The microfinance “group lending” approach has achieved widespread success in promoting high rates of repayment, and thus the viability of financial access, in very low-income environments. Yet group lending, which relies on social connections between borrowers to reinforce repayment, may be vulnerable under crisis conditions in which defaults are commonplace. We explore this possibility in the context of the liquidity crisis that followed India’s 2016 demonetization policy. Using proprietary data on the repayment behavior of about two million microfinance borrowers, we find evidence of disproportionate localization of defaults within lending communities. Further analysis reveals evidence consistent with borrower-to-borrower spread of defaults not only through formal joint-liability connections but also through informal community-level connections, the latter effect being especially pronounced for borrowers from the same religion.

Management literature on how interorganizational relationships influence firm performance has emphasized the importance of connections, positions, and cliques. We advance this literature by examining how network communities (membership in cohesive network structures) shape the performance of venture capital (VC) firms. We propose that community insiders affiliated with at least one network community will outperform outsiders. We also explicate the conditions under which the advantages of network community affiliations are likely to be muted. Specifically, we argue for the potential diseconomies of network community affiliations and the possibility of a substitutive relationship between network communities and institutional development. Leveraging recent advances in community-detection technology and longitudinal data on VC firms in China, we find support for our theoretical arguments. Analysis of mechanisms underlying our theoretical arguments reveals that the value of community affiliations comes from indirect connections within network communities. By integrating social network and institutional perspectives, this study highlights not only the promises but also the limits of relying on network community affiliations.

Global shocks bring unanticipated changes in the business environment of foreign multinational enterprises (MNEs) and rival domestic firms. We examine whether there is a difference between how MNEs and domestic firms react in heterogeneous local or subnational markets to a global demand shock. Leveraging the 2009–2010 H1N1 influenza pandemic as a source of exogenous variation in global demand for influenza vaccines, we investigate the role of subnational heterogeneity in economic resources, industry infrastructure, and political alignment within an emerging economy on the behavior of incumbent MNEs and rival domestic firms. We find that following the pandemic, MNE market share in the influenza vaccine market relative to the noninfluenza vaccine markets declines more in regions with lower government health spending per capita and also, in regions unaligned with the federal government. Additional analyses suggest that these changes in market share are not caused by a reduction in MNE revenues. Rather, they are caused by domestic firms that were already present in noninfluenza vaccine markets diversifying by entering the highly related influenza vaccine market. Finally, a granular examination of the differential responses reveals that such responses are not related to preshock differences in regional coverage of MNEs and domestic firms. This study contributes to the extant literature by suggesting that the direct costs or opportunity costs of new market and region entry are relatively greater for MNEs than for domestic firms, particularly in regions that have inadequate health infrastructure and are politically not aligned.

The emerging practice of “impact investing” optimizes both financial and social outcomes, and thus promises to support hybrid organizations that simultaneously pursue financial and social goals. We argue, however, that impact investing decisions may be prone to behavioral factors that limit their outcome efficiency. In a portfolio allocation task designed to reflect the essential features of an impact investing decision, we find across a range of scenarios that individuals systematically fail to choose investment portfolios that achieve financial and social outcomes efficiently and thereby waste opportunities for value creation. We further show in online and in-person experiments that outcome inefficiency is related to “categorical cognition”: suppression of categorical labels on investment options increases efficiency.

This article studies fintech targeted to the base of the pyramid and its role in encouraging savings for microenterprises. We argue that the impact of fintech adoption on savings for microenterprises by the poor and by women is moderated by their access to banks—specifically, that fintech is more impactful with bank accounts, and this complementarity between fintech and banks is amplified for poor women. We develop hypotheses in the context of mobile money, a popular fintech across the developing world. Our arguments are supported by a sample of 81,345 individuals across 74 low- and middle-income countries. Overall, the paper suggests that, although fintech can be a promising tool for the poor, it is equally important to improve inclusivity in formal banking institutions.

There continues to be substantial debate on whether and how providing inclusive access to finance through microcredit promotes entrepreneurship-led development at the base of the pyramid. We contribute to this literature by examining differences in household-level outcomes associated with microfinance loans given for different purposes, and identifying conditions under which the most impact is achieved. Defying common expectations, loans funding microenterprises do not exhibit greater impact than those funding traditional livelihood activities, and loans funding new microenterprises fare particularly poorly. However, loan impact improves when multiple members of a borrower group seek livelihood loans together, and when the provided loans better match the individual financial needs of the borrowers. Our findings underscore the need to refine how microfinance is applied as a tool for development.

Why do some organizations suffer more than others in the wake of an industry scandal? Although ex-ante greater opportunistic behavior of organizations is one factor, we argue that ex-post greater targeting of organizations is another important factor. Using the context of microfinance organizations (MFOs), we examine why the financial sustainability of for-profit and non-profit organizations may be heterogeneously affected following a scandal. Leveraging the 2010 Indian microfinance scandal as our research setting and analyzing longitudinal data, we find a substantial decline in the financial sustainability of Indian MFOs relative to their counterparts within the rest of South Asia. Compared to Indian non-profit MFOs, Indian for-profit MFOs suffered substantially more. Intriguingly, these results hold not only in the full sample, but also in the matched sample of comparable for-profit and non-profit MFOs. Further analysis reveals that the adverse impact on for-profit MFOs was much bigger in the scandal’s epicenter. Our findings suggest that some organizations may suffer more than others not only due to their engagement in actual malfeasance but also due to their greater targeting by the social control agents. We discuss the implications of this study for social enterprise managers and policymakers.

This study integrates insights from stakeholder theory and the literature on competitive dynamics and incumbent responses to entry. While research in economics and strategy has examined how market incumbents respond to new entrants, little is known about the heterogeneity in these responses to the entry of a stakeholder-oriented firm; our study addresses this research gap. Findings from a novel, longitudinal dataset of 206 granularly defined pharmaceutical markets in India suggest that stakeholder-oriented firm entry in these markets is associated with an impact on prices and product differentiation with heterogeneous responses from high-end and low-end incumbents. Specifically, entry by a stakeholder-oriented firm results in a reduction in prices and dosage sizes from high-end incumbents, whereas low-end incumbents respond in the opposite direction.

Problem Definition: This study examines whether and how the relationship between technology licensing and productivity growth in the short run is affected by the challenges and constraints inherent in the contexts in which developing economy firms operate. We do so by investigating the moderating role of formal workforce training program in a firm and the corruption level and the infrastructural constraint level in the firm’s external environment.

Academic/Practical Relevance: Although the adoption of foreign technology by developing economy manufacturing firms is often driven by the goal to strengthen their capabilities in the long run, prior research provides a limited understanding of the performance consequences of technology licensing in the short run, which is an important business reality. Our study serves to address this important gap in research and practice.

Methodology: The empirical analyses are conducted using matching and fixed-effects regression on a multi-industry dataset from the World Bank. We analyze detailed firm-level information from over 16,000 manufacturing firms across 25 developing economies in South Asia and East Asia. To strengthen causal inference, our analyses address selection bias and unobserved heterogeneity.

Results: Our results indicate that the adoption of foreign technology by developing economy manufacturing firms has a substantial short-run disruptive effect on firm operations with productivity growth declining by 4.5 percentage points in these firms relative to comparable firms that do not use foreign technology licensing. We find that formal workforce training programs attenuate the negative relationship between technology licensing and productivity growth. However, infrastructural constraints in the external business environment amplify this negative relationship. Intriguingly, our results suggest that corruption in the firm’s external environment acts as an “efficient grease,” attenuating the negative impact of technology licensing on productivity growth.

Managerial Implications: Our results provide compelling evidence regarding the disruptive effects of technology licensing on productivity growth in the short run. Furthermore, these results offer insights for manufacturing firms and policymakers in developing economies on how to mitigate these negative effects.

This study examines the relationship between exogenous demand shock and market structure in India’s influenza vaccine markets. Using a novel dataset of detailed purchasing information for vaccines in India, and exploiting the 2009–10 global H1N1 pandemic as an exogenous demand shock, we provide evidence of heterogeneous responses to the shock by domestic and multinational vaccine manufacturers in the influenza vaccine market relative to our control group of all other vaccine markets. We find that such a shock results in a reversal of the market structure for influenza vaccines in India, with a decline in the market share of multinational vaccine manufacturers and significant gains in the market share of domestic vaccine manufacturers. This reversal of the market structure is driven by increased efforts at new product introduction among domestic vaccine manufacturers, the effects of which persist even after the pandemic has ended. Our results remain robust to the use of alternative controls, synthetic control method, coarsened exact matching method, and other relevant estimation methodologies. These results provide new evidence on the role of a pandemic-induced demand shock in the context of an emerging economy by creating differential incentives for domestic and multinational vaccine manufacturers to bring new products to market. We also conduct additional analysis to explore the impact of targeted policy instruments on the new product introduction efforts of domestic vaccine manufacturers. Finally, we discuss the implications of our findings and offer insights into the role of policy on pandemic preparedness in emerging markets facing adverse welfare effects from pandemics.

Global racism and colorism, the preference for fairer skin even within ethnic and racial groups, leads millions of women of African, Asian, and Latin descent to use products with chemical ingredients intended to lighten skin color. Drawing from literatures on the impact of chronic and situational disempowerment on behavioral risk-taking to enhance status, we hypothesized that activating feelings of disempowerment would increase women of color’s interest in stronger and riskier products meant to lighten skin tone quickly and effectively. In two experiments (Experiment 1: N = 253 women and 264 men; Experiment 2: replication study, N = 318 women) with distinct samples of Indian participants, we found that being in a state of psychological disempowerment (vs. empowerment) increased Indian women’s preference for stronger and riskier skin lightening products but not for milder products. Indian men’s interest in both types of products was unaffected by the same psychological disempowerment prime. Based on these findings, we recommend increased consideration among teaching faculty, research scholars, and clinicians on how feeling disempowered can lead women of color to take risks to lighten their skin as well as other issues of intersectionality and with respect to colorism. We also encourage the adoption of policies aimed at empowering women of color and minimizing access to harmful skin lightening products.

The decision to not register an enterprise at its founding is pervasive globally, even though research has shown that nonregistration at founding may adversely influence the performance of legally registered businesses (hereinafter called firms). In this “generalization and extension” study, we extend the literature on the registration–performance relationship by (a) documenting the heterogeneity across countries in the effect of registration at founding on firm performance of legally registered businesses and (b) examining potential reasons driving this heterogeneity. Building upon the legitimacy-based view, we replicate the work of Assenova and Sorenson (Organ Sci 28(5):804–818, 2017), who analyzed enterprise-level data on 12,146 firms across 18 countries in sub-Saharan Africa. To test for generalizability, we analyze enterprise-level data on 134,198 firms across 143 countries. Our analyses reveal that the positive effect of registration at founding on firm performance successfully replicates in sub-Saharan Africa. However, there is remarkable heterogeneity across countries globally. We find that the country’s regulatory burden and market openness moderate the effect of registration at founding. Lower regulatory burden and greater openness of the country’s markets substantially strengthen the positive effect of the decision to register at founding on firm performance.