Senior Lecturer, Grade 1, Faculty of Commerce and Management Studies, Department of Finance, University of Kelaniya, Sri Lanka, PhD (UK), MBA (Sri Lanka), BSc (Hon) (Sri Lanka), DipM (UK), Kelaniya, Sri Lanka
Microfinance plays a vital role to alleviate poverty through the development of micro enterprises. Microfinance Institutions (MFIs) provide services such as micro credit, savings, insurance, and business development services (BDS) to its clients. BDS are non-financial services such as business training, market linkages, and information services which are provided by Microfinance Institutions (MFIs) to its clients. BDS help owner managers improve sales and profits and enable MFIs to achieve higher loan repayment rates and higher potential for client retention. The counsellors of MFIs provide BDS to owner managers of micro enterprises. This study focuses on the co-production of BDS where a counsellor of MFI and the owner manager of a microenterprise engage in the co-production of services. For a successful co-production, the client (i.e. owner manager in this study) has to a play an active role by exercising three client factors, namely ability, clarity of the role, and motivation. Thus, the objective of this study is to explore how the client/owner manager motivation (i.e. willingness) affects the co-production of BDS in counselling within a microfinance setting. A multiple case study method was used to conduct the present study by choosing six Sri Lankan MFIs as cases, where the selection of cases and respondents was based on a purposive sampling method. A counsellor and an owner manager representing each MFI were interviewed for data collection and thematic analysis was used to analyse the data. The findings show that economic factors, sanctions, and contextual factors influence the willingness of owner managers to co-produce BDS with counsellors of microfinance institutions (MFIs). The findings contribute to knowledge and practice domains related to microfinance.
Keywords: willingness, motivation, business counselling, co-production, microfinance.
JEL Classification: M10.
Cite as: Abeysekera, R. (2020). The Nexus between Co-production and Willingness: Business Counselling in the Microfinance Sector. Financial Markets, Institutions and Risks, 4(2), 43-51. https://doi.org/10.21272/fmir.4(2).43-51.2020.
- Abeysekera, R., (2016). Enhancing entrepreneurship in Sri Lanka: the provision of business development services (BDS) by microfinance institutions to support the self-sufficiency of microenterprises” (Doctoral dissertation, Bournemouth University). Available from: http://eprints.bournemouth.ac.uk/24721/ (Accessed 20 May, 2020).
- Abeysekera, R. (2015). Concepts and implications of theory of co-production, Colombo Business Journal, 6(2), 22-38. Available from: http://184.108.40.206:8081/handle/123456789/8003 (Accessed 20 May, 2020).
- Abeysekera, R., Patton, D. and Mullineux, A. (2015). Co-production in Business Counselling in Microfinance Setting: A conceptual approach. Journal of Enterprising Culture, 23(03), 299-319. https://doi.org/10.1142/S0218495815500107
- ADB. (1997). Microenterprise development: Not by credit alone. Manila: Asian Development Bank.
- Ademcol. (2001). Asociacio´n para el Desarrollo Microempresarial Colombiano and Women’s Opportunity Fund: Bundling microfinance and business development services. A case study from Ademcol in Colombia, Microenterprise Best Practices. Washington, DC: United States Agency for International Development.
- Alford, J. (2009). Engaging private sector clients from service delivery to co-production. Basingstoke: Palgrave. Available from: https://www.researchgate.net/publication/ 260249500_Alford_JL_ 2009_Engaging_Public Sector\ _Clients_From_Service-Delivery_to_Co-production_Palgrave_ Macmillan _Basingstoke_ Hampshire_272_pages_ISBN_978-0-230-22376-9
- Alford, J. (2014). The multiple facets of co-production: building on the work of Elinor Ostrom. Public Management Review, 16(3), 299-316.u. https://doi.org/10.1080/14719037.2013.806578
- Begum, H., Alam, A.F., Mia, M.A., Bhuiyan, F. and Ghani, A.B.A. (2019). Development of Islamic microfinance: a sustainable poverty reduction approach. Journal of Economic and Administrative Sciences. https://doi.org/10.1108/JEAS-01-2018-0007
- Bettencourt, L. A., Ostrom, A. L., Brown, S. W. and Roundtree, R. I. (2002). Client co-production in knowledge-intensive business services. California Management Review, 44 (4), 100-128. https://doi.org/10.2307%2F41166145
- CGAP. (2011). Advancing financial access to world poor [online]. Washington: Consultative group to assist the poor. Available from: http://www.cgap.org/p/site/c/about/ [Accessed 20 April 2020].
- Denotes, V. and Alexander, S. K., 2004. The individual micro-lending contract: is it a better design than joint-liability? Evidence from Georgia. Economic Systems, 28, 155-176. https://doi.org/10.1016/j.ecosys.2004.03.006
- Easterly, W. (2006). The white man’s burden: Why the West’s efforts to aid the rest have done so much ill and so little good. New York: Penguin Press.
- Eijk, C.J.A. V. and Steen, T. P. S. (2014). Why people co-produce: analysing citizens’ perceptions on co-planning engagement in health care services. Public management review. 16(3), 358-382. https://doi.org/10.1080/14719037.2013.841458
- Eisenhardt, K. M. (1989). Building theories from case-study research. Academy of management review, 14 (4), 532-550.
- Etgar, M. (2008). A descriptive model of the consumer co-production process. Journal of the academy of marketing science, 36 (1), 97-108. https://doi.org/10.1007/s11747-007-0061-1
- Firat A. F. and Shultz C.J. (1997). From segmentation to fragmentation. European journal of marketing, 31 (3/4), 183–207. https://doi.org/10.1108/EUM0000000004321
- Firat A. F., Dholakia N. and Venkatesh, A. (1995). Marketing in postmodern world.European journal of marketing, 29 (1), 40–56. https://doi.org/10.1108/03090569510075334
- Firat, A. F. and Venkatesh, A. (1993). Post modernity: the age of marketing. International journal of research in marketing, 10 (3), 227–249. https://doi.org/10.1016/0167-8116(93)90009-N
- Firat, A. F. and Venkatesh, A. (1995). Liberatory postmodernism and the re-enchantment of consumption. Journal of consumer Research, 22(3), 239–267. https://doi.org/10.1086/209448
- Firat, A. F. (1991).The consumer in postmodernity. Advances in consumer research. 18(1), 70–76. Available from: https://www.acrwebsite.org/volumes/7141/volumes/v18/NA-18
- Fitzsimmons, J.A. (1985). Consumer participation and productivity in service operations. Interfaces, 15(3), 60-67. https://doi.org/10.1287/inte.15.3.60
- GTZ ProMiS. (2010). Micro Finance Industry Report. Sri Lanka: GTZ ProMiS and The Banking With the Poor Network. Available from: https://www.findevgateway.org/sites/default/files/publications/files/mfg-en-paper-microfinance-industry-report-sri-lanka-2010.pdf
- Karlan, D. and Valdivia, M. (2006). Teaching Entrepreneurship: Impact of Business Training on Micro Finance Clients and Institutions. Economic Growth Centre Discussion Paper, 941, Yale University: Economic Growth Centre. Available from: http://www.econ.yale.edu/growth_pdf/cdp941.pdf ( Accessed 10 May, 2020)
- Khavul, S. (2010). Microfinance: Creating Opportunities for the Poor? Academy of management perspectives, 24 (3), 58-72. https://doi.org/10.5465/amp.24.3.58.
- Lengnick-Hall, C. A. (1996). Customer contributions to quality: A different view of the customer-oriented firm, Academy of management review, 21 (3), 791- 824. https://doi.org/10.5465/amr.1996.9702100315
- Lengnick-Hall, C. A., Claycomb, V. and Inks, L. W. (2000). From recipient to contributor: examining customer roles and experienced outcomes. European Journal of Marketing, 34 (3/4), 359−383. https://doi.org/10.1108/03090560010311902
- Lovelock, C. H. and Young, R. F. (1979). Look to consumers to increase productivity. Harvard business review, 57 (3), 168-178. Available from: https://hbr.org/1979/05/look-to-consumers-to-increase-productivity
- Meuter, M. L., Bitner, M. J., Ostrom, A. L. and Brown, S. W. (2005). Choosing among alternative service delivery modes: An investigation of customer trial of self-service technologies. Journal of marketing, 69 (2), 61-83. https://doi.org/10.1509%2Fjmkg.220.127.116.11759
- NEDA. (2013). Micro enterprise policy paper [Online]. Sri Lanka: National Enterprise Development Authority. Available from: http://www.industry.gov.lk/web/images/pdf/gg.pdf
- Parks, R. B., Baker, P. C., Kiser, L., Oakerson, R., Ostrom, E., Ostrom, V., Percy, S. L., Vandivort, M. B., Whitaker, G. P. and Wilson, R. (1981. Consumers as coproducers of public services: some economic and institutional considerations. Policy studies journal, 9 (7), 1001-1011. https://doi.org/10.1111/j.1541-0072.1981.tb01208.x
- Pestoff, V. (2012). Co-production and third sector social services in Europe. In: Pestoff, V., Brandsen, T. and Verschuere, B., eds. New public governance, the third sector and co-production. New York: Routledge, 13-34.
- Rice, M. P. (2002). Co-production of business assistance in business incubators – An exploratory study. Journal of business venturing, 17 (2), 163-187. https://doi.org/10.1016/S0883-9026(00)00055-0
- Schayek, K. and Dvir, D. (2009). Measuring the effect of public assistance programs on small businesses’ performance. Journal of general management, 35 (2), 3-20. https://doi.org/10.1177 %2F030630700903500202
- Sharp, E. (1978). Citizen organizations and participation in law enforcement advocacy and coproduction: The role of incentives. Thesis (PhD). University of North Carolina at Chapel Hill.
- Sievers, M., and Vandenberg, P. (2007). Synergies through linkages: who benefits from linking micro-finance and business development services? World development, 35 (8), 1341-1358. https://doi.org/10.1016/j.worlddev.2007.04.002
- Tilakaratne, G., Galappattige, A. and Perera R. (2009). Promoting empowerment through microfinance in Sri Lanka, economic and political empowerment of the poor- Sri Lanka. Sri Lanka: Centre for policy dialogue, South Asia Centre for policy studies. Available from: http://www.ips.lk/economic-and-political-empowerment-of-the-poor-promoting-empowerment-through-microfinance-programmes/
- Tilakaratne, G., Wickramsinghe, U. and Thusitha, K. (2005). Micro finance in Sri Lanka: a household level analysis of outreach and impact on poverty. Sri Lanka: Institute of Policy Studies of Sri Lanka. Available from: http://www.pep-net.org/sites/pep-net.org/files/typo3doc/pdf/files_events/ 4th_colombo/ Ganga.pdf ( Accessed 21 May, 2020)
- Vargo S. L. and Lusch R. F. (2004). Evolving to a new dominant logic for marketing. Journal of marketing, 68 (1), 1–17. https://doi.org/10.1509%2Fjmkg.18.104.22.16836
- Williams, S.J. and Caley, L. (2020). Defining Co-production. In Improving Healthcare Services (pp. 39-54). Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-36498-4_9
- World Bank. (2014). Poverty Review [Online]. Washington DC: World Bank. Available from: http://www.worldbank.org/en/topic/poverty/overview [accessed 19 May, 2020].
- Xu, Y., Cheng, W. and Zhang, L. (2019). Switching from group lending to individual lending: the experience at China’s largest microfinance institution. Emerging Markets Finance and Trade, 1-18. https://doi.org/10.1080/1540496X.2019.1636228
- Yin, R. K. (2009). Case-study research: Design and methods 4th edition ed. London: Sage. Available from: https://journals.nipissingu.ca/index.php/cjar/article/view/73