefits” that lock-them up. This means emotional switching costs, but also some sort of a reciprocity from the client to the analyst and the microcredit organization.

A micro-entrepreneur could say something like this: “this organization has given me access to credit, the analyst advises me in how to manage my micro-business, and has supported me in developing my human capacities”. These organizations believe in poor people, in their potential, in their ability to be part of the economic system. These social enterprises empower their customers through the “commercial human interaction” and empower them to be autonomous, while offering them the opportunity to live the most valuable life they can, and not the one they had to live.