Keywords: polycentricity, institutionalization, community-led organizations, solidarity finance. Access to finance is often defined as an important issue for poverty alleviation and income generation (Yunus, 1999). However,... [ view full abstract ]
Keywords: polycentricity, institutionalization, community-led organizations, solidarity finance.
Access to finance is often defined as an important issue for poverty alleviation and income generation (Yunus, 1999). However, with two billions adults without access to a bank account (Demirguc-Kunt et al., 2015), financial exclusion is highly prevalent in the world and the provision of financial services remains an important issue in developing countries. For addressing this concern, the microfinance industry increased over the last decade, mainly through the form of non-governmental organizations or shareholder firms (Périlleux et al., 2012). Complementary to these well-established organizations, cooperative and community organizations present an alternative management of financial resources. Often having their origins in social movement initiatives, such community-led organizations are not-for-profit organizations that are managed by communities for responding to needs that are unmeet by private and public sectors (Haugh, 2007; Peredo & Chrisman, 2006). As such, they pursue a dual mission of financial sustainability and social/environmental value creation (Battilana & Dorado, 2010).
The structuration and institutionalization of such new organizational forms remains an important issue and little research has been carried for determining which institutional conditions promote their establishment and growth (Doherty et al., 2014). The purpose of this article is to analyze the institutionalization process of novel microfinance practices promoted by social movements and grassroots community organizations. What is at stake is to understand how community-led and bridging organizations collaborations can contribute to institutional change for the emergence of a national solidarity finance system. I pose the following research questions: What institutional work do bridging organization elaborate for constructing of a national system of solidarity finance?
Based on an extensive field work, I propose to answer this question through an in-depth qualitative study of the community development banks (CDBs) network in Brazil. This solidarity finance network is composed of 103 CBDs and five nonprofit bridging organizations (Melo & Braz, 2013). CDBs are community-led microfinance organizations attached to the solidarity economy social movement in Brazil. Active at local, state and federal levels, CDBs elaborated multisector collaborations with public, private and nonprofit organizations for sustaining their activities. Through adapting organizational patterns to constraints and opportunities, their development strategy permits several changes in their institutional environment. Therefore, CDBs network provides an interesting case for understanding how one local experience initiated by a community social movement turned into a national system through a collective institutional entrepreneurship work.
I analyze the evolutionary organizational patterns and institutional relationship dynamics of this network for implementing a change project divergent from the dominant institutionalized template of microfinance. The results suggest that CDBs act as collective institutional entrepreneurs for implementing an innovative solidarity finance system. For doing so, they collectively organize into a polycentric network composed of community and nonprofit bridging organizations and acting at multiple scales for promoting policy change and reforming in existing financial institutions. They are integrated into the emerging field of solidarity economy and benefit from the enabling conditions related to the institutionalization of this social movement.
