NGO transformation: institutional entrepreneurship in Indian microfinance

Purpose – Institutional theory is inspired by the problem of how different organizations operating in different environment have similar structures. The similarity is catalyzed by isomorphic forces, active within a given organizational field. Despite the force of isomorphic process, there is emergence of new organizations in through institutional entrepreneurs. The emergence of NBFCs through transformation of NGOs within the given context of Indian microfinance sector creates a space for examining the institutional entrepreneurship. The paper studies the institutional entrepreneurs of Indian microfinance, and attempts to make some proposition on institutional entrepreneurship. Design/methodology/approach – It brings out the commonalities among the institutional entrepreneurs, and how they have rationalized their actions within the given context. The paper aims to extend the current understanding of institutional entrepreneurship to the emerging field of Indian microfinance. Findings – The institutional entrepreneurs were at the periphery of not‐for‐profit sector before transformation. The leaderships of institutional entrepreneurship are well‐networked, and have better access to resources. The institutional entrepreneurs have rationalized their action, by aligning their interest with that of other influential stakeholders. The new form is legitimized through patronizing practices like credit rating by professional agencies etc. Research limitations – The study is based on secondary literature and the studies on all the selected organizations are not necessarily value‐neutral, and hence there are possibilities of interpreting the process of institutional entrepreneurship in an inadequate way. Originality/value – There are very few works on microfinance from the institutional theory's perspective, and this may be a fresh attempt to look at the process of transformation of NGO‐MFIs from the lenses of institutional entrepreneurship.