ICT-mediated organizational change in microfinance organizations: A case study

Abstract

A strong research tradition on the economic and social impacts of microfinance intervention has been going on. But a dearth of studies on microfinance organizational and management perspectives is there, although the social and economic impacts of this development program largely depend on its organizational setup and intervention management. Information and Communication Technology (ICT) has been used in microfinance organizations for quite a long period of time. This study looks into the ICT-mediated material and social changes that happen in this unique type of organization and its management. The study was conducted using exploratory case study in two organizations. A number of semi-structured interviews and focus groups have been conducted at different layers of the organizations. The study found that ICT has profound implications for change in different material and social aspects of microfinance organizations. As a catalyst, ICT causes organizational structure shrank both horizontally and vertically. Because of the use of ICT a loss-of-middle phenomenon emerges in organizational structure and a tendency of centralized decision authority prevails. It helps boosting up the operational performance and transparency and lowering the long-debated interest rate of microfinance. It engenders profound changes in human resources and socio-cultural aspects of microfinance organizations. However, if protective mechanism is not adopted then the use of ICT may have detrimental effects to the social performance of microfinance. This study contributes to the knowledge domain of ICT-mediated organizational change and the microfinance policy makers by exploring the implications of ICT to different organizational aspects. It contributes by unearthing the detrimental effect of ICT to the development outcome of microfinance intervention.