A State-Oriented Stakeholder Approach: Understanding the Ethics of Microfinance in Emerging Economies

42 Pages Posted: 9 Mar 2014 Last revised: 16 May 2015

See all articles by Tricia D. Olsen

Tricia D. Olsen

University of Denver - Business Ethics & Legal Studies; University of Denver - Korbel School of International Studies

Date Written: August 1, 2014

Abstract

The integrity of microfinance is in question. Unethical practices have led many to question its value. Yet, research and countless narratives suggest positive, though modest, effects. I argue that a false dichotomy of support or opposition for microfinance has emerged; a tendency that ignores the microfinance variation. Instead, this article asks: what is the role of the state in influencing stakeholder salience and how does this process affect the ethics of microfinance? This article develops a new approach—a state-oriented stakeholder approach (SOSA)—by weaving together political economy and stakeholder theory literatures. This approach shows how the state, a unique stakeholder, uses regulation to augment or abate other stakeholders’ salience. It helps explain variation in stakeholder salience and informs a typology of microfinance developed here—state-supported, bottom of the pyramid, and hybrid. Drawing from original fieldwork, this typology provides a more nuanced framework to understand how the state influences microfinance institutions’ practices by affecting stakeholder salience.

Keywords: Business ethics, stakeholder approach, political economy, microfinance, business and society

Suggested Citation

Olsen, Tricia D., A State-Oriented Stakeholder Approach: Understanding the Ethics of Microfinance in Emerging Economies (August 1, 2014). Available at SSRN: https://ssrn.com/abstract=2405982 or http://dx.doi.org/10.2139/ssrn.2405982

Tricia D. Olsen (Contact Author)

University of Denver - Business Ethics & Legal Studies ( email )

2101 S. University Blvd.
Denver, CO 80208
United States

HOME PAGE: http://www.triciaolsen.com

University of Denver - Korbel School of International Studies ( email )

Denver, CO 80208
United States

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