The Case of the Microfinance Industry
In this study, data from 405 microfinance institutions (MFI) were used to examine the simultaneous and diverse effects of differences in informal and formal institutions on cross-border alliances’ financial performance.
According to the study, “the impact from informal institutional differences is sigmoid-shaped, with performance first increasing, then declining, before improving again as informal institutional differences grow large.”
The study addresses the following:
- Enhance understanding of the impact of institutional differences on the performance of cross-border alliances.
- Contribute to the alliance literature by simultaneously addressing the impact of informal and formal institutions.
- Contributes to the literature on nonlinear performance effects from internationalization.
- Comparing the impact of informal and formal institutional differences as the key contextual elements
- Contribute to the understanding of organizations working in a rapidly expanding global service industry.
The report shows that informal and formal institutional differences both have an impact on performance returns from cross-border alliances.