Managing Growth: The Organizational Architecture of Microfinance Institutions
This paper provides microfinance practitioners with ideas and suggestions to assist them with the challenging task of managing growth. "Organizational architecture" defines the building blocks necessary to the organization's growth, including:
- Organizational structure;
- Institutional culture;
- Human resource development.
The paper uses an entrepreneurial framework to analyze the growth process of microfinance institutions (MFIs) by looking at the individuals who start and operate MFIs as entrepreneurs charged with growing their businesses. This responsibility requires them to resolve two fundamental questions:
- What is their optimum size, based on analysis of the relative costs and benefits associated with the size of their operations?
- What is the right speed for growth, based on analysis of the risks related to the speed of growth?
The study concludes that the entrepreneur director must recognize that if the organization is built too high or if one of the components is forced to change too quickly and support too much stress, it will topple.
