SME-centered institutional innovation in the financial sector : role of Kafalat in shaping and transforming lending practices -

Abstract

There have been calls for future work by researchers to focus on two key understudied aspects of institutional entrepreneurship process: (1) accounting for the embeddedness of institutional entrepreneurs; and (2) accounting for a distributed view of agency in institutional processes. First, in the case of embeddedness, the issue is to concretely explain the actual process of how existing actors within the social field who are tangled with the current institutional forces appear to engage in triggering and shepherding change simultaneously. Second, in the case of agency, the challenge is to highlight how agency of several actors (both individual and collective) across the social field of action are involved and implicated in effecting institutional change without appealing to the cult of “heroic” individual. Third, there is a dearth of research on to better understand the underlying processes of institutional maintenance and change through the institutional entrepreneurship lens in the context of a Middle East country (Lebanon) environment. My research in this thesis project has attempted to address these three gaps in the literature. I have done so by assessing institutional innovation process instigated by Kafalat which has subsequently shaped and transformed the SME-oriented lending practices in Lebanon during 1999-2014. On the one hand, the role of embeddedness was concretely illustrated through the involvement and engagement of initial team of actors who collectively formulated and shepherded the establishment of Kafalat. On the other hand, we showed how subsequently the banks, BDL, donors and SME players collectively exercised agency over different parts of the field in a distributed manner. My distinctive contribution has been on highlighting how the process of institutional entrepreneurship was enacted within the context of specific dynamics in the focal Middle Eastern country. My research has contributed in addressing the gap in the research on institutional innovation changes focusing on