The stranger as friend: loan officers and positive deviance in microfinance

Abstract

This chapter explores positive deviance in the context of microfinance. Some loan officers frequently bend or choose not to enforce written rules in an effort to better address client needs, while others enforce the rules strictly. These differences in enforcement styles are analyzed to explore the structural characteristics that generate and sustain rule-bending behavior. In microfinance, the pressures to standardize and automate lending decisions challenge loan officers’ ability to manage clients because context uncertainty cannot be fully captured by centralized policies. The chapter explores the structural conditions that lead to positive deviance with productive outcomes by the organization’s own criteria. The paper unveils two inherent tensions in microfinance. First, increased efforts to centralize and enforce policies in fact only increase the pressures for loan officers to work outside the organizations’ regulations. Second, this type of positive deviance keeps the organizations connected to their core, social missions.