Seeding Entrepreneurship with Microfinance
Guest Editors:
Garry Bruton, Texas Christian University
Susanna Khavul, University of Texas at Arlington
Donald Siegel, University at Albany, SUNY
Mike Wright, Imperial College Business School
Microfinance is stimulating entrepreneurial activity in developing and developed countries. Although microfinance grew as a means of providing uncollateralized start-up loans to groups or individuals living in poverty, today, it reflects a range of financial services including debt and equity financing, insurance, savings, and retirement plans. Denominated in relatively small amounts, microfinance instruments provide entrepreneurs with financial services that are difficult for them to acquire otherwise.
As its popularity has grown, the provision of microfinance has become a contested terrain. Banks, savings and loan organizations, for-profit investment funds, insurance companies, and mobile network operators are all vying for a share of the microfinance market. In addition, individuals have new opportunities to participate in microfinance as microangels and microlenders. Revolutionary developments in technology are also changing the landscape of entrepreneurial financing, and, in the case of new technology and media ventures, may be superseding the traditional role of seed venture capital. Specifically, mobile technologies, social networking tools, and crowdfunding mechanisms make it easier to pool and distribute small amounts of seed capital from individuals who want to invest in or lend to entrepreneurial ventures. The evolution of microfinance is accelerating, yet our understanding of the effects that it has on entrepreneurs starting and growing new ventures remains in its infancy.
In this special issue, we ask how is the expanding role of microfinance changing the nature of entrepreneurship? To answer this question, we encourage researchers to draw broadly from theoretical traditions across the social sciences (e.g. economics, sociology, psychology, and public policy) and consider multiple levels of analysis. The literature on microfinance so far has employed agency theory to explain the classic group lending processes, prospect theory to explain the risk preferences of entrepreneurs, and social capital theories to explain networks on which entrepreneurs rely. Likewise, researchers have drawn on institutional theory to explain the emergence and evolution of different microfinancing instruments. We welcome research that builds on existing literature and asks nuanced questions. However, as microfinance moves beyond its origins, we also see opportunities for researchers to use many other theoretical perspectives such as social network theories, behavioral economics approaches, among others, to extend our understanding of the phenomenon.
We welcome rigorous empirical and conceptual papers that develop and test theory. Longitudinal, qualitative, and experimental field studies are encouraged, as are studies using large sample, network, focused case studies, or meta-analysis. Papers set in emerging or developed economies as well as across multiple countries are of high interest. Given the prominence of poverty alleviation and entrepreneurial emergence in the conversation about microfinance, researchers should address the policy implications of their findings.
The questions of interest here include but are not limited to:
· How do entrepreneurs use different microfinance services to start and grow new ventures? Do entrepreneurs using microfinance services have different long-term performance outcomes for their new ventures than similar entrepreneurs who do not have microfinance?
· How do we compare and evaluate the performance of different microfinance initiatives and the new ventures they seed?
· How does new technology impact microfinance? How does technology change the economics of microfinance for entrepreneurs and investors? How do social networking and mobile technologies change the distribution of and access to microfinance?
· How do entrepreneurs manage relationships with multiple lenders and investors? What are the roles of trust and agency in microfinance? How do entrepreneurs manage portfolios of microfinance services over time and over multiple ventures?
· How do theories of finance address the portfolio management in microfinance organizations? How do microfinance organizations diversify and manage their portfolios over time? What implications does this have for entrepreneurs and their ventures over time?
· How does competition and regulation affect the availability, cost, and performance of microfinance services in different countries and in different institutional settings?
· How do non-profit and for-profit microfinance organizations differ in the ventures they promote? Do for-profit institutions operate differently than non-profits? Do these differences lead to better service and outcomes for the borrowers? When microfinance is coupled with social services (e.g. health and education), does this strategy appreciably breakdown the impact of poverty on borrowers?
· How does microfinance in developing and mature economies differ? To what extent does microfinance complement traditional sources of entrepreneurial finance over the development life-cycle of new ventures?
· What is the nature of informal forms of microfinance (e.g. whether from a moneylender making small loans at the base of the pyramid or relatively larger informal loans which are common in emerging economies such as China)? What is the impact of these informal forms of microfinance on entrepreneurial firms and entrepreneurship?
· What are the ways in which microfinance can have the greatest entrepreneurial impact in settings of desperate poverty at the base of the pyramid?
· What are the ways in which microfinance can impact the future of entrepreneurial finance?
Submissions should be prepared in accordance with ET&P's style guide and submitted to http://mc.manuscriptcentral.com/etp by January 31, 2013. Be sure to indicate that your submission is for the Seeding Entrepreneurship with Microfinance special issue.
After the initial round of reviews, the authors of short-listed papers will be invited to an ET&P special issue conference at the SUNY Global Center in New York City on October 3-4, 2013. At this conference, authors will receive developmental feedback from the guest editors and invited discussants. The special issue will be published in 2015.
Questions regarding the special issue can be addressed to: Garry Bruton (g.bruton@tcu.edu), Susanna Khavul (skhavul@uta.edu), Donald Siegel (dsiegel@albany.edu), and Mike Wright (mike.wright@imperial.ac.uk).