On subsistence-type rural independent retailers and crowdfunded microfinance—Prosocial lending, nudges, and unintended consequences

Abstract

Much of the extant scholarship in supply chain management (SCM) has had a developed world focus, although most of the global population resides outside this area. SCM scholars are now recognizing this limitation in the coverage of our communities' research. They have recognized that the logistical challenges of getting products to these underserved markets at the bottom of the economic pyramid (BOP) may be fundamentally different from the “big box” mindset that prevails in the west. There is growing recognition that supply chain entrepreneurship is critical to the logistics and physical distribution systems that can get products to such markets in a cost-effective manner. Yet, such entrepreneurs, who are often small, and weakly integrated into the global economy, face several challenges in their daily business. Many of them rely on microfinance to fund their business. Yet, the microfinance model itself is changing into a web-supported crowdfunded model. The current study investigates how an entrepreneur's circumstances with regard to their borrowing status as a first-time borrower, and their intent with regard to business expansion influence their success in fundraising on a crowdfunding platform. Results reveal that BOP entrepreneurs who are “repeat borrowers” have difficulty in obtaining funding for their business plans.