RT Article
T1 Financial sustainability of for-profit versus non-profit microfinance organizations following a scandal
JF Journal of business ethics
VO 188
IS 1
SP 57
OP 74
A1 Adbi, Arzi
LA English
PB Springer Science + Business Media B. V
YR 2023
UL https://www.ixtheo.de/Record/1869717392
AB 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.
K1 Ethical transgression
K1 Financial Sustainability
K1 Microfinance
K1 Organizational forms
K1 Scandal
K1 Aufsatz in Zeitschrift
DO 10.1007/s10551-022-05287-8