PTWhat microcredit is worth to the people who receive it
Social businesses say they create social value, but rarely ask the people on the receiving end. The thesis listened to 30 micro-entrepreneurs in Brazil's Northeast who keep renewing their loans and found two ways of living with that money: to help the business survive or to help it flourish. Explained in 12 screens.
Everyone talks about social value, almost no one asks the people who receive it
Creating social value is the whole point of social entrepreneurship. But what is it? The author read 53 articles on the subject, 42 international and 11 Brazilian. Most of them stress how important it is to create social value without saying what it is, and some treat it as a synonym for social impact. Choose what to highlight:
The thesis's literature review (Scopus, Spell and Scielo; section 2.3). The thesis counts definitions only among the 42 international articles. One cube per article; the position of each is illustrative.
On paper, microcredit is money for the business, with someone keeping an eye on it
In Brazil, microcredit means productive credit (for an income-generating activity) that is guided (granted after a credit agent visits the business and assesses it). The study worked with the client portfolio of a for-profit social business that lends microcredit, is backed by a philanthropic venture capital fund and operates in four states of the Northeast. The thesis calls it MC1. Go through the cycle:
Cycle drawn by us from the definition of productive, guided microcredit (Haus, 2008, and Provisional Measure 226 of 2004) cited in the thesis. The thesis says a new assessment is expected at each renewal.
The researcher went to the homes and businesses of 30 clients
In January and February 2021, during Brazil's second wave of Covid-19, the author travelled to four states to interview, in person, MC1 clients who had renewed a microloan at least once. Most of them work where they live, and many conversations took place with family, neighbours and customers around. Change the view:
Profiles from Tables 5 to 8 of the thesis; the colour counts are ours. Credit agents chose the clients, but many were not at home and were replaced on the spot by others with a similar profile. The order of the cubes on each plate does not match the thesis codes.
The question was not whether credit works, but how each person lives it
Phenomenography was born in education to uncover the few qualitatively different ways in which people understand the same thing. It does not judge who is right: it groups experiences. The author read and reread the interviews in three rounds, together with two other researchers. Tap a round:
Round 1 · 10 interviews from Ceará
Round 2 · all 30 interviews
Round 3 · refinement
12 initial conceptions from Table 9; categories from section 3.7 and Table 11. The thesis does not say which final category each initial conception led to, so the lists are shown separately.
Read what they say and decide: does credit keep the business going or make it grow?
The analysis arrived at two groups. In one, microcredit is the resource that lets the business survive. In the other, it is the resource that lets it flourish. Try to classify six interview excerpts the way the author did:
Quotes from section 4.1, with the thesis codes (BF1 to BF30) and the classification in Table 11. Cuts [...] are ours, also where the quote would reveal the person's gender. Quotes translated by us.
Three differences separate the two groups
10 people experience microcredit as a resource for the business's survival; 20, for its flourishing. The thesis calls the three differences that separate one group from the other critical categories. Pick one:
Table 11 and section 4.1. The author uses Maslow's (1943) pyramid of needs to describe what the money solves. Neither group was linked to the top layer; the 3D pyramid is our drawing.
Flourishing includes surviving: it is not better, it is broader
People who live credit as flourishing also take care of keeping the business going, and go further: they expand and diversify. People who live it as survival described no expansion at all. That is why one circle fits inside the other. The thesis warns that this hierarchy is not a value judgement about the people. Tap the parts of the drawing:
Redrawing of Figure 8 of the thesis (outcome space). The author proposes adding to the drawing, besides the two ways, the differences and what is shared, something the Brazilian phenomenography theses she found did not do.
Renewing is a matter of honour, and no one would close the business without credit
Two experiences look the same in both groups. Seeing the renewal money land in the account proves a clean credit record, which for everyone is a matter of honour. And if microcredit disappeared, everyone would carry on with the business, even if it meant selling something or going back to a loan shark. Choose:
Those who survive pile up contracts; those who flourish see the amount grow
The thesis does not cross the interviewees' profiles with the two groups. We did the count by combining the profile tables with the list of who is in each group. These are few people, so it is a snapshot, not proof, but it helps to see who we are talking about. Choose the measure:
Our own count, from Tables 5 to 8 (profiles) and Table 11 (groups). Percentages are of each group's size; amounts in reais are the group median (half borrowed more, half less). Columns share the same scale within each measure.
Neither way of living with credit reflects what the company promises
The thesis asked whether the ways people live with microcredit reflect the goals of those who offer it. The author's answer is no. Flip each card to compare the promise with what the accounts show:
“That alone will not ‘change Brazil’, although it may keep favouring the growth of the companies that offer microcredit.” · the author, on renewing credit just because the client pays on time
Section 4.3 and conclusions. The credit agent's explanation (fewer visits during the pandemic and automatic renewal for those who pay on time) was given to the researcher in the field. The quotes come from the interviews and were translated by us.
Social value is measured in the voice of those who receive it
The thesis proposes looking at social business products as social values: they are worth the meaning beneficiaries give them as they use them. Comparing that meaning with the mission is one way of assessing social impact, and the author suggests other social businesses do the same.
For microcredit providers
- Visit and assess the business again at renewal, not only for the first loan.
- Add financial and management guidance to credit, especially for those who live it as survival, and spaces where micro-entrepreneurs can learn from each other.
- Reconsider lending to those who no longer need it, which may leave out those who do.
For social investors
- Learn, from the clients' own voices, whether money earmarked for a social need is delivering on its promise.
- Paying on time shows the debt is honoured, not that credit changed the borrower's life.
For research and evaluation
- Use the outcome space as a qualitative evaluation of any social business product or service.
- Repeat the study in other regions and in favelas, to see whether broader ways of living with credit emerge.
What this research does not say
- How many clients live each way. These are 30 people from one company, in four states of the Northeast; phenomenography looks for the range of experiences, not proportions. Other regions may show other ways. · according to the author and our own note
- Whether credit lifted anyone out of poverty. The thesis listens to how people live with credit; it does not measure income before and after. · our own note
- Interviews with the company nearby. Agents picked the clients (many were swapped on the spot), the supervisor and agent were present during the conversations, and clients saw the researcher as an MC1 employee. The author says the answers were spontaneous. · our own note
- An unusual moment. Fieldwork took place during the pandemic, without a pilot interview; the agent also attributed part of the lack of visits to Covid-19. · according to the author
Credits
CHUMBO, Rafaela Andrade Nascimento. Concepções de valor social segundo os beneficiários: pesquisa fenomenográfica no campo do empreendedorismo social. Doctoral thesis (Business Administration) · Mackenzie Presbyterian University, São Paulo, 2022. Advisor: Prof. Dr. Janette Brunstein.
Interviews were recorded with informed consent and with the authorization of the founder of the company studied, whose name the thesis does not reveal. CAPES scholarship (PROSUC). The author also thanks her former advisor, Prof. Dr. Silvia Marcia Russi De Domenico, who followed the research until submission. This version simplifies the work for a general audience.