The Nexus between Co-production and Willingness: Business Counselling in the Microfinance Sector

Abstract

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.