Governance and Organisational Flexibility at the Junction of African MFIs’ Sustainability Issues

Abstract

It is unfortunate to acknowledge the phenomenon of Africa’s Microfinance Institutions (MFIs) bankruptcies only a few years after their creation. The instability of technical, economic, commercial and cultural environments, which play an important role on MFI’s sustainability, explains this recurrence of bankruptcies. These crises, both in West and Central Africa, have highlighted the role of organisational flexibility in MFIs’ sustainability. This paper aims at examining the effects of flexible governance that contribute to Economic and Monetary Community of Central Africa’s (EMCCA) MFIs sustainability. In this regard, we have chosen qualitative method which is a multi-modal research including a naturalist interpretation approach emphasising on entities’ qualities. We have carried out semi-directive interviews among (14) MFIs in Cameroon, Congo, Gabon and Chad. We have made use of data collected with NVIVO to carry out content analysis process. The study’s results show that EMCCA’s MFIs sustainability is a matter of the flexibility of organisational dynamism of governance mechanisms, innovations and technological opportunities.

Introduction

With the prospect of creation of wealth in Africa, microfinance institutions (MFIs) play an unquestionable role in credit allocation to low-income populations, enabling them to create and manage very small, small and medium-sized enterprises. They provide financial services to economic agents and, at the same time, fulfil social and sustainable development missions, while remaining in commercial sector. This ambivalence gives MFIs a status as a development aid tool with the potential to raise living standards, create jobs, while playing a necessary role in poverty alleviation under economic crises. However, for more than 10 years now, EMCCA region MFI’s sector is characterized by a recurrence of bankruptcies and crises hindering their sustainability. By way of illustration, some countries’ individual data, published by the Central African Banking Commission (COBAC), reveal that in Cameroon, between years 2000 and 2019 bankruptcy rate was 36.96%, which means that in 2000 there were 652 MFIs compared to 411 microfinance institutions authorised to practice in the country in 2019. In Chad between years 2009 and 2019 bankruptcy rate was 10.47% that is 210 MFIs counted in 2009 against 188 in 2019. In Congo, published figures show that between years 2000 and 2019 the country recorded a bankruptcy rate of 23.18% that is 69 in 2000 against 53 in 2019. In Gabon in 2015, the rate was 0.8% that is 20 MFIs in 2013 against 16 in 2019. Indeed, these bankruptcies tend to increase because of flexible governance constraints in organisational practices that negatively affect MFI’s sustainability. The fact that mobile money’s arrival in mobile phone companies’ money transfers activity in EMCCA region has led to a drastic fall in MFIs’ turnover explains the illustration of flexibility issue in organisational practices. According to COBAC’s 2019 report, MFIs lost almost 56% of their turnover, to such an extent that some went out of business. From a strategic view, this report reveals that some MFIs do not put emphasis on flexible strategic intelligence mechanisms that can enable them adapt to environmental changes and contribute to their sustainability as well. Yet in a contingent and unpredictable environment, flexible governance role in organisational practices is a management tool to deal with strategic uncertainty. It reflects the company’s ability to quickly react to new conditions, and develop a learning capacity by using additional information that can ensure its survival (Reix, 1999). In this logic, MFIs must constantly monitor their environment to identify new problems and/or opportunities. If they are unable or too slow to react, they may have to close down and put workers on technical leave or lay them off, as is the case today with Express Union and Express Exchange in Cameroon; PARCEC in Chad and MUCODEC in Congo and FINAM in GABON. These facts reveal that the issue of organisational flexibility as an organisation’s ability to sustain its activity is still emerging in current literature debates and is also absent from the research in Africa as the context explains environmental instability that favours MFIs crises. This paper aims at understanding how flexible governance in organisational practices can contribute to EMCCA’s MFIs sustainability based on specific competencies. The plan is as follows: firstly, it brings out an explanation of the theoretical framework and methodology of the study, and secondly the results analysis and theoretical and managerial implications.

Theoretical Framework for Organisational Flexibility and Sustainability in Companies

In order to be long-lasting and give its stakeholders a guarantee of longevity, any company, as soon as it is created has to deal with its internal and external environment. In this context, Barbelivien and Nicolas (2014) define sustainability by two factors, firstly the ability to combine break and continuity, and secondly the ability to combine different networks (break-continuity and adaptation-action). To this end, these authors draw a parallel with sustainable development, which lies in the ability to combine economic, social and environmental fields. Brechet and Prourteau (2010) and Mignon (2009) believe that an organisation’s sustainability is its capacity for action, continuity and break while exploiting existing competencies. It includes preservation of certain invariant elements specific to the organisation such as its values, visions, missions and objectives. The work of Cadieux (2005) shows that a company is sustainable when it is characterized by invariant elements such as: the know-how, traditions, governance, careful financial management, adaptations, loyalty of staff and customers, innovations, long-term investments and strategic initiatives that shape its own signification related to long-term. Over time, flexible governance in organisations has become a strategy for sustainability in an increasingly risky environment. Hence, the concept of flexibility is that which explains organisation’s procedure to manage exploration and exploitation dilemma (Bettehar & Miraoui, 2005). Volderba (1996) defines organisational flexible governance as an organisation’s ability to make management fit the environmental constraints. His studies specify four types of organisational flexibility, namely:

• Optimization flexibility (low variety and speed) which implies static procedures to optimize long-term business performance.

• Structural flexibility (high variety, low speed) which refers to managerial capacities to modify organisational structure, decision-making and communication circuits, to fit environmental conditions.

• Operational flexibility (low variety, high speed) that provides rapid responses to changes that might be anticipated, such as fluctuations in the company's production activity.

• Strategic flexibility (high variety and speed) which, implies changes in nature of the organisation’s activities. That includes combining typology of organisations adapted to hyper competitive environments such as MFI. In this context, flexible management can help to quickly change its strategies, apply new techniques and completely renew the organisation’s products. The relationship between sustainability and organisational flexibility is therefore the subject of theoretical confrontations that are examined through current debates.

Organisational Flexible Governance: a Contingent Adjustment of MFIs’ Sustainability

Contingency school stated in Woodward’s (1958) work explains that environment consists of certain contingency variables, such as the organisation’s size, technology, etc., in order to constrain organisations in their choice for adaptive measures under threat of disappearance. In this regard, Spitezki (1995) argues that contingency is consistent with a conception of the company as an open system, made of a set of subsystems in constant interactions and whose survival depends on its flexibility to its environment. Despite the fact that environment is a constraint to which the company chooses adaptive means, the implicit vision of interaction between the company and its environment among these strategic choices is organisational flexibility. For Child (1972), contingency issue in a more or less turbulent environment helps companies react with flexible behaviour, allowing them to fit to circumstances in order to ensure their sustainability. This idea explains the logic that MFIs need to structure their organisations by developing strategies based on their environmental changes. Consequently, Mayère (1999) believes that organisational flexible governance is a survival imperative for these organisations. Organisational, human, environmental and financial factors are indeed effective in a given context (Watiez 2017). In that regard, Bréchet and Prouteau (2010) believe that: “There is not one structure that is better but rather different structures that are better in different conditions”. These conditions include: technology (Woodward, 1958), legal status (Blau, 1970), strategic conditions (Hickson et al., 1971), choice of governance model (Child, 1972), technical system (Mintzberg, 1994), age (Tarondeau, 1987), and socio-cultural conditions (Brasseur et al., 2008). Similarly, Pesqueux (2020) believes that organisational dynamism is demonstrated by flexible governance as a relevant organisational indicator for companies already in business. Thus, in order to remain in business, MFIs must master their environment through management practices that are undergoing profound changes, (Nobre, 2001). Therefore, MFIs sustainability is assessed regarding their ability to be flexible to new service markets such as mobile money. Thus, two contingency factors are distinguished: behavioural contingency factors and structural contingency factors (Nioche andTarondeau, 1998). From this, Lesca and Blanco (2002) logically infer that instrumentation of governance mechanisms is the first and second factor that trigger the need for flexibility ensuring the company’s sustainability. If this is the case how do we justify the logic of organisational flexibility fad?

Organisational Flexibility: a Spillover Effect Contributing to MFIs’ Sustainability

Currents of Intra-organisational Ecology Theory (Burgelman, 1991) and Punctuated Equilibrium (Greiner, 1972, Tushman et al., 1986) defend the idea of internal selection based on the question how the company is conditioned by a set of knowledge that are: know-how, rules, as well as procedures developed along its history and operating as an internal selection of strategic initiatives related to competition. Advocates of these schools believe that sustainability stems from the flexibility of the leadership team to find a balance between development of induced and autonomous strategic initiatives, to pursue new opportunities. Indeed, it helps control the chaos in a balanced way by autonomous strategies and alternate major reorientations, minor changes and jointly promote incremental, architectural and radical innovations (Evans & Bahrami, 2020). For Burgelman and Grove (2007), if the induced strategic process develops actions as part of the official strategy, the autonomous strategic process explores opportunities out of the strategic field chosen by management in relation to new market segments, new technologies and new skills. Through a process, autonomous strategic initiatives are (or are not) incorporated into the overall company’s strategy, which, in this case, is the MFI. The effectiveness of internal selection processes depends on an organisation’s ability to simultaneously maintain and exploit existing opportunities while pursuing new ones. According to Burgelman (1991), sustainability results from alternating learning and innovation, which emerging internal processes of experimentation and selection do prepare in fact. Indeed, the organisational flexibility of MFIs is assessed regarding their ability to serve an increasing number of unbankable client. It is in this context that Koenig (1997) shows that organisational flexibility is seen as fad that generally allows emergence of a new practice, a new tool, or a new managerial process. Attention is then driven to essential managerial modes that can lead to very strong innovations, which are sometimes qualified as management guru (Tolbert and Zucker 1996). The work of Cohendet and Llerena (1999) shows that organisational flexibility helps confront the views of management teams based on judgments and tools related to organisational improvisation. Specific competences and capacities hold a key position in MFIs’ flexible governance and in developing their growth in terms of reallocation of existing resources and integration of new ones.

Flexible Governance: a Key to MFIs’ Organisational Sustainability

The impact of flexible governance on the phenomenon of companies’ sustainability, first of all relates to the formalisation and implications of formal rules as an instrument to rationalise problems, to remove uncertainties and behavioural hazards and to stabilise a company’s running for as long as possible (Friedeberg, 1994). This logic makes it possible to control uncertainty within the company, and 'that which is uncertainty with regard to the problems is power regarding the actors‘ (Crozier & Friedeberg, 1977). For this reason, flexibility of the governance mechanisms is felt by the actors in the company as a catalyst for sustainability. Thus, the analysis of the role of governance as a logic of action highlights an adherence to flexible management. Currently, the dominant approach to governance mechanisms in companies is structured around the perception of flexibility towards a common objective, which is sustainability (Charreaux & Desbrières, 1998). Governance is a flexible phenomenon with systemic and dynamic approaches aimed at ensuring the effective management of the organisation's resources, strengths, weaknesses, opportunities, threats and risks linked to the uncertainty of its environment (Gulati et al., 2020). Actually, the organisational approach is materialised by the flexibility of management control as a tool for planning, auditing in monitoring and reporting with the aim of creating value and achieving objectives while considering the interests of stakeholders (Sergi et al. (2013). For Tarondeau (1999a, 1999b) the link between flexibility and sustainability is ensured through governance mechanisms. To this end, he believes that the role of flexible governance is to give a company the ability to change in order to improve its insertion in environment and increase its probability to survive. Exercising company’s flexible governance lies in the ability to adapt the roles of the Board of Directors, the shareholders, the audit committee and the management control to the financial model that allows the creation of sustainable value. The perspective is ‘long term’. The governance flexible logic then includes aspects such as: modes of coordination, reduction of sources of organisational dysfunction, creation of organisational tools, sharing of knowledge in order to help organisations renew themselves when their governance system is problematic (Harvey, 1968). This is why Williamson’s governance model (1979) is considered flexible because it allows for discrete exchanges corresponding to market relationships between contracting parties. These relational exchanges can be associated with the hybrid modes of organisation because of their complementarity allowing the identification of several factors that push suppliers to be flexible towards their customers. In a business relationship, for example, specific investments follow the adaptation of the supplier's services, processes and projects to the specific capabilities or needs of the customers Micheal and Hannan (1989). Freeman and Reed’s (1983) extended conception of the governance model considers that the company is a social construct, a receptacle for the expectations, objectives and interests of multiple partners. It is in this perspective that Gill and Whittle (1993) clearly express their will to perform a fundamental reform of governance in favour of the employees, in the name of flexibility in specific knowledge and skills they achieve in their companies. In this logic, the work of Bimeme and Djouenang (2019) shows that on the issues of performance of the MFIs, flexible governance is not only a managerial approach specific to the sector but also an approach adapted to the type of ownership. Thus, the COVID-19 crisis has allowed us to understand the experimentation of flexible governance in MFIs through the lifting of security blockades and the policy of grouped credit to the different members. This situation has enabled these entities to establish trusting relationships with clients and the strengthening of their social and economic capital (CERISE, 2020).1

Furthermore, in the framework of capacity building, Watiez (2017) believes that the shared values of the impact of flexible governance on the phenomenon of company’s sustainability, lies in the formalisation and implications of formal rules as an instrument to rationalise problems, remove uncertainties and stabilise a company’s running for as long as possible. In this regard, the organisational approach by Bettahar and Miraoui (2005) shows that the formal rule is an instrument of governance aiming at rationalising problems, removing uncertainties and behavioural hazards, stabilising and regularising. Within a company, a manager implements it to frame the actions of his employees, regulate their conduct and practices, and set the boundaries of their capacity to act. However, this formalisation represents nothing more but an image of the considered organisation and not its actual functioning. In addition, the work of Pesqueux (2020) and Watiez (2017) show that although flexible governance is a management method that sometimes makes it possible to respond to the invariants of the environment (social, economic, cultural), it can also be a source of instability for the company, especially when the actors (employees, customers, suppliers) do not adhere.

Furthermore, the work of Balasubrahmanyam et al. (2013) shows that firms that apply the spirit of financial flexibility improve their strategic flexibility in order to increase their prospects for renewed strategic growth.

Methodology

The methodology is based on two approaches: the sample composition on the one hand and the variables characteristics on the other hand.

Sample Composition and Data Collection

In this study context, we opted for the qualitative method that is part of an epistemological interpretativist posture. This approach follows the case study process. As a result, semi-directive interviews with MFIs in different countries of the EMCCA area served as strategy to access the real. The characteristics of different entities in which interviews were carried out differ from one another because it is a multimode method that uses a naturalistic approach of interpretation and, which emphasises entities’ qualities, processes and their natural meanings (Denzin & Lincoln, 2002; Gephart, 2004). This method helps define the essential qualities of our study’s object and understand what system of meaning they relate to (Bergada, 1990; Spitezki, 1995). Indeed, exploitation of the relationships between organisational flexibility and MFI’s sustainability include many types, each offering a different objective to view the phenomena. Bansal et al. (2018) state that these phenomena seek to highlight the breadth of rich ideas across different qualitative genres drawn from management research. The surveys were conducted among fourteen (14) first and second categories MFIs and networks in four countries of EMCCA area: Cameroon, Congo, Gabon and Chad. These four countries account for 99.52% of EMCCA’s MFIs, a total of 836 out of the 840 existing (COBAC 2019). The class one microfinance institutions are those that collect savings from their members and grant loans exclusively to them. This category comprises institutions of the associative, cooperative and mutualist type. The class two microfinance institutions are those that collect savings and grant loans to third parties. The data were collected through interviews on 14 MFIs of which 5 are in Cameroon, 3 in Congo, 3 in Gabon, 3 in Chad, from October 2019 to February 2020. Interviewees were asked about the factors of flexibility and sustainability of MFIs. As our surprise visit to MFIs’ managers could have caused inconvenience, we initiated correspondence in which we explained the reasons for our research project, its objectives and the impact of the MFIs’ managers cooperation. Afterwards, we acquainted them with different possible interview’s modalities and they had free choice of timing and modalities. Ane-mail was sent to a previously defined MFI list. A few days later, we made a follow-up to get their agreement and, possibly, appointments. Once the data were collected, they were subjected to a content analysis (Gephart, 2004) following the thematic approach through the Nvivo 10 software. We sum up this approach in four steps: transcription (which consisted of written presentation of the interviewees' comments), analysis grid construction (carried out in the software by creation of nodes representing the study’s different themes), coding (at this level to assign to each node the sequences of the corresponding verbatim) and interpretation (which was the final step intended to highlight the informational content of the verbatim). This last step was carried out using images generated by the software, coupled with coded sequences of the verbatim. Characteristics of different companies where the interviews were conducted are summarized in the table below:

According to Table 1 above, MFIs in the sample are 21% first category and 79% 2nd category. Furthermore, interviews lasted on average more than 1 h, and were carried out in 4 countries (Cameroon: 36%; Chad: 21%; Congo Brazzaville: 21%; Gabon: 21%). Finally, the majority of MFIs in the sample are independent (86%). All interviewees are male.

Table 1.

Characteristics of different cases MFIs.

Source: Nvivo 10

Case	MFI’s category	Interview time length	Interviewee’s post	MFI’s country	Membership network
Case 1	first category	1 h 45″	customer staff	Cameroon	MFIs in a network
Case 2	2nd category	1 h 50″	Customer staff	Cameroon	Independent MFI
Case 3	2nd category	1 h 40″	Indoor audit executive	Cameroon	Independent MFI
Case 4	first category	1 h 30″	Manager	Cameroon	Independent MFI
Case 5	2nd category	1h30”	Accountant	Cameroon	Independent MFI
Case 6	2nd category	1 h 30″	Customer staff	Congo	Independent MFI
Case 7	first category	1h50”	Customer staff	Congo	MFIs in a network
Case 8	2nd category	1 h	Indoor auditor	Congo	Independent MFI
Case 9	2nd category	1 h 10″	Accountant	Gabon	Independent MFI
Case 10	2nd category	1 h 15″	Credit manager	Gabon	Independent MFI
Case 11	2nd category	45″	Director	Gabon	Independent MFI
Case 12	2nd category	55″	Customer staff	Chad	Independent MFI
Case 13	2nd category	1 h	Branch manager	Chad	Independent MFI
Case 14	2nd category	1 h	Branch manager	Chad	Independent MFI

Characteristics of the Collected Variables

This stage included the following topics: Information on MFIs’ organisation charts; governance tools (management control, audit, shareholding, etc.), flexibility (adaptation, digital, anticipation, changeability, etc.) and information on sustainability (management style, customer growth and capacity for innovation and entrepreneurship). All these indicators fall within the competence of the work of Tarondeau (1999a, 1999b), Teece (1986), Mignon (2001) and Bréchet and Prouteau (2010). With respect to the content analysis, it was noticed that the same words were repeated in respondents' speeches by category. The study is summarised in a diagram from which our interview guide naturally derived. Lexicographical analysis of the 14 interviews provided us with a corpus containing a total of 4831 words with a lexicon of 1024 different words. To get a quick idea of the contents we can look at the list of the most frequently used words. Reviewing the Lexical Association Map provides context for the words. The most common words in the corpus are: adaptation, technology, innovations, management control, governance, survival, visibility, regulation, strategy, institutions, learning, etc. Results obtained and compared with data from the theoretical part, help to identify the determinants of sustainability and their effects on MFI’s sustainability. All this leads to a results analysis under the following point.

The Results

This study results show that the prevailing trend in responses reflects a positive orientation of flexibility contribution to sustainability. According to interviewees, organisational flexibility is a sustainable management method that leads to an increased visibility of MFIs’ sustainability. Thus, the analysis will focus on governance mechanisms, innovations and technological opportunities (Fig. 1).

Fig. 1.

The model on organisational flexibility and sustainability of MFIs in EMCCA area

Figure 2 above provides us with information to analyse flexible governance mechanisms, which can foster MFIs’ sustainability in EMCCA context. However, the board of directors, management control, audit, regulation and executive choices are mechanisms that are linked to MFIs’ sustainability in most of interviewed cases. Analysing the results helps us understand interviewed managers’ assessments.

Fig. 2.

Weight of arguments that explain relationship between flexible governance and MFIs’ sustainability

Flexible Governance: a Mechanism for MFIs’ Sustainability in EMCCA Area

It emerges from Fig. 2 that governance mechanisms that the interviewees mostly referred to are -with respective coverage percentages- regulations 42%, audit 17%, executive choices 25%, management control 25% and board of directors 29%. Results analysis from that figure helps us understand that flexible governance mechanisms that are likely to contribute to MFIs’ sustainability in EMCCA’s countries are both internal and external. Literature on governance shows that flexible governance mechanisms variables ensure the entity’s survival in its environment. Interviews revealed that audit, board of directors, management control and regulation are referred to as flexible governance mechanisms. Managers interviewed on these topics stated: “flexibility is more necessary for our MFIs than ever, but we still need means to cope with appropriate and fairer forms of protection. This lack of flexibility weakens our MFIs. However, when governance mechanisms are based on controls and strategies, it is easier for our MFIs to become flexible as this technique contributes to shortening time horizon. Flexibility is now acknowledged as an economic necessity, especially with regard to environmental contingency.” Indeed, audit is a competent and independent actor’s review of the financial statements, which purpose is to express an opinion on the sincerity and clarity of accounting and financial information derived from these financial statements. Actually, some interviewees stated that “external audit certifies our balance sheets according to the context…”. As regards internal audit, the interviewees stated: “Internal audit ensures that day-to-day management of our MFI is carried out according to Board of Directors’ objectives. However, in its action process, it ensures that management decisions are respected and microfinance institution is managed in accordance with entitled holders’ interests. This entity adapts best in its environment on both internal and external aspects and ensures that executive decisions are respected and MFI’s management fits its best interests.” About choosing the executive, one interviewee explained that “choosing the executive—that is democracy, has to do with sustainability […] each member has a voice at the general assembly. And when there is democracy, there is equality of voices, luck and rights for all members. We also practice risk equity”. These results meet the analyses of Teece et al. (1997) who state that the sustainability of an organisation derives from the dynamic capacity for flexibility. On the contrary, Tolbert and Zucker (1996) think that the sustainability of an organisation do not always depend on flexibility, but on institutionalisation.

As for the Board of Directors, it is up to them to make the MFI’s flexible strategic choices with regard to the increasingly uncertain environment and intensifying competition in addition to business diversification process. Some interviewees say in this regard: “In fact the Board of Directors defines MFI’s internal policy and sets internal operation methods. The overall management MFI’s policy is committed to this logic. Thus, governance mechanisms that adapt to MFI’s environment in different countries are linked to strategy that conditions business survival, to choosing executive that conditions governance quality, as well as to entrepreneurial governance, which requires all employees to contribute to their continual operation.” We draw from the above that the Board of Directors shows up flexibility as a factor in MFI’s sustainability.

As for management control, interviewees believe that its role is to ensure compliance with standards and decisions. The following verbatim notes clearly illustrate that “management control ensures that the standards set by the Branch are met, and can be adjusted whenever there is a change in our MFI’s management policy. It provides reassurance that we are meeting prudential standards.” By the way, it helps implementing the defined strategy, evaluating it at mid-term and adjust it if necessary, to face competition in order to ensure MFI’s flexibility; “[…] management control via dashboards helps facing environmental constraints […]”. On the impact of using new information and communication technologies, another interviewee stated: “[…] management control digitisation is the necessary tool for our MFI to perform controls in remote branches. In fact, this method of control avoids operational risks. Digital management control also plays a role in risk prevention and management and avoids bankruptcies. It is also used to manage non-payment risks […]”. These statements lay emphasis on the relation between organisational flexibility and the role of management control.

As far as regulation is concerned, interviewees say: “COBAC regulations require us to comply with prudential standards. Besides, we also have the Finance Law”. Both regulations and law decide the taxes rate. They lead us to move from one well-defined structure to another in particular circumstances, thus showing their flexibility. COBAC regulation defines MFIs’ operating framework in the sub-region. In the event of a crisis, COBAC reviews risk management rates and conditions downwards.” In addition, implementation of regulation in phases of the decision-making process, helps to guarantee MFI’s sustainability. It is in this perspective that the managers surveyed stated: “regulations set up principles and ensure their compliance to avoid non-payment risks. Respecting these principles aims to ensure optimal governance according to circumstances and organisational sustainability. COBAC defines quotas in terms of thresholds and ceilings for MFI’s sound management.” In a hypothetical unstable economic environment, governance mechanisms play an undeniable role in organisational flexibility due to positive effects to MFIs’ rapid adjustments to make them more responsive, for an economic environment with complex factors. This approach goes beyond financial aspect to focus on the controlled strategic project in order to make the MFIs visible, by giving them an identity, and to position them as reference actors at the level of organisation and competitive markets and to affirm a useful role for all. It opens up to a dimension of accession, coherence and relevance for all the associated partners.

Innovations: Flexibility Modulation Determining MFIs’ Sustainability in EMCCA Area

Figure 2 below, shows that technological innovations have been the most quoted by the speakers at a percentage of 98.33%. Product and organisational innovations are not the least because they are strongly linked. However, it is necessary to emphasise that according to 80% of interviewees, technological innovations determine the MFI’s sustainability, followed by product and organisational innovations (26.67% of cases). At the end of the day, all these innovations contribute to EMCCA area’s MFIs sustainability. Several interviewees emphasised: “[…] all these innovations play a key role…” (Fig. 3).

Fig. 3.

Different types of innovations that affect MFIs’ sustainability

Analysis brings out that MFIs in EMCCA area accumulate multiple categories of innovations in order to consolidate their survival. These include product, technological, organisational and social innovations. Developing and proposing new products help MFIs to better serve their customers and then, better fulfil their social mission towards unbankable populations. These new products can be of multiple types. Indeed, interviewees explain: “We have new products such as mobile money and e-Bank. These innovations are in fact part of an adjustment policy that gives us flexibility amidst competition. Our own innovations are associated with behaviour, service and product. At the organisational level they relate to staff transfer. This strategic behaviour helps circumvent difficulties and products selling. These innovations enhance the MFI’s good functioning via multiplicity of new products or services that are coordinated by our human resources.” These statements explain the reinforcement of MFI’s financial viability, and consequently their sustainability. Indeed, product innovations help improve the functioning of these financial entities and customers can easily and peacefully gather their due at any time. The manager interviewed about this stated “[…] this method has taken shape following a trial and error learning process. With creation of the credit card, customers may collect their money, purchase and pay online securely at any time. […] “With electronic money transfer, customers can receive their salary via Mobile and Orange Mobile Money.” Indeed, the development of information and communication technologies (ICTs) led to meaningful changes in organisations management thanks to processing time reduction and various ways of transmitting very huge amounts of information. As reminded the interviewee, these technological innovations are the driving force behind MFIs’ development. He stated: “[…] technological innovations help enhance as long as possible our MFI’s development and functioning […]”. Indeed, using digital helps to highlight the just-in-time five zeros technique we have regularly mentioned in corporate quality policy. About it, an interviewee declares: “[…] with digital advent, red tape was left for computers. We use computers to carry out our various tasks in business. Then we send SMS messages to inform all our customers about the new products and services being developed […]. “Our innovations are autonomous and contribute to internal development, but systemic innovations are prudent alliances as is the case with mobile phone companies. So, when you react quickly you suffer less, reactivity is an on-time and proactive tool to sustainable activity.” This argument helps us understand that technological innovations contribute to new products advertising and to real-time customer information. Indeed, since information empowers its holder, it helps MFIs to show their attachment to clients, since they are the centrepiece to focus on in order to ensure corporate development. This brings us back to the famous saying that ‘the customer is king ‘. These technologies are driving the development of many companies, and their use triggered the proliferation of scientific studies.

However, it should be noted that technological innovations trigger new organisational modes and are sources of organisational innovations. It is interesting to study organisational innovations, especially in-service entities such as MFIs, for two reasons. On the one hand, organisational component forms the ground of services. On the other hand, intermediation services are privileged areas of ICT’s application. While technology contributes to MFI’s smooth functioning, organisational innovation allows its development as an interviewee says: “organisational innovations have a very great impact on our MFI’s development”. In addition to the three quoted above, interviewees also mentioned social innovations. Thus, they state: “We believe that the short, medium and long-term strategy of allocating credit to young people, elderly and women fits into a flexible logic established by our MFI”. According to an epistemological reading of innovations types, it appears that their so-called pluralistic vision helps conceptualise the company and assess its performance. This study is part of the orthodoxy approach to innovations flexibility whose implementation must aim to strengthen MFIs’ sustainability.

Theoretical and Managerial Implications of the Impact of Organisational Flexibility on Sustainability

The issue of organisational flexibility contribution to MFI’s sustainability in EMCCA area is differentiated on the one hand at theoretical and on the other hand at managerial levels.

Theoretical Implications

As far as theory is concerned, it is similar to the partnership approach to governance that has helped understand the virtues of flexible management focused on adjustments to changes and learnings. From this point of view, it emerges that the constant search for MFIs’ balance lies in the forms of organisational flexibility applied to human resources and in supplier-customer relations. However, we found during the empirical phase of our work that different forms of qualitative and stable flexibility applied to human resources are very little known and/or implemented. And as direct consequences of this there are lack of staff’s stability, of staff agreement with corporate culture and impossibility to set up a real strategy of medium or long term. Towards these theoretical shortcomings, it seems appropriate to us to formulate palliative theoretical recommendations so that microfinance institutions are truly rooted in technological, economic, commercial, technical and even cultural environments. In order to analyse organisational flexibility contribution to sustainability in a hyper-competitive context such as to date EMCCA area’s MFIs context, this study provided an understanding of the traditional price and quality competition cycle. Moreover, it has inexorably led to the renewal position of Punctuated Equilibrium Theory which supports the idea that MFIs must jointly develop a whole set of incremental and architectural innovations to ensure their survival.

Managerial Implications

As for managerial implications, the aim is to be part of a true partnership governance framework, for these MFIs must implement flexibility in relationship with all their stakeholders. As such, types of conceivable flexibilities are: flexibility through working time arrangements and part-time work, geographical flexibility of workplaces, flexibility through job enlargement in order to reorganise an occupation profile, flexibility through retraining and flexibility through permanent added value in work. flexibility via working time arrangements and part-time work, geographical flexibility of workplaces, flexibility by broaden scope of tasks in order to re-form a business, flexibility by reconversion and flexibility by permanent work value-added. Consequently, this recommendation will prepare MFIs to avoid being followers, as the follower is the competitor which has only a reduced market share, adopts an adaptive behaviour by complying its decisions with those taken by the competition. With regard to bilateral and even multilateral relations between MFIs and other stakeholders, in this case the supplier-client relationship, we recommend favouring actions that will lead to reciprocal benefits in the long term and preserving mutual satisfaction through consensus when necessary. All these implications have managerial incidences and stress in addition that, the existence of an effective monitoring mechanism would allow the company to expand its portfolio of activities (which will be grouped into strategic areas of activity for proper monitoring). Furthermore, it would allow the company to expand its market share for existing activities by adopting an offensive attitude and, by finding many blue oceans, to consolidate the market share already acquired by adopting a defensive attitude. On red oceans, implement competitive strategies to be able to settle. Thus, we recommend to MFIs to set objective conditions for credit, to set up in each MFI a credit committee responsible for the credit activity with periodic reports on the actual situation of outstanding credits and recoveries to supervisory bodies. These actions will lead to securing credit activity and reducing the bankruptcy rate.

We therefore recommend that promoters, managers and all those in charge of managing MFIs integrate the items of Woodward’s (1965) technological contingency, Child’s (1972) power choice and Mintzberg’s (1982) technical system as factors of organisational flexibility that can contribute to sustainability. In fact, this agility contributes doubly to a better understanding of the supervisory decision model, with a view to enable MFIs keep up with the times and not be outdated at a certain time.

Conclusion

This study aimed at examining factors of organisational flexibility that could contribute to microfinance institutions’ sustainability in EMCCA area, specifically in Cameroon, Congo, Chad and Gabon. Its motivation comes from the observation of Central Africa countries’ MFIs bankruptcies occurring only a short time after digital economy advent, more specifically the mobile money. The literature review on interaction between organisational flexibility and sustainability was made upon the extent of organisational improvisation discourses about contingency, adaptations, virtues of a flexible management and that of resources and skills. The qualitative research we have mobilized in this article is the study of processes through targeted semi-directive interviews with fourteen (14) EMCCA sub-region’s MFIs. We have transcribed collected interviews into a text corpus. We performed macro-analysis of this corpus with the NVIVO 10 software. This analysis led to understand that levers of organisational flexibility that contribute to MFIs’ sustainability in EMCCA area are: on the one hand, innovations that foster improvement of the productive apparatus and opening up new sectors and products branches, and on the other hand governance mechanisms that determine the decision-making methods that have as immediate effect, customer satisfaction and/or retention. Finally, technological opportunities that help adopt an offensive strategic watch position in order to gain a competitive advantage in a hyper-competitive context such as EMCCA area. While it is undeniable that flexibility contributes to the sustainability of MFIs in African countries, it also depends on skills issues that can help us understand what can create a difference in MFIs’ performance. Thus, the reflections undertaken in this sense give future orientation about the balance regarding performance flexibility of the MFIs in Africa.

Isidore Bimeme Bengono

Lecturer and researcher PhD in Accounting, Audit and Control. Domains of research: Accounting, Audit, Control, Governance, Management and Entrepreneurship. Charges: Deputy Head in charge of management of Laboratory Faculty of Economy and Management, Dschang University. Teachings: Accounting, Governance, Management. Associative research: Member of the Francophone Association of Accounting, Member of the association of Microfinance Researchers. Professional work: Consultant at Freelance et Cabinet d’expertise comptable, Coordinator of Caninet Patners services.

Funding

Not applicable.

Data Availability

Yes.

Code Availability

Not applicable.

Declarations

Conflict of interest

Not applicable.