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Microfinance is a promising tool for addressing the grand challenge of global poverty. Yet, while many studies have examined how microfinance loans affect poor borrowers, we know little about how microfinance organizations (MFOs) themselves finance their lending activities. This is a significant oversight because most MFOs do not self-fund their lending, but, rather, rely on loans from external funders. To better understand microfinance funding, we apply and extend the institutional logics perspective to analyze the lending practices of commercial and public funders, who together provide most of the capital for global microfinance. We argue that these funders adhere to financial and development logics, respectively, and that this leads them to invest in different types of MFOs. Yet, in the face of uncertainty, we suggest that the practices motivated by these logics will start to converge in ways that are problematic for a nation's microfinance sector. Using a proprietary database of all traceable loans to MFOs from 2004 to 2012, we find strong support for our hypotheses. In particular, our findings show that the relationship between institutional logics and organizational practices is contextually contingent, and this insight contributes important understanding about the efficacy of microfinance as a poverty-reduction tool. [ABSTRACT FROM AUTHOR]

Many social problems reflect sets of beliefs and practices--or "institutional logics"--that operate at the societal level and rationalize the marginalization of certain categories of people. Studies have examined the consequences this has for individuals, but have largely overlooked how organizations that address such issues are affected. To understand this, we apply and extend the institutional logics perspective. Our approach recognizes that practices within different sectors of a society may be shaped by different organizing principles. However, we suggest practices are also likely to reflect--to varying degrees--broader societal logics. Based on this, we argue that societal logics may work through multiple influence channels and affect organizations in non-obvious ways, depending on how, where, and with what intensity they manifest in society. We test our theory by analyzing how patriarchy, as a societal-level logic, affects outreach to women by microfinance organizations in 115 nations. We find that patriarchy supports practices in the family, religion, professions, and state that suppress this outreach. Yet, in some nations, patriarchy is differently evident across sectors. The resulting contrasts draw attention to women's issues, motivate redress efforts, and catalyze resource flows to microfinance organizations. The greatest outreach to women is in these nations. [ABSTRACT FROM AUTHOR]