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The influence of the CEO’s business education on the performance of hybrid organizations: the case of the global microfinance industry

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  • D. Pascal

    (University of Agder)

  • R. Mersland

    (University of Agder)

  • N. Mori

    (University of Dar es Salaam Business School)

Abstract

Microfinance institutions (MFIs) are typical examples of hybrid organisations, meaning organisations pursuing both a financial and social logic. This study examines the question of whether financial and social performance improves when an MFI’s chief executive officer (CEO) has a business education. We apply the random effects instrumental variable regression method to examine the influence of the CEO’s business education on the MFI’s financial and social performance. Our panel dataset that includes 353 MFIs from across the globe indicates that ‘only’ 55% of the MFIs have a CEO with a business education. The empirical results indicate that MFIs with CEOs who have a business education perform significantly better, financially and socially, than MFIs managed by CEOs with other types of educational backgrounds. The findings suggest that CEOs with a business education seem better at managing the much-debated tradeoff between providing small loans and producing healthy financial results.

Suggested Citation

  • D. Pascal & R. Mersland & N. Mori, 2017. "The influence of the CEO’s business education on the performance of hybrid organizations: the case of the global microfinance industry," Small Business Economics, Springer, vol. 49(2), pages 339-354, August.
    • Handle: RePEc:kap:sbusec:v:49:y:2017:i:2:d:10.1007_s11187-016-9824-8
    DOI: 10.1007/s11187-016-9824-8
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    3. Fang, Hao & Lee, Jen-Sin & Chung, Chien-Ping & Lee, Yen-Hsien & Wang, Wen-Hao, 2020. "Effect of CEO power and board strength on bank performance in China," Journal of Asian Economics, Elsevier, vol. 69(C).
    4. Briano-Turrent, Guadalupe D.C. & Li, Mingsheng & Peng, Hongfeng, 2020. "The impact of family-CEOs and their demographic characteristics on dividend payouts: Evidence from Latin America," Research in International Business and Finance, Elsevier, vol. 51(C).
    5. Alina Alecse Stanciu & Iuliana Camelia Stoenica & George Adrian Bilcan & Gina Nuti Gheltu, 2018. "Managerial Culture - Factor of Influence of Performance," Academic Journal of Economic Studies, Faculty of Finance, Banking and Accountancy Bucharest,"Dimitrie Cantemir" Christian University Bucharest, vol. 4(1), pages 50-53, March.
    6. Zamore, Stephen, 2018. "Should microfinance institutions diversify or focus? A global analysis," Research in International Business and Finance, Elsevier, vol. 46(C), pages 105-119.
    7. Md. Ali Rasel & Sandar Win, 2020. "Microfinance governance: a systematic review and future research directions," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 47(7), pages 1811-1847, April.

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    More about this item

    Keywords

    CEOs; Business education; Microfinance; Performance; Hybrid organisations;
    All these keywords.

    JEL classification:

    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages

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