The politics of microfinance organisational sense-making

A case study of Tau Yeu May (TYM) microfinance institution in Vietnam  

 

 

 

Picture:  The  name  board  at  one  branch  of  TYM  in  Hung  Nguyen  district,  Nghe  An  province,  Vietnam  

 

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   Table  of  Contents  

Acknowledgement .................................................................................................................... 3

List of abbreviations ................................................................................................................ 4

Currency exchange rate .......................................................................................................... 4

Abstract ..................................................................................................................................... 5

I. Introduction .......................................................................................................................... 6

II. Literature Review ............................................................................................................. 10

III. “In Vietnamese context,…” ............................................................................................ 16

IV. Methodology ..................................................................................................................... 21

V. Case and event analysis .................................................................................................... 24

VI. Social performance - Synthesis and discussion ............................................................. 39

VII. Conclusion ...................................................................................................................... 42

REFERENCES ....................................................................................................................... 43

APPENDIX 1 .......................................................................................................................... 46

APPENDIX 2 .......................................................................................................................... 47

APPENDIX 3 .......................................................................................................................... 50

APPENDIX 4 .......................................................................................................................... 51

APPENDIX 5 .......................................................................................................................... 55

 

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Acknowledgement

This dissertation is attributed to TYM Microfinance institution - my second home for three years; to

Martin - my super-disciplined super-visor; to GuiDeng - my ever supportive “consultation service”, to

Nikhil and Ana for their valuable advice.

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List of abbreviations

TYM – Tau Yeu May

VWU – Vietnam Women’s Union

SBFIC – Savings Bank for International Cooperation

MFWG – (Vietnam) Microfinance Working Group

Currency exchange rate

£1 = VND 35,000

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Abstract

This paper intends to investigate a microfinance institution as a proactive actor, struggling to maintain

social performance, but at the same time, to negotiate with many other challenges in its operation to

maintain itself as an organisation. This paper argues that a microfinance institution functions within

an organisational boundary of multiple factors and challenges posed by its complexity of its

operations and its operating environment. Therefore, it is difficult for a microfinance institution to

continuously remain at a certain level of social performance. Social performance in a microfinance

institution becomes better or worse as it is under the influence of the multiple factors and difficulties.

Taking Tau Yeu May (TYM) Microfinance Institution in Vietnam as a case study, this paper finds out

five key factors of its organisational sensemaking process that set an organisational boundary for

microfinance operation in Vietnam, besides social performance. Additionally, in order to keep the

organisational existence, sometimes, the organisation cannot keep social performance as the first

priority in its sensemaking process.

Key words: Microfinance, Social performance; Organisational sensemaking

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I. Introduction

1.1. Rationale of the research

Started with the pro-poor banking idea of Professor Muhammad Yunus in the 1970s, microfinance

nowadays has mushroomed around the world with different variations, sometimes too different from

what Yunus expected. Recently, research on microfinance has been trying to evaluate the impact of

microfinance in poverty eradication but hardly any robust evidence was found (Duvendack et all,

2011; Bateman and Chang, 2012; Banerjee et al, 2013). Thus, questions about the appropriateness of

microfinance to poverty eradication; or the possibility of mission drift and over-commercialisation

have been raised in many discussions on this pro-poor banking operation (Dichter and Harper, 2007).

As a matter of fact, social performance is always a focus of microfinance operation, that is why

research on microfinance pays more attention to its beneficiaries (Hulme, 2007; Harper, 2007).

However, it is undeniable that microfinance institutions, before striving for good social performance,

are utmost organisations that need to cope with the issues of complexity and multi-facet relationships

between structure, operation and performance (Copestake, 2005, p.159). Using the concept of

“organisational sensemaking” (Weick, 2007)1 in this paper, I aim to describe the complexity of the

environment with factors that assert influence on the operation of a microfinance institution as well as

the boundaries of organisational sensemaking that these factors create for the organisation.

Understanding that social performance is crucial in microfinance operation, this paper builds up its

analysis with the core assumption that the microfinance institution desires to have good social

performance. However, the contraints among social performance and other factors under certain

boundaries may lead to trade-offs in short-term. Thus, this research also proposes that microfinance

operation should be evaluated with a more comprehensive perspective that takes into account the

1 Organisational sensemaking is a continuous process of an organisation interpreting the environment, enacting

environment (i.e. intervening and changing the environment), justifying their actions and validating their actions

for the next circle of enacting (Weick, 1993, pp. 11-25; Weick, 1995, p.6)

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struggle of the microfinance institution – on one hand, providing socially good financial services for

the disadvantaged, and on the other hand, maintaining its identity as an organisation.

1.2. Case selection – TYM Microfinance institution

This paper shall take TYM Microfinance institution in Vietnam as its case study. The analysis of the

complexity of microfinance operation is discussed intensively in Vietnamese context.

Tau Yeu May, which means “I love you” in English, is the name of the first formalised microfinance

institution in Vietnam. As TYM for short, this organisation was established as a project of Vietnam

Women’s Union in 1992 and has been transformed through different legal statuses before becoming a

formalised microfinance institution2 (TYM, 2012). The event of TYM being formalised has set a

landmark for both Vietnamese microfinance sector and for TYM as an organisation.

In terms of Vietnamese microfinance sector, with the first licensed microfinance institution, policy-

makers and banking regulators in this country are required to work more to develop a legal framework

specifically for microfinance. Before TYM, the only formal microfinance providers were two major

state-owned pro-poor banks, which enjoyed heavy subsidies by law. This remained as the norm of

pro-poor banking for state regulators. As a result, regulators such as The State Bank of Vietnam or

Ministry of Finance were ignorant to the existence of such non-banking operations as a “microfinance

institution”. With TYM as the first licensed microfinance institution, the regulators cannot apply their

existing requirements of banking operations for microfinance, but at the same time, they have not

developed specific law or regulations for such operation. With an organisation functioning under their

supervision, the state regulators stand all the chances to enforce feasible policies for microfinance if

the policies work in TYM.

This license has also inserted great impact on TYM as an organisation. TYM took this as the chance

to challenge itself as it would encounter a series of stricter requirements with closer supervision from

2 With the license granted from the State Bank of Vietnam, TYM was given a formal name as “Tinh Thuong

one-member limited liability microfinance institution”, however, Tau Yeu May or TYM is more preferred.

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professional banking officers. Being a microfinance institution with a disbursement cap of VND 30

million per loan (or equivalent to £900) with a total different operation principles, TYM does not have

infrastructure and human resources as a bank. Thus, it paid effort to strengthen its organisation to

meet the higher demands of the key stakeholders. At the same time, TYM raised the voice for the

whole microfinance sector when it could recognise the unfeasible or inapplicable requirements or

policies from the State. As the first formalised microfinance institution, TYM’s lessons and

suggestions could be very powerful in policy advocacy regarding legitimate documents and laws on

microfinance operations in Vietnam.

Therefore, it worths to find out how organisational members in TYM manage to make sense within

the multiple boundaries and the complex environment, to move forward as the pioneer in

microfinance sector in Vietnam. With that purpose of applying the bottom up organisational sense-

making perspective to investigate the origins of determinants of the social performance in TYM, this

study is set under the following research question:

How do organisational members in a microfinance institution make sense of the factors that affect

their operational boundary in Vietnam, considering social performance management? – A case

study of Tau Yeu May microfinance institution.

The answer to this question shall be brought about with the answers to the following three sub-

questions:

• What are the factors that constitute the organisational boundary of a microfinance institution?

• How do organisational members maintain the balance point of TYM within its boundary

while they make sense of the organisation’s operation?

• How do organisational members consider its social performance while sensemaking?

Due to limits of time and resources, I shall answer this research question within a scope of two special

events that happened recently in TYM, so called “the critical media crisis” (i.e. when TYM was

heavily criticised by a local newspaper) and “the cooperation research” (i.e. the recent intensive

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research to strengthen the cooperation between TYM and Vietnam Women’s Union). Details of the

events are presented in chapter V – Case and event analysis. The following chapter provides some

literature review for the analysis.

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II. Literature Review

2.1. Strategic options facing microfinance institutions

Microfinance, despite being considered as a development means for poverty eradication, is still a

method of banking, which requires financial sustainability. Therefore, it is a question for all

microfinance institutions to find its balance between social performance and financial performance.

While operating, microfinance institutions may need to accept trade-offs with regards to this balance

in the short-term (Mersland and Stroem, 2007). Copestakes (2007, pp.1721-25) proposes a graphical

framework to visualise the possibility locus of a microfinance organisation once they opt between

financial and social sustainability in their operation in a time period.

Figure 1: Strategic options facing microfinance institutions

In this diagram, social mission of the organisation is presented with a set of indifference curves (C)

and Pt is any given initial level of performance. During a time period, it is optimal for a microfinance

institution to change from Pt to the possibly attainable position Pt+1*, given the fact that social

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performance and financial performance are equally attractive. However, owing to many other factors,

such as policy change, investment, innovation and growth, the organisation may end up toward Pt+1#

or PPt+1. Each arrow presents different strategies that a microfinance institution may pursue during a

short period of time, which are as followed (in clock-wise order):

• Arrow 1 (pointing up and to the left): trade-off strategy of improved social performance;

• Arrow 2 (vertical): current client-first, meaning current financial performance should not get

any worse;

• Arrow 3 (pointing up and to the right): intermediate strategy or the optimum;

• Arrow 4 (horizontal): growth-first, meaning current social performance should not get any

worse;

• Arrow 5 (sloping downward): trade-off strategy of enhanced financial performance by

reducing social performance.

Copestake argues, as the performance in the current period shall determine the possibilities of the

organisation in the next period, similar graphs could be drawn with different set of indifference curves

as long as the combination of social performance and financial performance being equally attractive

to the organisation. However, a more serious question rises up. At the end of the period, if the

organisation does not end up at the optimal position Pt+1*, will it head back for this locus in the next

period?

According to Copestake, the organisation shall systematically manage their performance at this stage

based on 3 steps of review 1) review how financial and social performance is assessed; 2) review the

range of available performance possibilities and strategies; 3) review how preferences and goals are

formed and adjusted. This brings about the concept of organisational sensemaking (Weick, 1995),

which defines the action of an organisation in its process of interpreting, enacting, justifying and

validating while operating.

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2.2. Organisational sensemaking and organisational sensemaking in a

microfinance institution

Talking about organisation sensemaking, Karl Weick uses one assertion: “an organisation can never

know what it thinks or wants until it sees what it does” (1977, p.189). He argues that as reality is an

on-going accomplishment, while people attempt to create order and want to stabilise the continual

flows momentarily, sensemaking is the process when people base upon their experience in the past to

build frameworks or create orders, then make situations rationally accountable by justification and

validation (Weick, 1993, pp. 11-25; Weick, 1995, p.6). He concludes that sensemaking in an

organisation is a continuous process of organisations interpreting the environment, enacting

environment (i.e. intervening and changing the environment), justifying their actions and validating

their actions for the next circle of enactment. Thus, sensemaking can be understood as the way the

organisation learns about the environment and detecting its strategic options. However, the

organisation is never certain if the strategic option of their choice would bring them to the desirable

position (Pt+1*) or not, because once they intepret and enact, the environment will change and arising

factors can affect the direction and the end-up position.

Depending on the organisational perceiption on their operating environment and their organisational

intrusiveness (i.e. how pro-active is the organisation to interpret and enact its environment), Daft and

Weick propose the following typology of organisational sensemaking (1984, p. 248, p.250):

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Unanalysable

ASSUMP-

TIONS

ABOUT THE

ENVIRON-

MENT

Analysable

UNDIRECTED VIEWING ENACTING

Constrained interpretations.

Nonroutine, informal data.

Hunch, rumour, chance

opportunities

Experimentation, testing,

coercion, invent environment.

Learning by doing

Data sources External; personal External; personal

Acquisition Irregular contacts and reports;

casual information

Irregular reports and feedback

from environment,

Interpretation

process

Much equivocality reduction;

few rules

Some equivocality reduction;

moderate rules

Strategy Reactor Prospector

Decision

process

Coalition building Incremental trial and error

CONDITIONED VIEWING DISCOVERING

Interprets within traditional

boundaries. Passive detection.

Routine, formal data

Formal search. Questioning,

surveys, data gathering. Active

detection.

Data sources Internal; impersonal Internal, impersonal

Acquisition Regular record keeping and

information systems; routine

information

Special studies and reports,

extensive information

Interpretation

process

Little equivocality reduction;

many rules

Little equivocality reduction;

many rules

Strategy Defender Analyser

Decision

process

Programmed, problemistic

search

Systems analysis, computation

Passive Active

ORGANISATION INSTRUSIVENESS

Figure 2: Four types of organisations

This typology describes four types of organisations according to their ways of interpreting their

environment and enacting their operating environment. Depending on the perceiption of organisations

about the environment (i.e. analysable or unanalysable), organisations will develop its own process of

interpreting its environment. Perceiving that its operating in an analysable environment, organisations

will not need to reduce its equivocality while sense-making whereas peceiption of unanalysable

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environment makes organisation to be more open to uncertainty. This perception leads to the way

organisations interpret and understand the environment. Active organisations always seek for

diversified ways of understanding the environment through different types of data and inputs while

passive organisations tend to rely on established data collection procedures.

Microfinance institutions could well fit in these four categories of organisational sensemaking. In

combination with Copestake’s diagram, the current conditions of microfinance institutions could

somehow be explained. Microfinance institutions of different typologies in figure 2 make different

strategic options (as presented in figure 1) and does not end up in the optimal position (Pt+1*).

TYM Microfinance institution appears to be in the middle of conditioned-viewing and discovering

organisation. It can be categorised as conditioned-viewing organisation in this paper because of the

following reasons:

• It has its own record keeping and information systems – an Management Information System

(MIS) was built and tailored for the organisation use only; reports are required from all

branches; offices and departments at regular basis. Thus, the data is presented impersonally

• Rules and regulations are applied regularly at all work levels

• There are procedures built up for any organisational process, thus decisions are programmed

and produced most of the time to solve operational problems

Whereas TYM can also be a discovering organisation owing to its active self-detection.

• The organisation is proud to be the pioneer in the formalisation of microfinance sector in

Vietnam

• It is ready to take the challenge of exposing itself to a new environment of formal finance

with analytical strategy

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Possessing characteristics of two organisation typologies, it can be infered that TYM is currently

perceiving its operating environment as analysable. It tries to apply analytical strategy but is limited

with defender strategy while enacting environment, as organisational process has fixed with

procedures and decisions are programmed. It can also be understood that there must exist operational

boundaries for the organisational sensemaking, which are created by certain factors in TYM’s

operation. In line with Copestakes’ arguments, the organisation has to review its preferences and

goals within these boundaries in order to adjust its performance. The analysis shall depict the way an

organisation with active self-detection make sense of related factors in its environment and finds the

balance point within its organisational boundaries for its operation. In the framework of this analysis,

some important concepts shall be used with the definitions as follows:

• Clients: are people who are using microfinance services from a microfinance institution.

Those services may include loans; savings; insurance and so on.

• Organisational boundary: is the limits that the organisation has to function within. These

are comprised of multiple factors and challenges that an organisation needs to negotiate while

operating.

• Organisational members: are key members of the organisation. As this research investigates

the organisational sensemaking at operational level only, organisational members include top-

management, heads of departments and branch managers.

Before going into details about the sensemaking process in TYM microfinance institution, it is an

instructive to give an overview of the political context and the microfinance sector in Vietnam.

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III. “In Vietnamese context,…”

3.1. The construction of political institutions

This section of the study shall give a glance of the political context in Vietnam and the way existing

political institutions are used to control the operations and activities of many organisations, including

microfinance institutions.

The Socialist Republic of Vietnam currently considers itself as a country in the transition process into

socialism, led by the one and only legitimate party – the Communist Party. The Party was established

since the fight for national independence, strengthened through wartime, communism and

modernisation. Currently, it has the ultimate influences in all other institutions of the society,

including the State, the local governments, the National Assembly, State-owned enterprises, and

numerous mass organisations. Thus, all the institutions in Vietnam follow the Communist Party’s

guidance. While there may possibly be disagreements between some state-related organisations and

agencies, conflicted entities are expected to negotiate and find agreements within the overall guidance

of the Party. Therefore, state-related organisations and agencies, especially within a locality (e.g. a

province) maintain good relations with each other and there is normally no public criticism among

state-related bodies3.

As this research shall analyse a microfinance institution,

functioning under a mass organisation, I would like to draw

more focus on the role of mass organisations in Vietnam’s

political institution. Literally translated from Vietnamese,

mass organisations are socio-political organisations, or more

3 Therefore, Vietnam has been criticised heavily for not maintaining freedom of speech by Human Rights Watch

(http://www.hrw.org/world-report/2013/country-chapters/vietnam). The press is not allowed to disagree with the

State and the Party, leading to the lack of transparency and freedom of speech. This social norm makes the

critical media crisis in TYM become very serious, when an organisation considered itself to be under the State

was criticised by a State-owned local newspaper. Bear this in mind while reading the case and event analysis.

“Centipede-leg-shaped” network

connects bureaucracy of a mass

organisation at all level together.

This network plays an important

role to enhance the influence of

the State and the Party to every

citizen.

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or less Vietnamese civil societies (Hayton, 2010, p.98). They could be understood as “the organisation

for the mass”. Currently, 44 mass organisations are functioning under Vietnam Fatherland Front,

which is basically the association of Vietnamese socio-political organisations (Vietnam Fatherland

Font, ). Large mass organisations were mostly set up by the Communist Party during the war against

French colonialism in the 1930s-1940s with the purpose of consolidating efforts of all citizens of

different classes for “the building up of socialism and the protection of the socialist nation” (Vietnam

Fatherland Front, 1983, p.1). Large and influential mass organisations include Vietnam General

Confederation of Labour for workers (or Trade Union for short); Ho Chi Minh Communist Youth

Union for the youth and Vietnam Women’s Union for women.

The hierarchial structure of mass organisations varies, but large and influential bodies like Vietnam

Women’s Union build their system together with the State’s administrative system, but more

sophisticated. They do not only have their Central Office; Provincial Offices; District Offices but they

also set up their representatives and committees at grass-root level. For example, residental women of

a street or an alley can be grouped together into a women’s union cell (tổ phụ nữ), who is represented

by a women’s union cell committee in some different community discussions4. The network of those

mass organisations is described as “local centipede-leg-shaped”, which depicts the level of penetration

of these mass organisations into the community. The Party and the State consequently use these “local

centipede-leg-shaped” networks to enhance the understanding of and the compliance to their policies

and decisions at all levels.

In 1986, Doi Moi – the economic and political transformation programme that was started by the

Party – marked the commencement of the country’s transition from a centrally planned economy to a

so-called socialist-oriented market economy (World Bank, 2012). Socialist-oriented market economy

should be understood as “the economy with diversification of methods of possessions and economic

sectors but State-owned economic sector still plays the crucial role to generate motivation and

4 TYM decided to take advantage of this organization structure in its new policy.

18

facilitate the exploitation of domestic and foreign potentials for socio-economic development5”

(Communist Party Portal, 2008). However, so far, there have been different ways of understanding

this concept. Basically, one purpose of Doi Moi and the concept of “socialist-oriented market

economy” were to alter Vietnamese economic structure by allowing private and other forms of

business to function, which were strictly prohibited in centrally-planned economy. Thanks to Doi

Moi, many people with entrepreneurship ability started their home businesses, which then ignited the

social demands for credits. Furthermore, Doi Moi also introduced more open-door policies that gave

ways to many initiatives from abroad to be introduced into the country, especially in poverty

eradication (i.e. “foreign potentials” as the definition says). It was in this period when microfinance

came to Vietnam in the form of projects with international aids in prestigious international NGOs or

influential Vietnamese mass organisations. It satisfied the State as a method for poverty eradication

and helped meet the local’s demands on credits (Nguyen et al, 2013, p.63).

3.2. Microfinance sector in Vietnam

After 20 years, microfinance has proved to be effective enough that it remains in the national target

programmes for poverty eradication since 1998. Most of the resources from such national target

programmes were allocated to state-owned development banks or formal microfinance providers.

Therefore, microfinance sector in Vietnam, so far, has been fragmented and operating under uneven

competition with two largest state-owned development banks (Vietnam Bank for Social Policies and

Vietnam Bank for Agriculture and Rural Development). They enjoy subsidised funding from national

budget to disburse soft loans for the needy nationwide and currently dominate the market with the

services supplied to 50% of the low-income in the country. Another regulated microfinance provider

is the People’s Credit Fund. Together, these three formalised entities encounter 90% of micro-credit

market share (Planet Rating, 2010, p.2). These three formal microfinance providers are operating

under the supervision of the State Bank of Vietnam and regulated under Law for Credit Organisation.

5 Translated by author

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This allocation of resources in national target programmes for long time has made local authority and

banking supervisor agencies in Vietnam remained biased with limited understanding about

microfinance operation. They believed that microfinance meant the State disbursing soft loans for the

poor as a means of poverty eradication and barely recognised another two types of microfinance

operation in the country, which are informal microfinance and semi-formal microfinance.

Similar to any other countries worldwide, informal microfinance exists in Vietnam in various forms,

such as moneylenders; financial support from family and relatives; or tontines or ROSCA (Rotating

Savings and Credit Association). Informal microfinance is functioning based on mutual trust and there

is no form of regulation over it.

Semi-formal microfinance is mostly small-scaled projects/ programmes of INGOs, but also

specialised non-licensed microfinance institutions such as CEP – the largest microfinance provider

under Labour Confederation of Ho Chi Minh City (of Trade Union – a mass organisation). These

semi-formal organisations do not have much financial support from the State but rely mostly on

members’ savings and donor’s funds. In 2004, Vietnam Microfinance Working Group (MFGW) was

established as the association of semi-formal microfinance institutions and programmes nationwide.

To date, it has more than 85 members (MFWG, 2013).

In 2010, TYM under Vietnam Women’s Union became the first microfinance institution in the

country to get the license for formal microfinance provision from the State Bank of Vietnam. This

means the organisation had successfully transformed itself from a semi-formal microfinance

institution to a formal microfinance provider. With this reason, and as mentioned in section 1.2 – case

selection, TYM microfinance institution has an important role in policy advocacy on microfinance

regulation in Vietnam. A study about the sensemaking process of TYM is needed in order to

understand the way an organisation struggle to maintain its balance within numerous challenges

throughout its operation.

20

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IV. Methodology

4.1. Positionality

I used to work in this organisation for three years. I am in favour of TYM’s operation and the way

they priotise social performance and clients’ satisfaction. I know all my interviewees personally. I

have access to many organisational documents that I had since I was working.

All these could bring about bias in data collection, data analysis and interpretation. However, I

perceive myself currently as an outside researcher, who would like to look at TYM’s operation with

favour but also with critical thinking.

In order to prevent any violation to the code of conduct, I do not use any data from personal sources.

When the information comes from other sources rather than the interviews or the provided documents,

I shall denote and explain. No proper name is released anywhere in this paper and the list of TYM’s

documents in use in my paper is provided in Appendix 5.

4.2. Interviews

Semi-structured interviews played the main source for primary data in my research. Seven interviews,

each last around 1 hour to 1.5 hour, were conducted during two weeks of July via Skype with two

directors; four heads of departments (or team leaders) and one German external consultant6, six of

them were based in Hanoi during the time of the interviews while the other one (the German

consultant) was in Germany. Six interviews with Vietnamese nationals were conducted in Vietnamese

and the interview with the German consultant was in English.

6 The German consultant has been working in TYM on daily basis for nearly ten years, providing management

consultancies directly to the management and board of directors. He/She is an influential person in the

organisation and playing the role of insider-outsider in TYM’s decision-making process. At the same time,

his/her existence in the organisation represents the influence of the German Savings Bank, who sent him/her

there in their technical assistant project. Thus, his/her response is crucial.

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The interview questions focus on their perspectives about microfinance operating environment in

general and then delve deep into the two organisational events (i.e. the critical media crisis and the

cooperation research). I started with general questions about the events and how they remember about

such events so far. After they warmed up with their memories about the events, I went on asking

about how they thought they had acted that way. All respondants were at comfortable mode of

sharing. Their answers came out in various forms and finally set a strong connection between the two

events, which I had not expected before.

However, this method of phone interview posed some limitations for the data I have collected. Firstly,

the communication sometimes was interrupted owing to poor internet connection or technical errors.

This made the interviewees distracted or sometimes information was missed. Secondly, the lack of

face-to-face communication appeared to put a barrier on mutual trust, as the interview questions

delved deep into one sensitive event. Despite my positionality, the lack of eye contact and facial

communication prevented me from futher interpreting the respondants’ viewpoints

It happened three times that I could not collect the data that I planned. The first time was with “Low-

bat-phone”, whose phone ran out of battery, and we needed to continue on the following day. The

second time was with “Ask-my-boss”, who directly declined to answer any questions regarding the

negative event of critical media crisis. The third time was with “Errands-breaker”, who suddenly had

some errands in the middle of the talk. All these could possibly happen in a face-to-face interview but

the lack of observation prevented me from interpreting any further about these reactions.

The other four interviewees are anonimised as “After-work”; “Not-at-weekend”; “Immediate” and

“One-hour-delay” – the time they agreed to have interviews with me.

All the interviews were transcribed in the original language (six in Vietnamese and one in English).

The transcriptions were analysed with Atlas.ti. The code system was developed in English and applied

to all the interviews. No translation of any transcription is provided in this research.

23

The interview questions are annexed to this paper as Appendix 3. The list of interviewees’ alias with

some of their characteristics and summaries of the interviews are presented in Appendix 4. No proper

name is released.

4.3. TYM internal documents and reports

TYM provided me with numerous reports and internal evaluations, which were crucial as secondary

data source for my research. It should be noted that their reports and internal evaluations appeared to

have many inconsistencies. However, my purpose is not to assess the quality of such documents, but

the following:

• To have background knowledge about the organisation and the two events;

• To cross-check primary data from the interviews;

• In chapter II, I have argued that TYM bears certain features of a conditioned-viewing

organisation, thus, their internal reports and documents were supposed to reflect certain

boundaries of their sensemaking, which I planned to find out.

All the documents I accessed from TYM were about the cooperation research. Regarding the critical

media crisis, I only used the online articles which were still remain accessible and did not get formal

documents from TYM. The list of the documents that I have used in this paper is presented in

Appendix 5.

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V. Case and event analysis

5.1. Event 1: The critical media crisis

5.1.1. What happened and TYM’s enactments

In 2012, TYM was planning and organising to celebrate its 20th anniversary. During the whole year,

series of singing and dancing contests were organised for clients all over TYM’s network to select

best performances for the anniversary, which were hold on 15th of November 2012. Everyone was

eager to preprare for the 20th anniversary celebration when TYM would be granted with the First

Order Labour Medal by the Vice President of the State.

However, on the 9th of October 2012, more than one month before the ceremony, an article titled “Is

the affectionate fund affectionate?” was published in Nghe An Newspaper (the official newspaper of

Nghe An Province People’s Committee). “The affectionate fund” is the unofficial name of TYM

Microfinance institution among its clients. This article criticised TYM charging high interest rate on

the poor and low-income women but claiming to be a pro-proor programme. Following this article,

there were a series of investigative articles that accused TYM of not organising any social activities;

not having relations with the Women’s Union; and of tax evasion. On the whole, this series of article

seriously blaimed TYM for giving a bad name for pro-poor programmes.

As Weick (1988, p. 228) argues that in crisis situation, organizations shall act within their limited

epistemology. This happened clearly in TYM as all the interviewees shared their feelings of surprise

and sadness, though the intensity of such feelings varies. The inexperienced organisational members

in dealing with media decided to make its first enactment as:

• Sending an official dispatch (letter) to Nghe An Newspaper, explaining about microfinance

operation without any consultancies on proper discourses with media;

• TYM management travelled to Nghe An and asked for an appointment with the journalists

and the Newspaper editorial director.

25

These efforts were of no use as the Newspaper was not persuaded and they continued publishing their

investigative articles on the next issuances. To make matters worse, other newspapers started sending

journalists to Nghe An and also to TYM for their investigation. The crisis went from local newspapers

to central newspapers, and became more serious when Nhan Dan Newspaper – the official newspaper

of the Communist Party – started raising its voice about their doubts about TYM’s operation.

At this stage, TYM started to seek for support from other entities for the second enactment:

• TYM involved Vietnam Women’s Union in the next negotiation and talks with Nghe An

Newspaper, emphasizing the identity of TYM as part of Vietnam Women’s Union;

• It set up relationships with other news agencies at different areas and provinces and ordered

other positive articles about TYM to be published;

• German Savings Bank for International Cooperation (SBFIC), the closest donor whose

representative is the permanent Germany consultant working on daily basis in TYM, sent its

expert on marketing and public relations to TYM for one week to provide short-term

technical assistance in emergency.

After these efforts, the conditions became stable. Vietnam Television Channel 1 (VTV1) broadcast

programmes about positive impacts of microfinance services; Nhan Dan Newspaper published

another article on how microfinance helped ethnic women escape poverty; the series of negative

articles on Nghe An newspaper terminated. However, the State still remained doubtful and kept

silence. The most important guest of TYM’s 20th Anniversary – Madame Vice President of the State –

refused to attend the ceremony and sent her representative to grant the First Order Labour Medal to

TYM’s leaders.

After the crisis was settled down, in the following month, TYM strengthened its communication

division under an appointed spokesperson of the organisation. This division is to handle all the

publications and announcement of TYM as an organisation in different communication channels,

including an Internal Newsletter, the official website and a Facebook page. Communication division

26

also has to keep good relationships with the press and media, selecting close contacts with local and

central presses so that journalists can be sent to TYM’s events and nice articles would be published

afterward. Later in the following year, SBFIC sent an intern for 3 months, who had strong expertise in

marketing and media relations; to assist the implementation of these strategies.

In the interviews, when I questioned about what had changed in TYM after this event, the directors

responded that they had better understanding on public relations and media relations so far.

Furthermore, they acknowledged the role of Vietnam Women’s Union and SBFIC in supporting them

getting over the crisis. It can be inferred that TYM did not realize the importance and potency of the

media as an important stakeholder. Plus, the traditional paradigm was that TYM had much political

support from Vietnam Women’s Union and possibly the State. Thus, TYM assumed that its

legitimacy was unlikely to be challenged, since media control is relatively aligned with the State’s

interest in Vietnam. However, apparently, TYM was wrong and the media was still able to challenge

its legitimacy.

In the interview with One-hour-delay, he/she also affirmed that TYM had cooperated with Vietnam

Microfinance Working Group7 to organise a scientific workshop and invited local authorities,

journalists, researchers, academia and microfinance practitioners to discuss about social performance

and sustainability of microfinance. One key purpose of the workshop was to obtain greater support of

the regulators and media for microfinance through increasing awareness. After the workshop, a

scientific article on the sustainability of microfinance was published on Vietnam Banking Journal by a

researcher based on a keynote speech.

Immediate and One-hour-delay both shared a reflective point on the organisation’s operation. They

agreed that there were parts of the critical media that raised an alert signal for them on their limited

efforts in organising training and community activities for clients. This interpretation of the

organisation paved the way for their conduct of the cooperation research afterward.

7 The association of microfinance institutions in Vietnam, refer to section 3.2

27

5.1.2. Organisational sensemaking and organisational boundary in this event

a. The features that the organisation possesses:

TYM is categorised in this paper as standing between a discovering and a conditioned-viewing

organisation. What the organisation had done during this critical media crisis has shown features of

both organization types. The analytical strategy in long-term problem solving and the yearning for

organisational autonomy are parts of a discovering TYM, while the defending mode among

organisational members as a conditioned-viewing organisation could also be detected.

TYM had applied an analytical strategy in long-term problem solving by organising scientific

workshops and working with academia to enhance public understanding. This is clearly a very

dynamic way of interacting with the environment and being active in enacting environment. Scientific

community can provide legitimacy to the microfinance because they are neutral and unbiased, thus

allaying fears that microfinance is unprofessional. Furthermore, it is a wise move to cooperate with

academia that have objective perspectives and can assert influence with scientific articles. This does

not only help TYM to improve its image but also makes microfinance in general gain more trust

among the public and the authority.

The yearning for organisational autonomy could be found in the first enactment and the action of

setting up a specialised division for media relations. The first enactment revealed that the organisation

aimed at solving the media crisis on their own, while the follow-up action of assigning full-time staffs

on media relations shows that TYM is enhancing its ability to handle public relations without the

involvements of other entities. Actually, this way of sensemaking is the result of long time negotiation

for autonomy of TYM with Vietnam Women’s Union.

Owing to the special identity of TYM, it has been trying to be independent and self-sustainable but at

the same time, it needs the brand name of “being part of Vietnam Women’s Union” to gain public

trust. On one hand, the organisation wants to be remembered as a professional microfinance

institution with its “committed, creative, efficient” staff cadres (TYM motto), who are well trained

28

with special skills and ethics to work in microfinance. It does not want to be remembered with staff

cadres as “movement staffs”, who work for mass organisation at grass-root levels as these latters are

mainly trained for the Party and State’s propagandas. In the past, TYM used “movement staffs” of

Vietnam Women’s Union for their operations and it was not effective. Books were poorly kept,

money was lost and staffs were not committed. On the other hand, TYM needs Vietnam Women’s

Union for public trust. With the “brand name” of being under Vietnam Women’s Union – the largest

mass organisation in Vietnam, TYM can experience smooth expansion to new regions and easily gain

public trust from both the local and the authority. With the help of Vietnam Women’s Union, TYM

could hold a better image in debates with press as well as other State’s agencies.

Thus, the level of autonomy of the organisation is always under question and contested. The yearn for

further autonomy is continuously under negotiation with a pull force from Vietnam Women’s Union

to keep the organisation under the influence of its institution.

The defending mode among some of the organisational members showed the other aspect of a

conditioned-viewing organisation in TYM. This is found in two interviews with Ask-my-boss, and

One-hour-delay. Ask-my-boss declined directly to answer any questions related to the critical media

event though he/she was deeply involved with handling the issue8. One-hour-delay invoked the

rhetoric commonly used to describe microfinance: “This is a new concept” (e.g. microfinance, mass

organisation, media relations, and so on). I could argue that this is not right as microfinance came to

Vietnam for more than 20 years, mass organisations were functioning in the country since the 1930s,

media relations were applied by many corporations. However, it can be understood that this mindset

of defending exists in many practitioners and it prevents them from trying new interventions.

These three features (i.e. the analytical strategy in long-term problem solving, the yearning for

organisational autonomy and the defending mode among organisational members) create a factor that

TYM sets for itself in its operation. In this paper, I would call it “organisational mind-set”.

8 Author’s knowledge based on my work experience in TYM

29

b. The factors from the environment

According to what happened during this critical media crisis, two environmental factors can affect to

the organisational boundary of a microfinance institution like TYM. Those are the lack of

understanding about microfinance among the regulators and the influence from donors.

The critical articles has revealed a serious lack of understanding about microfinance among

regulators. This hinders a non-facilitating policy environment for a formalised microfinance

institution like TYM. This coherences with the response of interviewees when they shared their

thoughts about the operating environment that TYM is functioning within. As the articles went along,

the journalists had made many interviews with local authority; local women’s union, officers of the

Taxation Department and the State Bank of Nghe An province while they were investigating about

TYM’s operations. Assumed that the journalists followed their code of conduct and did not make up

answers from respondants, it was hard to understand why an officer of the State Bank of a province

did not know about such a regulated microfinance institution, not to mention TYM was the first and

only one in the province. Similarly, they accused TYM of tax evasion, which was false because the

organisation was tax-exempted for two years after the license accordance to a pilot programme of

Ministry of Finance.

These incidents led to the discussion on the policy environment for microfinance in Vietnam. The

policy environment is the attitude of government and regulators toward microfinance operation,

represented through the supportive or unsympathetic regulations and agendas for microfinance that

they approve (Copestake, 2005, p.163). From the perspective of the interviewees, they think the

policy environment is not enough facilitating for microfinance institutions to develop because:

• Four years after TYM became the first formalised microfinance institution, there has been

only one other institution licensed. This is a very limited quantity in comparison with

hundreds of microfinance providers nationwide.

30

• The biggest microfinance institution in the country decided not to operate under banking law

for the time being, withdrawing its license application. As a matter of fact, the authority and

supervisory bodies cannot do anything because there is no legal requirement for the licensing

application.

• Despite the lack of published data, there is a raising fear among microfinance practitioners

that the sector is shrinking after the first institution was formalised.

Consequently, the non-facilitating policy environment also leads to either the lack of guidance and

circulars specifically for microfinance or the improper requirements enforced in the organisation.

Regarding the lack of guidance, Errands-breakers could not think of many difficulties in his/her job

except for the lack of guidance in organisation structurism. Again and again, he/she said many of

his/her tasks were stuck due to this insufficience of the legal framework. Regarding the improper

enforcement, micro-insurance is strictly not allowed as a product of TYM9 . This enforcement is

ridiculous because it increases risks for both the organisation and the clients and seriously affects the

organisation’s social performance. Another improper policy for microfinance institutions is the

requirement for many secure and modern facilities and infrastructure as they assume a licensed

microfinance institution is a commercial bank. Thus, this forces the organisation to increase its

expenditure on fixed assets rather than on social performance activities.

However, in order to deal with the non-facilitating policy environment, TYM with its analytical

strategy has started cooperating with researchers and academia to conduct scientific studies,

workshops and publish academic articles on sustainability of microfinance. This can be a very

effective method of policy advocacy that can rise the awareness and support of policy-makers on

microfinance operation.

9 This means currently all microcredits that TYM disburses are not insured. The most serious cases happen

when the clients die, their families have to repay for them. In the past, when microinsurance was provided, the

loan was overwritten and the family received the installments that the clients had paid.

31

Donors’ influence could be found in this event as an apparent support, but there is likely a

threat of the organisation being confused by donors’ wills. The support from the German project

of SBFIC played an essential role in the effort of rehabilitating the media crisis in TYM. They sent

their key marketing expert to TYM for a week to help solve the emergency, and later assisted the

implementation of TYM’s communication strategy with a German intern with work experience in

marketing and public relations. Apparently, without SBFIC, TYM could have never received such

world-recognised consultation that met their demands at the right time. In the interviews, this support

from SBFIC was heartfully acknowledged by One-hour-delay and After-work.

Regarding the attitude of TYM towards donors, it appeared that TYM’s organisational members truly

appreciated donors’ funding. One-hour-delay responded that the availability of donor’s funds was one

of the advantages that TYM had as a licensed microfinance institution. Besides SBFIC, TYM has

recently cooperated with other “giants” such as Asian Development Bank (ADB); International

Financial Coporation (IFC); The Agence Française de Développement (AFD); Rabobank Foundation

(the Netherlands) on mostly human development, training and social activities for clients.

Although it is a good sign that TYM is now cooperating with important players in international

development, it seems that the organisational members do not have high awareness of donors’

influence. As the saying goes “no gift is pure gift”. Donors usually exert influence on the organisation

through financial support, and consequently channelling their social performance ideology into such

organisation receivers (Parry, 1986). In management studies, Pfeffer and Salancik (1978) with their

resource dependence perspective also proposes that resource givers can maintain their power by

providing the hard-to-obtain resources to the resource taker organisations.

Take an example of the most influential on-going international project in TYM currently – the

trilateral technical support agreement between Vietnam Women’s Union (TYM was authorised);

German Savings Bank or Sparkassenstiftung (SBFIC represented) and Centre for Agriculture and

Rural Development, the Philippines (CARD-MRI). For almost ten years, under this trilateral

32

agreement, the long-term German consultant, who was interviewed for this research, is sent to TYM.

During the year, numerous short-term experts from the German Savings Bank and from Filipino

CARD are sent to TYM for technical support. Thus, through this close accompanion of two large

partners, TYM gradually developed its social performance, duplicating mainly CARD’s model

through SBFIC’s money.

It may be argued that TYM can develop that way as long as the model works in Vietnamese context.

However, in the interviews, TYM organisational members expressed a different philosophy in social

performance from their external consultant. When asked about the future direction for social

performance in TYM, Not-at-weekend firmly thought it would be financial inclusion, however, One-

hour-delay and After-work were much more ambitious to include poverty outreach, client protection

and financial inclusion. Not-at-weekend can be considered as the closest consultant that TYM may

have from donors and this difference still be found in him/her. Then it can be predicted more serious

gaps may exist between TYM’s ideology and other donors’. As the number of donors that TYM is

working with is increasing, this may create difficulties for the organisation in the cooperation with

international donors.

In brief, this section provides the analysis of recognized factors for TYM Microfinance institution that

emerged during the rehabilitation effort of a media crisis. In this event, the organization is functioning

within a boundary set by three factors i) its organizational mind-set, ii) the non-facilitating policy

environment and iii) the possible influence from international donors.

However, referring back to figure 1 (Copestake’s framework on strategic options in microfinance

operation), it appears that this event occurred, leading TYM to reposition toward Pt+1#, which means

it applies the trade-off strategy on social performance, as TYM’s clients were not actively involved in

the enactment. In the following section, the cooperation research, commenced by TYM, could be

understood as an effort of the organization to recover its good social performance.

33

5.2. Event 2: The cooperation research

5.2.1. What happened and TYM’s enactment

Throughout the year of 2013, TYM was conducting research on bettering its operation. Although the

rationale for the research was not clearly stated in documents, responses from the interviews revealed

the motives of conducting this study. Immediate and One-hour-delay reasoned clearly that the

research was launched because of what they had recognised in the critical media crisis, which

happened in late 2012. Their interpretation of the organisation after the media crisis included: i) There

must be some problems in TYM’s programmes such as training for clients, so that some clients cannot

receive benefits from TYM’s social activities; ii) Vietnam Women’s Union played a very active role

in the crisis rehabilitation, but the current cooperation between TYM’s branches at Vietnam Women’s

Union at local levels remained loosely connected.

From this interpretation, the enactment of TYM was to launch a home-tailor study with ambitiously

six objectives10 for a team of initially 12 people from departments at Head Office, branches,

transaction offices and even one technical officer (or loan officer)11 in March 2013. According to the

official documents that TYM provided me, the timeline for this research and its phases could be

presented in the following graph:

10 The objectives were: 1) to determine new vision, mission and target groups; 2) to determine the cooperation

procedure between TYM and Vietnam Women’s Union; 3) to determine the caseload of one technical officer

(number of clients that a technical officer should manage); 4) to determine a 5-year community development

strategy; 5) To budget the expenditure as commission for Vietnam Women’s Union at all levels and for center

leaders; 6) To calculate the minimum interest rate for loans. Attention: commissions for the women’s unions and

center leaders were included as one of the initial research objectives. 11 The members of the research team were changed in the following phases.

34

The research produced several recommendations for policy amendment within TYM, but when asked

about the most remarkable change after this research, all interviewees agreed that it was the shift in

the role of TYM’s centre leader. This representative of the centre used to be a client who was elected

by her peers in the centre, but currently, she must be a member of the women’s union cell at the grass-

root level12.

Regarding other research questions, the study recommended the target groups for TYM’s clients are

those whose monthly income is up to VND 2,6 million (equivalent to £74)13; the caseload for one

technical officer (or loan officer) is increased from 350 to 500 clients. The interest rate was changed

from monthly basis to weekly basis, but was not much different from the previous one. The study

confirmed that TYM’s using flat interest rate is not violating credit laws. Although the research

recommended centre meetings be organised on quarterly basis and the admission of male members,

these were not approved by TYM management and Vietnam Women’s Union.

12 Refer to Appendix 1 for the organization structure. 13 This was calculated based on GDP per head of Vietnam. However, TYM is supposed to function in rural and

poor areas, where the average income should be lower than the country’s average. Plus, the inequality in

Vietnam is remarkable (Cao and Akita, 2008; Minot, Baulch and Epperecht, 2006), there may raise a question

on the suitability and validity of this figure. However, this research does not intend to assess TYM’s reports.

TYM-wide rollover

3/2014 8/2014

(to date)

Study on

TYM current

operation

3/2013

28/3/2013: Report

on TYM current

operation to VWU

28/8/2013: Regulation on the cooperation

between TYM and VWU at all levels

12/1/2014: Report

on pilot evaluation

to VWU

Pilot testing in Viet Tri

Figure 3: The cooperation research timeline

*VWU stands for Vietnam Women’s Union

35

Claimed as an achievement of this research, the regulation on the cooperation between TYM and

Vietnam Women’s Union at all levels was approved by Vietnam Women’s Union President. This

regulation thereafter requires Vietnam Women’s Union at all levels (i.e. Central; Provincial; District;

Commune and grass-root) to provide TYM with the strong support and close commitment to TYM’s

activities. This regulation also requires TYM centre leaders to be members of the committee of the

grass-root women’s union cells.

5.2.2. Organisational sensemaking and organisational boundary in this event

The action of starting a research was another example of TYM as a discovering organisation with its

analytical strategy in long-term problem solving. This factor has been analysed in the previous event.

In this section, two more environmental factors that affect the organisational boundary are analysed,

which are the influence of Vietnam Women’s Union – a political institution of the country, and the

challenges of a competitive market.

Vietnam Women’s Union always exerts influence to TYM’s autonomy. It can be observed that the

regulation on the cooperation between TYM and Vietnam Women’s Union was issued too early. The

document was approved and signed by the President of Vietnam Women’s Union on 28th August

2013, almost 4 months before the evaluation on the pilot testing was done.

At the first glance, this decision appeared to be not of appropriate timing because the shift in the role

of TYM’s centre leaders was still being test on August 2013 and no evaluation had been conducted

yet, but Vietnam Women’s Union approved the roll-over of this cooperation and required Women’s

Union at all levels to support TYM as the research suggested. However, in fact, this clarifies the

motivation behind this research. As a way to negotiate the level of TYM’s autonomy, the whole

research was in order for TYM to take concrete steps to build closer relationships with Vietnam

Women’s Union.

36

It can be inferred that after the critical media event, TYM could visualise how supportive and pro-

active Vietnam Women’s Union could be and it was trying to take advantage of the network of the

Women’s Union. By this move, TYM is more integrated into Vietnam Women’s Union and thus this

means the organisation has had its autonomy affected. The expectation of TYM was to make use of

the strengths of Vietnam Women’s Union “movement staffs” – their communication and training

skills, so once they work as TYM’s centre leaders, they can deliver training programmes of Vietnam

Women’s Union to TYM’s clients. This could therefore enhance TYM’s social performance.

However, as TYM always yearns for autonomy, TYM denies to increase dependence on its mother

organisation. When asked about the changes in the relations with Vietnam Women’s Union after the

cooperation research, one of the interviewee said: “It is not that I ask for your help or you ask for my

help. It is a memorandum of understanding signed between TYM and Vietnam Women’s Union at all

levels, rights and obligations of both sides are stated clearly.” This statement shows that TYM

positions itself in an equal role as Vietnam Women’s Union (they are two parties in one memorandum

of understanding). At the same time, TYM has facilitated a better cooperation and better relationships

between the two networks of TYM and Vietnam Women’s Union at local levels. The clients’ election

system at centres was replaced by appointing a “movement staff” of Vietnam Women’s Union as

centre leaders14. This can be understood as a slight twist in TYM’s clients’ policy in its negotiation

with the political institution. Furthermore, the constraint set by the influence of Vietnam Women’s

Union could also be considered as a pull force to prevent TYM from mission drift.

Another environmental factor was the challenge from a competitive market, which made TYM

extend its target groups, increase workload for its technical officers and amend the norminal

interest rate. It can be inferred that TYM is also striving to earn enough profit from its operation

business. The fact that it extended its target groups could be understood as an effort to extend its

14 TYM affirmed that they had explained and mobilized clients to agree with this shift before executing. They

have also recognized some weaknesses of this scheme already.

37

market to include not only the poor, but also the low-income and small and medium entreprises as

well (as they are planning to launch an SME loan product).

From the interviews, Ask-my-boss expressed his/her number one concern in his/her job to be “the

competitors” (he/she mentioned “the competitors” 7 times in 2 anwers). This is understandable as

other research on Vietnamese microfinance market showed the unbalanced market share of 90% to be

occupied by Vietnam Bank for Social Policies; People’s Credit Fund and Vietnam Bank for

Agriculture and Rural Development. To make it worse, commercial banks started their downscaling

by providing microcredits and microsavings in rural areas (Nguyen et al, 2013).

Similarly, One-hour-delay shared a permanent concern on interest rate. The word “interest rate” was

repeated 13 times in two answers. It could be inferred that TYM has been very seriously and carefully

considering about the interest rate as they understand this rate can directly affect their clients. With

this careful consideration, it was no doubt that TYM became angry when the critical media event

criticised it to charge exceptionally high interest rate on poor people.

Moreover, TYM hardly receives financial support from Vietnam Women’s Union or the State despite

being identified as part of the mass organisation. In 2011, TYM managed to be granted VND 50

billion (or about £1.5 million) for equity from the national budget. This is by far the one and only

financial support that it had from the State through Vietnam Women’s Union since its establishment,

inspite of the fact that microfinance has been a component of national target programmes since 1998.

In brief, in this event, two factors that affect organisational boundary in TYM were the influence from

Vietnam Women’s Union and the market constraint. Through this enactment, TYM had its autonomy

affected in order to enhance its social performance through the use of Vietnam Women’s Union

“centipede-leg-shaped” network. At the same time, the research could be a preparatory step for the

organisation to deal with market constraints.

38

Back to figure 1 (Copestake’s framework on strategic options in microfinance operation), it appears

that the organization is trying to reposition itself upward, which means it is applying the current

client-first strategy (financial performance should not get worse). However, after the critical media

event, the organization was positioning around Pt+1#, the social performance trade-off point. It could

be understood that this is an effort of the organization to pay more attention to the clients and its

social performance in its sensemaking to redirect the organization to the optimal position.

39

VI. Social performance - Synthesis and discussion

When writing a guideline about social performance management for microfinance institutions,

Simanowitz (2005, p.6) points out four objectives that an organisation shoud focus on, which are

intent and design, activities, output and outcome15. Superfacially, it looks as if the organisation can

successfully deliver their social mission on its own, however, all the four listed objectives can be

influenced by other factors that exert influence on the organisations in their operation. Therefore,

social performance, despite being crucial in microfinance operation, can be frequently affected by

other factors and boundaries that arise in the organisation’s operation. Social performance

management in a microfinance institution must be a complicated process. For social performance

assessment, it is needed a comprehensive tool set that takes into account the struggle of the

organisation to maintain their balance.

From Simanowitz’s viewpoint, the organisation may seek to achieve good social performance but the

market conditions may prevent them from lowering interest rate. Financial constraints may force them

to increase the caseload of technical officers. The methods of providing services (i.e. activities) may

need altering, for example, in TYM’s case, the organisation needs to use the local “centipede-leg-

shaped” network of Vietnam Women’s Union to deliver social services to the target groups. The

output of its services is being stretched as the organisation aims at expanding their market shares, so

that they need to recruit low-income people and small and medium enterprises as the potential clients.

15 1) Intent and design: What does the organization seek to achieve; how are services and performance designed

toward this end; 2) Activities: How will services be provided to target clients through a specific organisational

structure and designed to reach organisational objectives? 3) Output: What services are delivered to whom –

breadth and depth of outreach. What is the quality of service? Are they sustainable? 4) Outcome/ impact: What

changes result from the services provided? What are the longer-term sustainable changes produced by these

outcomes? What are the unintended consequences? (Simanowitz, 2005, p.6)

40

This segmentation can be understood as to better meet clients’ demands but also to strive for the

sustainability of the organisation16.

In the case of TYM Microfinance institution, it can be said that the organisational members have

considered the related boundaries for microfinance operation in Vietnam and the interrelation among

them. Their decisions reflect the result of negotiation process and the effort to balance the

organisation within the boundary of many factors. Therefore, there are possibilities that in some

certain situations, the organisation cannot manage to keep social performance as the first priority.The

following flow chart represents the organisational boundary of TYM in its sensemaking:

The diagram aims at showing the complexity of the interaction among the boundaries of TYM’s

organisational sensemaking. In the diagram, the interactions between factors are represented by

arrows connecting boxes. It can be seen that different factors can influence the organisational

boundary at different level of intensity. The factors can also interact with one another to generate a 16 This section shall not discuss about Simanowitz’s last point – outcome/ impact because: i) this is a

complicated issue; ii) there have been many impact evaluation missions conducted in TYM by SBFIC, CARD,

IFC, Planet Rating; Planet Finance; Cerise using different methodologies, but TYM has not finalised which

methodology they would use for their internal impact management.

Org. mind set (Yeaning for autonomy; analytical strategy

for long term problem solving; defending mode)

Donor’s influence Vietnam Women’s

Union

Policy environment Market environment

(Competitors; interest rate)

Figure 4: Microfinance sensemaking boundaries and their interactions

41

combined effect to the organisational boundary. For example, market environment and policy

environment have a close link as they can interact with each other and generate a combined influence

on TYM’s social performance. However, market environment has little affect on donor’s influence.

Similarly, market environment may affect TYM’s financial performance, thus to its social

performance, but may not exert much pressure on the organisational mind set.

Another important purpose of this diagram is to show the exposure of social performance to other the

effects of other factors. It can be seen that social performance may be influenced by any of those, or

the interaction among the external factors may lead to a combined effect on social performance. This

explains why it is very challenging for the organisation to continously maintain good social

performance.

Therefore, in the sensemaking process, an organisation needs to consider all these factors in its

operation and there are circumstances that their first priority is not social performance. Consequently,

this choice will lead to the short-term trade-offs and bring about some impacts on social performance.

Therefore, any attempt to assess social performance should consider the comprehensive organisational

boundary that the microfinance insitution is functioning within to have concrete evaluation of its

performance.

42

VII. Conclusion

In conclusion, this paper has discussed the sensemaking process in TYM microfinance institution

through two selected events, which are “the critical media crisis” and “the cooperation research”.

Through the analysis of the organisation’s sensemaking during these two events, I have found out four

environmental factors that affect TYM’s microfinance operation besides social performance. Those

are policy environment, donors’ influence, market environment, the influence from Vietnam

Women’s Union. Furthermore, organisational mind set is another factor that TYM develops for itself

thanks to its own characteristics.

While operating, a microfinance institution like TYM needs to find its balance point within the

boundary that consists of different factors. These factors exist and interact with one another,

continously exerting influence on the organisational boundary and its social performance. This

explains why social performance in a microfinance institution remains a challenge to implement and

assess.

As TYM’s Chairwoman said in one staff meeting: “Directing a microfinance institution is the same as

directing a ship in the ocean. The social mission leads the way we go, but we need to steer when

icebergs come.” The politics of microfinance organisational sensemaking is the arts of finding the

balance points for the organisation, accepting short-term trade-offs for long-term social mission.

--------

43

REFERENCES

Banerjee, A. V., Duflo, E., Glennerster, R., & Kinnan, C. (2013) The miracle of microfinance?

Evidence from a randomized evaluation.

Barefoot collective (2009) The Barefoot guide to Working with Organisation and Social Change,

Available at: http://www.barefootguide.org/ (Accessed: 10 August 2014)

Bateman, M., & Chang, H. J. (2012) Microfinance and the illusion of development: from hubris to

nemesis in thirty years. World Economic Review,1(1), 13-36.

Cao, T. C; Akita, Takahiro (2008) Urban and rural dimension of income inequality in Vietnam, GSIR

WORKING PAPERS, International University of Japan

Communist Party e-Portal (Cổng thông tin điện tử Đảng cộng sản) (2008) Nghị quyết Hội nghị lần thứ

sáu Ban Chấp hành Trung ương khoá X về tiếp tục hoàn thiện thể chế kinh tế thị trường định

hướng xã hội chủ nghĩa. Available

at http://dangcongsan.vn/cpv/Modules/News/NewsDetail.aspx?co_id=30404&cn_id=206549

(Accessed: 20 August 2014)

Copestake, J. (2007) Mainstreaming microfinance: social performance management or mission

drift? World Development, 35(10), 1721-1738.

Copestake. J (2005). ‘Organisational determinants of social performance’ in Copestake. J, Greely. M,

Johnson. S, Kabeer. N, Simanowitz. A (2005) Money with a mission – Microfinance and

poverty reduction, Volume 1, ITDG Publishing, Institute of Development Studies, pp. 157-

177

Daft. R and Weick. K (1984) ‘Toward a model of organisations as interpretation systems’ in in

Weick. K (2007) Making sense of the organisation, Blackwell Publishing, pp. 241-258

Dichter. T, Harper. M (2007) What’s wrong with microfinance Practical Action Publishing

Duvendack. M, Palmer-Jones. R, Copestake. J, Hooper. L, Loke. Y, Rao. N (2011). Systematic

review: What is the evidence of the impact of microfinance on the well-being of poor people?

London: EPPI-Centre, Social Science Research Unit, Institute of Education, University of

London.

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Government e-Portal (Cổng thông tin điện tử Chính phủ), ‘Hệ thống chính trị’ in Hiến pháp

(Constitution). Available at

http://www.chinhphu.vn/portal/page/portal/chinhphu/NuocCHXHCNVietNam/ThongTinTon

gHop/hethongchinhtri (Accessed: 25 August 2014)

Harper. M (2007) ‘What’s wrong with groups?’ in Dichter. T, Harper. M (ed.) What’s wrong with

microfinance Practical Action Publishing, pp. 35-48

Hayton, B. (2010). Vietnam: rising dragon. Yale University Press.

Ho Chi Minh Communist Youth Union (2007) Charter. Available at

http://doanthanhnien.vn/newsdetail/DoanTNCSHCM/9554/%C4%91ieu-le-%C4%91oan-tncs-ho-chi-

minh.htm (Accessed: 26 June, 2014)

Hulme. D (2007) ‘Is microdebt good for poor people? A note on the dark side of microfinance’ in

Dichter. T, Harper. M (ed.) What’s wrong with microfinance Practical Action Publishing, pp.

19-22

Mersland. R, Strøm, R. Ø/ (2007). Microbanks: Ownership, performance and social trade-offs – a

global analysis, Adder University College and Østfold University College. Available at

http://mpra.ub.uni-muenchen.de/2063/

MFWG (2013) Background of Vietnam Microfinance Working Group, Available at:

http://www.microfinance.vn/about-mfwg/website (Accessed: 10 August 2014)

Minot, N., Baulch, B., & Epprecht, M. (2006). Poverty and inequality in Vietnam: Spatial patterns

and geographic determinants. Washington, DC: International Food Policy Research Institute.

Mosse, D. (2005). Cultivating Development: an ethnography of Aid Policy and Practice

(Anthropology, Culture and Society Series)

Nguyen. K A, Le, T T et al (2013) Mức độ bền vững của các tổ chức tài chính vi mô tại Việt Nam –

Thực trạng và một số khuyến nghị, Giao Thông Vận Tải Publishing, Vietnam Microfinance

Working Group

Parry, J. (1986). The gift, the Indian gift and the ‘Indian gift'. Man, pp. 453-473.

45

Pfeffer. J, Salancik G. R. (1978) The external control of organizations: A resource

dependence perspective. New York, Harper and Row, pp. 39-60

Planet Rating (2010) TYM Rating Report

Simanowitz, A., & PAWLAK, K. (2005). Social Performance Management in Microfinance:

Guidelines. Imp-Act, Institute of Development Studies.

TYM (2012) TYM – a portrait

TYM (2013) Báo cáo nghiên cứu cải tiến hoạt động TYM (dated 28 March 2013)

TYM (2014) Báo cáo đánh giá thí điểm cải tiến hoạt động TYM tại Việt Trì (dated 12 Jan 2014)

Vietnam Fatherland Front (1983) Charter. Available at:

http://www.mattran.org.vn/home/gioithieumt/gtc4.htm (Accessed: 26 June, 2014)

Vietnam Women’s Union (2012) Charter. Available at:

http://www.hoilhpn.org.vn/newsdetail.asp?CatId=251&NewsId=18267&lang=VN (Accessed:

26 June 2014)

Vietnam Women’s Union (2013) Quy định về công tác phối hợp hoạt động giữa Hội liên hiệp phụ nữ

các cấp và Tổ chức tài chính quy mô nhỏ TNHH MTV Tình Thương (TYM) (dated 28 August

2013)

Weick, K. (1995). Sensemaking in organizations (Vol. 3). Sage.

Weick. K (1977). ‘Enactment process in organisations’ in Weick. K (2007) Making sense of the

organisation Blackwell Publishing, pp. 179-206

Weick. K (1988). ‘Enacted sensemaking in crisis situations’ in Weick. K (2007) Making sense of the

organisation Blackwell Publishing, pp. 224-236

World Bank (2012). Market-economy for a middle income Vietnam. Vietnam Development Report.

Joint donor report to the Vietnam Consultative Group Meeting. Hanoi

46

APPENDIX 1 VIETNAM WOMEN’S UNION AND THE RELATIONS WITH TYM

According to the Charter of Vietnam Women’s Union, which was approved in their 2011 National

Summit, Vietnam Women’s Union is operating with 4 management levels:

• Central level – with the Head office is based in Hanoi, Vietnam

• Provincial level

• District level

• Commune/ Ward level (or grass-root level)

(Vietnam Women’s Union, 2011)

In combination with the organisation chart that TYM cited in its annual report 2012, we could have

the following chart that shows the interrelation of the two organisations at different levels:

Report to:

Cooperate with:

TYM Head Office

Centre and groups

District level Branches

Transaction Offices

Centres and groups

Central level (Hanoi HO)

Provincial level

(64 units)

Vietnam Women’s Union

Commune level

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APPENDIX 2 BUILDING AN ANONYMOUS COMMON SPACE

The defending mode of conditioned-viewing organisation exists in TYM’s office, preventing people

to share their thoughts. Understanding that TYM is currently having staffs from diversified

backgrounds, a safe space for all staffs to share what they think about their jobs and about the

organisation’s decision can be useful for the staffs themselves to reflect on their jobs and for the

management to collect feedback and initiatives. I designed the following activities based on reflective

practice as an effort to start building an anonymous common space at TYM Head Office.

Before any of the following activities are implemented among the office staff, the staff and

management should keep themselves open-minded, keep themselves involved, ready to share and

ready to listen.

These activities have some following features:

• They should be conducted during working days, there is no need to organise a workshop/

training course;

• All the activities are anonymous;

• There is a need for a facilitator who has understanding about reflective practice to deliver

guidelines;

• People need to respect others’ stories and feelings. Do not start gossips or jokes about what

people have shared. This is a process of trust building

These are only three examples of reflective practice at workplace. The organisation is encouraged to

learn and apply more when appropriate.

1. A pin board for thoughts

Type of activity Individual reflection

Aim To collect feedback and thoughts among staff about certain issues.

Facility in need A pin board, stickers (post-it notes), colour markers and some pins

Time duration Varies

Preparation The pin board should be hung in the easiest noticeable place of the office.

Procedure

Step 1: Everyone agrees on which colour of the stickers to represent their

feelings; which colour to represent their contributions.

Step 2: The staffs feel free to take the stickers and markers any time they

48

want and write about two main things:

1) Their feelings while working – if they ever feel inspired, when? If they

ever feel enjoyable, when? If they ever feel depressed, when?

2) Their thoughts of how to improve TYM – how to make them feel positive

more often.

Step 3: The staffs pin their feelings and thoughts on the board any time they

have finished writing.

Step 4: Everyone stands together to read the feelings and thoughts on the

board. These ideas should be recorded for further sense-making process

among organisational members.

The same activity could be used to collect thoughts from staff about a potential decision or feedback

on a newly issued policy. The time allotted for this activity can vary but should not be less than one

working day so that people can reflect at their own speed. It should not be too long as well as people

will be demotivated so Step 4 can be proceeded after 3-5 working days.

2. Letter to your organisational soul

Type of activity Individual reflection

Aim This is to build agreement, understanding and sympathy between staff

and the organisation

Facility in need Blank papers

Time duration Varies

Preparation No preparation

Procedure Step 1: Each staff writes a letter to TYM’s soul on the blank paper. On

one side, he/she answers the question “What I can do for you”; on the

other side, he/she answers the question “What I want you to do for me”.

Step 2: The facilitator collects all the letters.

Step 3: The office spent some time together reading all the letters.

This activity can be used to survey staffs’ demands and detect their difficulties at work so that

management could provide support in time.

This activity is designed based on suggestions in The Bare Foot Guide. (Barefoot collective, 2009)

49

3. Image exchange (for departments)

Type of activity Group reflection

Aims This activity is specially designed for each department/ division of the

office to work together.

1) To build trust within a group of staff.

2) The ability to reflect in group and reflect as a group

Facility in need Flip charts; colour markers, crayons, colour papers, etc.

Time duration 1-2 hours. Possibly schedule as a department meeting.

Preparation A close meeting room, as the group may talk and laugh loudly, which

may affect other people, or the group may share confidential talks.

Procedure The group together draws a picture that depicts their thoughts of

themselves as a department.

Be as creative as possible. Feel free to discuss on how they will do this

together. They can discuss and agree with one idea before drawing, or

each person draw their own piece on a same flipchart and then find ways

to connect their ideas. Anything works.

This activity is suggested after the other two, because staffs need to get used to individual reflection

before they try group reflection.

Another variant of this activity is that the group draws a picture that depicts how people in other

departments think about their department. These pictures can later be shared with other departments,

so that people in different teams understand more about other people’s jobs, thus, enhancing the

mutual understanding about the organisation.

This activity is designed based on suggestions in The Bare Foot Guide. (Barefoot collective, 2009)

50

APPENDIX 3 INTERVIEW QUESTIONS

Questions to the directors: 1. Could you please introduce yourself, about your background and your work experience in microfinance? 2. How do you think about the current microfinance environment in Vietnam? Is it facilitating? How things have changed since TYM was granted the license in 2010? 3. Can you just briefly tell me what you remember about the event when Nghe An Newspaper criticised TYM seriously in 2012? How did you feel, how did you think about this? Anything changed after this event in your perspective 4. May I ask about the recent research that TYM conducted? Can you briefly tell me what it was about and its purposes? Can you share about the plan to roll over? What is the most remarkable finding/ change/ recommendation of this research? How does this research change your perspective in managing a microfinance institution?

Questions to the heads of departments (team leaders): 1. Could you please introduce yourself, about your background and your work experience in microfinance? 2. Can you talk a bit about your daily tasks, what do you do? Which tasks do you think are the most challenging? Why? How do you come up with recommendations to the directors? 3. Can you just briefly tell me what you remember about the event when Nghe An Newspaper criticised TYM seriously in 2012? How did you feel, how did you think about this? Anything changed after this event in your perspective 4. May I ask about the recent research that TYM conducted? Can you briefly tell me what it was about and its purposes? Can you share about the plan to roll over? What is the most remarkable finding/ change/ recommendation of this research? How does this research change your perspective in managing a microfinance institution?

51

APPENDIX 4 INTERVIEW SUMMARY

Alias Years of work in

microfinance

Background Summaries

1) After – work 8 years Language and

Commerce

Environment:

Microfinance operation in Vietnam is still in lack of many guidance from the supervisory bodies.

Critical media event:

I was not too much surprised because this has happened to microfinance worldwide so I was sad

a bit shocked because TYM has been always do good things but not too much surprise.

I only involved with some assigned tasks, for example, writing the official dispatches to the

newspaper.

Cooperation research:

I was in the research team at first, but then I was on maternal leave so I was not deeply involved

at the last stages.

This is to enhance the cooperation between TYM and Vietnam Women’s Union because the two

organisations were somehow loosely connected.

TYM has been considering itself part of Vietnam Women’s Union.

2) Ask – my –

boss

18 years Accounting Environment:

The environment is not facilitating, full of competition.

Critical media event:

I refuse to answer; I need to ask my boss for the approval of which type of data I can give you.

Contact me later about this.

52

Cooperation research:

This is the big change in strategy. We decide to use the network of Vietnam Women’s Union to

improve our performance.

Through this research, I recognised that we need to try harder to push forward changes and more

initiatives in TYM’s operation.

3) Errands –

breaker

20 years Accounting Environment:

The environment is not facilitating, lack of many legal regulations, like the guidance for

organisation restructuring.

Critical media event:

I cannot remember, it was long time ago.

I remember the management set up the “Fast-reaction group” to settle this crisis. I was shocked at

first, however, later when we discussed among the group I felt calm.

The event does not really affect the clients, clients in Nghe An (Branch 10) even applied for more

loans then.

Cooperation research:

It has been long time ago. I didn’t remember clearly my role and what my contribution was,

however, all the decisions were discussed in the group. That is the group’s recommendations and

suggestions.

4) Immediate 14 years N/A Environment:

The environment seems to get better but still poses many challenges. I do not have data on this,

but there’s some data consolidation that show the shrinking of microfinance sector.

TYM is courageous enough to take the lead.

Critical media event:

I was really shocked and saddened. I cannot believe it when I was reading the articles. They must

be lying.

53

We didn’t know how to handle it first, we were confused, everyone was confused; some people

even said that TYM is doomed.

When it is over, looking back, I felt confident now and I know better how to deal with media.

Cooperation research:

The enhanced cooperation between TYM and Vietnam Women’s Union will bring more benefits

for the clients, that’s is certainly.

My perspective in leading and managing a microfinance institution doesn’t change after this

research because I have always understood that TYM is part of Vietnam Women’s Union

5) Low – bat –

phone

5 years Finance and

Accounting

Environment:

The environment used to be very difficult but from last year, a new regulation on accounting for

microfinance was issued that made my job easier. The most difficult task in my job now relates

more to technology. The internal system (MIS) does not fully meet the demand of accountants.

Critical media event:

I was not in the team of solving the problem.

I was not surprised at all as I had worked in a newspaper before. It’s hard to avoid as they don’t

understand about us and they don’t look at us with any effort to get to know us.

Cooperation research:

After this research, I don’t feel a lot of changes. Actually, I need to do one more thing only after

the research, which is calculating one more item on the expenditure on monthly basis.

6) Not – at –

weekend

N/A N/A Environment:

It is definitely not facilitating. Though many policy-makers do not understand microfinance,

certain people have been aware already, for example, those at the Licensing Department in the

State Bank.

The environment is not good when the whole country has only one, two, three or even four

licensed microfinance institutions.

54

Critical media event:

I was not directly involved in solving the problem. We had an intern last year to support

Communication division with recommendations on media relations.

I don’t see any problem with TYM going transparent, but why us? Why do we need to be 100%

transparent while other do not do it?

Cooperation research:

I was not directly involved with the research but I was kept updated.

It seems to me that TYM is trying to make it clear that it is part of Vietnam Women’s Union, but

frankly speaking, I don’t understand why these thinkings come after the change of the

management, why now.

7) One – hour –

delay

22 years Banking Environment:

I am not satisfied with the environment but optimistic that the environment is getting better.

Critical media event:

I was very shocked when I received the articles.

They do not understand us, that’s why they criticise us. So we need to make them understand.

We realised that a workshop is not enough, because we cannot bring all people in the People’s

Committee; in State Bank at provinces and other related entities to Hanoi for workshops. Thus,

there needed a publication.

Cooperation research:

We need to find ways to strengthen the connection with Vietnam Women’s Union as TYM is

part of them.

It is not I ask for your help or you ask me for my help. It is a memorandum of understanding that

stated clearly rights and obligations of both parties.

55

APPENDIX 5 LIST OF TYM’S DOCUMENTS ACCESSED

No. Document’s name Source

1. List of TYM’s archives

This is a book that tracks all documents issued by the

organisation throughout the year. I can read the name

of the documents, but did not have full access to them

Sent by TYM

2. Report to Vietnam Women’s Union about the research

on TYM operations (Dated 28th March 2013)

Sent by TYM

3. Report to Vietnam Women’s Union about the pilot

phase of the research in amending TYM operations in

Viet Tri Branch (Dated 12th January 2013)

Sent by TYM

4. Presentation of the pilot phase of the research in Viet

Tri Branch (No date)

Sent by TYM

5. Regulations on cooperation between Vietnam

Women’s Union at all levels and TYM Microfinance

Institution (approved by Vietnam Women’s Union) –

Decision no. 06/QD-DCT, dated 28th March 2013

Sent by TYM

6. TYM - A portrait

The introductory document given to guests

Download from TYM’s website at

www.tymfund.org.vn

7. TYM’s Rating report in 2010 Download from TYM’s website at

www.tymfund.org.vn

8. TYM’s Annual report 2012 Download from TYM’s website at

www.tymfund.org.vn

9. Articles on Nghe An newspaper criticising TYM.

Three articles still remain online

Online accessible at Nghe An

Newspaper website at

www.baonghean.vn