An institutional logics approach to social entrepreneurship: Market logic, religious diversity, and resource acquisition by microfinance organizations

Resource acquisition is critically important for social ventures to fulfill their social missions while striving to scale up and become financially sustainable. Past studies have only just begun to appreciate how institutional forces shape the acquisition of resources by social ventures. Grounded in the context of microfinance organizations (MFOs), a particular type of social venture that holds promise for addressing poverty in developing nations, this paper examines how institutional logics, related to market and religion, shape the nature and amount of capital acquired by MFOs. In particular, we study how the market logic and religious diversity independently and jointly affect flows of commercial and public capital into MFOs across countries. Using a proprietary database of all traceable lending transactions between capital providers and MFOs from 2004 to 2012, we find that strong market logic enhances both commercial and public capital acquired by MFOs, whereas religious diversity decreases the amount of commercial capital flowing to MFOs. Religious diversity also mitigates the positive impact of the market logic on capital flows into MFOs. We discuss the implications of these findings for microfinance research and practice, the social entrepreneurship literature, and the institutional logics perspective.