Performance measurement in Islamic microfinance institutions: does it change social norms and values?

Purpose - The purpose of this paper is to examine the influence of financial performance measures on the social norms and values of an Islamic microfinance institution (IMFI), and the actions taken by the organisational members to maintain these values in their organisation. Design/methodology/approach - A qualitative case study of an NGO-based IMFI in Malaysia was undertaken, with interviews conducted with officers and managers at various organisational levels of the IMFI. Insights gained from institutional work and institutional logic were used to theorise the findings. Findings - The IMFI used mainly financial measures to manage its performance, which were interlinked with the commercialisation approach in the industry, and the top management’s focus on the financial sustainability of the organisation. The lack of social goals and the use of reward-based financial measures did not weaken the solidified social values at the operational level, due to the independence of the operational units, the compartmentalisation of profit-making activities and the institutional work of the operational managers. The operational managers acted as carriers of this social logic. Religious values formed the pillar of the permanence of social values in the IMFI. Originality/value - This study provides insights into the internal practices of IMFIs, and the role of religious values in the permanence of social logic in the context of an NGO-based IMFI. The lack of measurable social goals, as well as their rewards, does not compromise the focus on poverty alleviation and community development in view of the intrinsic rewards and accountability of the operational managers.