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1 – 10 of over 29000Qinfang Hu, Jing Hu and Zhilin Yang
What are the performance implications of peer monitoring in a multiple-supplier context? Grounded in agency and social exchange theories, this study aims to examine how, when, and…
Abstract
Purpose
What are the performance implications of peer monitoring in a multiple-supplier context? Grounded in agency and social exchange theories, this study aims to examine how, when, and why peer monitoring works as a crucial control mechanism to reduce opportunism among suppliers.
Design/methodology/approach
A conceptual model and research hypotheses are tested using survey data from 246 respondents in 82 supplier groups.
Findings
Results suggest that peer monitoring is related positively to perceived deterrence (as mediator) and negatively to opportunism, whereas the mediated relationship is moderated negatively by generalized reciprocity and positively by balanced reciprocity and negative reciprocity.
Originality/value
This study introduces the application of peer monitoring into business-to-business research and shows how it reduces opportunism. Its findings have implications for manufacturers on how to use peer monitoring to control opportunism among multiple suppliers.
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Qinfang Hu, S. Fiona Chan, Guangling Zhang and Zhilin Yang
Grounded in agency and clan theories, this study aims to examine how, when and why joint liability works as a control mechanism to reduce opportunism among tea supplier groups in…
Abstract
Purpose
Grounded in agency and clan theories, this study aims to examine how, when and why joint liability works as a control mechanism to reduce opportunism among tea supplier groups in China.
Design/methodology/approach
Survey data from 82 supplier groups (three respondents per group) were collected.
Findings
Joint liability is related positively to peer monitoring (as mediator) and negatively to opportunism, whereas the mediated relationship is moderated positively by group leaders’ perceived legitimate authority and negatively by reciprocity and shared norms.
Social implications
Opportunism is operationalized as the use of illegal pesticides, the violation of manufacturer–supplier contractual agreements and joint liability, as suppliers’ liability of having the whole group’s seasonal production is rejected by the manufacturer if a single act of opportunism is detected in the group.
Originality/value
Our study demonstrates how and under what conditions the joint-liability mechanism is linked with the reduction of multi-suppliers’ opportunism. We pave the way for future applications of the control mechanism to fields related to inter-organizational governance. Most importantly, we apply Ouchi’s clan theory (1979, 1980) to conceptualize manufacturer–supplier and supplier–supplier relationships in China and provide first-hand evidence to validate its applicability and generalizability to the context. The study also offers insights on network influences in inter-organizational relationships (Gu et al., 2010; Wathne and Heide, 2004) and confirms the important roles of network factors in inter-organizational relationships. In particular, peer monitoring operates as a mediator and normative factors operate as facilitators (moderators) for the joint liability to work as a mechanism to control opportunism in this relationship context.
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The purpose of this paper is to investigate the role of joint liability in improving the repayment performance of a microfinance program.
Abstract
Purpose
The purpose of this paper is to investigate the role of joint liability in improving the repayment performance of a microfinance program.
Design/methodology/approach
This is a systematic review of the theoretical and empirical literature.
Findings
The theoretical literature has shown, using models of peer selection, peer monitoring and peer pressure, that joint liability overcomes both the informational and enforcement failures present in credit markets for the poor. However, the empirical literature does not yield a clear answer on how much of the success of microfinance programs can be attributed to the effect of joint liability alone without considering the effect of other instruments used by microfinance programs. Further, it is seen that joint liability does not work in isolation, but its effect is dependent on social, cultural and economic environment.
Research limitations/implications
An important future research agenda could be to study the roles of different overlapping mechanisms in group lending and to look at their interactions.
Practical implications
The concept of joint liability works well both in the rural and urban areas, but different social, cultural and economic factors should be analyzed before initiating a microfinance program. In developed regions, focus should be on strengthening peer selection and peer monitoring, as information problems are prevalent. In underdeveloped regions, the major problem is of strategic default, so the focus should be on strengthening social sanctions.
Social implications
Findings can be used for optimal design of credit contracts for the poor.
Originality/value
The paper reviews the existing literature on – “whether and how” – joint liability lending works in inefficient credit markets and comes up with practical implications for the microfinance sector.
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The marginalised people at the bottom of the pyramid are unable to access finance due to the lack of collateral and physical property. The self-help group linkage programme…
Abstract
The marginalised people at the bottom of the pyramid are unable to access finance due to the lack of collateral and physical property. The self-help group linkage programme enables the people at the bottom of the pyramid to finance through their social capital and social relationship. In a group, the liability for each of the members is limited, and the group assumes joint liability for loans taken by the members of group.
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Abstract
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Financial inclusion implies providing the access to finance for the people at the bottom of the pyramid. The financial inclusion of the rural people remains the challenge because…
Abstract
Financial inclusion implies providing the access to finance for the people at the bottom of the pyramid. The financial inclusion of the rural people remains the challenge because the poor people, especially the tribal people, do not have knowledge and are financially illiterate. They cannot also bank and require specialised support to access financial capabilities. The marginalised people do not have access to finance, and the social collateral or the social capital enables the marginalised members to get access to finance.
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Dan Wu, Yefeng Chen, Weiwen Zhang and Xiaoshi Xing
The purpose of this paper is to investigate the impact of three types of peer monitoring and punishment tools on the performance of a group contract for the control of…
Abstract
Purpose
The purpose of this paper is to investigate the impact of three types of peer monitoring and punishment tools on the performance of a group contract for the control of agricultural non-point source pollution (ANPSP) in China.
Design/methodology/approach
Experimental economics.
Findings
All the three tools result in efficiency improvement and show little difference in performance. In addition, they break the theoretical Nash equilibrium of the team entry auction and help to better reveal bidders’ private cost information.
Originality/value
To the authors’ knowledge, this study can be the first laboratory experiment study in the area of ANPSP in China and might provide some beneficial lessons for China’s policy-makers.
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Shirsendu Mukherjee and Sukanta Bhattacharya
This paper aims to offer a theory on optimal group size. To overcome the problems of institutional credit facilities to the poor and marginal people, Joint Liability Group Lending…
Abstract
Purpose
This paper aims to offer a theory on optimal group size. To overcome the problems of institutional credit facilities to the poor and marginal people, Joint Liability Group Lending (JLGL) is often considered as a better option. However, the literature in the field is surprisingly silent about the issue of group-size. This paper tries to fill the vacuum in a theoretical framework.
Design/methodology/approach
Using a standard theoretical model, this paper shows that even with costless peer monitoring, there exists an upper bound on the size of group, and this upper bound is exactly pinned down by the strength of the social sanction.
Findings
This paper shows that under reasonable specification of effort cost, as group size increases, both optimal cooperative effort level and the deviation incentive from that effort level rise monotonically for any individual borrower. Thus, given the strength of social sanction, the rising incentive for deviation uniquely determines the optimal group size even in absence of free riding in peer monitoring.
Research limitations/implications
The theoretical results derived in the paper require empirical verification which is, however, tricky because of the problems associated with quantifying social sanctions.
Practical implications
This paper argues that the group size should be larger in more integrated communities which have better social cohesion among its members.
Originality/value
This paper shows that, for a given extent of joint liability the borrowers need to bear, the group size in joint liability group lending should be designed according to the strength of social sanction prevailing in the society to achieve social efficiency.
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– The purpose of this paper is to evaluate the role of social capital in a microfinance contract.
Abstract
Purpose
The purpose of this paper is to evaluate the role of social capital in a microfinance contract.
Design/methodology/approach
Systematic review of the theoretical and empirical literature on the role of social capital in microfinance.
Findings
The theoretical literature has shown using models of peer selection, peer monitoring and peer pressure that group lending with joint liability overcomes both the informational and enforcement failures present in credit markets for poor. However findings from the empirical literature conclude that social capital should not be taken as a single concept but should be considered in light of its different aspects which may be having different effects on the performance. For example, the trust between the borrowers, cultural and social homogeneity has been found to have more significant affect on repayment performance in contrast to the incentives due to peer pressure. The groups formed by family members and relatives are consistently been reported to have weakening influence on repayment.
Practical implications
For a same program the effect of social capital on performance can be different for different geographies and different classification of subjects and thus should be studied before initiating a microfinance program in any social setting.
Social implications
The borrowers should be encouraged to form groups with others who are more trustworthy and not with those they are just having an acquaintance with. The borrowers should be encouraged to come to aid of those who are victims of negative externalities. The positive experiences will lead to reciprocity of actions in future. The borrowers should be discouraged to form groups with family members and relatives.
Originality/value
It analyzes both theoretical and empirical literature by disentangling different aspects of social capital within groups and their effects on group performance.
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This chapter discusses about the role of social capital in providing access to the microfinance for the tribal people at the bottom of the pyramid. Marginalised people at the…
Abstract
This chapter discusses about the role of social capital in providing access to the microfinance for the tribal people at the bottom of the pyramid. Marginalised people at the bottom of the pyramid do not have access to finance due to the problem of information asymmetry, and the community groups use the social capital to gain access to the physical capital and financial services. Due to the presence of the lemons and agency problem, the people at the bottom of pyramid are unable to be financially included. The social contract is operationalised through the use of the peer mechanism, and this helps in financial inclusion of the marginalised tribal people at the bottom of the pyramid. Thus, financial intermediation and financial inclusion play an important role in mitigating the woes of the marginalised tribal people who have been financially excluded from the financial system.
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