Dynamics of a Life Cycle Theory Based on Developed Country Histories

  • Arvind AshtaEmail author


How can we apply the life cycle concept to social entrepreneurship? Ashta first explains the evolution of the industry life cycle concept. He then applies it to a few microfinance cases which lasted for more than a century so that the reader can see the concept in its entirety. These cases are from different developed countries that also experienced the problem of poverty and exclusion. He follows this with microfinance cases that are still booming but they have gone through the initial stages. His major contribution in this chapter is to explain how transformation (growth and demise) is a politico-legal process where political legitimacy, private interests and social compassion create a dance between the State, the for-profit banks and the social enterprise.


Business history Life cycle Montes de Piedad Loan funds Mutual funds Banking 


  1. Arikan, A. M., & Stulz, R. M. (2016). Corporate Acquisitions, Diversification, and the Firm’s Life Cycle. Journal of Finance, 71(1), 139–194. Scholar
  2. Ashta, A. (2016a). Microfinance: Battling a Wicked Problem. Brussels: P.I.E. Peter Lang.CrossRefGoogle Scholar
  3. Ashta, A. (2016b). Towards a Realistic Theory of Social Entrepreneurship: Selling Dreams to Society. Burgundy School of Business.
  4. Ashta, A. (2019a). Towards a Realistic Theory of Social Entrepreneurship (NGOs) Grounded on Microfinance Research: Selling Dreams to Society. Strategic Change: Briefings in Entrepreneurial Finance, 28(4), 301–314.CrossRefGoogle Scholar
  5. Ashta, A. (2019b, May 9–10). Une Théorie du Cycle de Vie de L’industrie de la Microfinance. Paper Presented at the L’actualité de la Finance: Acte 2, Nancy, France.Google Scholar
  6. Ashta, A., & Biot-Paquerot, G. (2018). FinTech Evolution: Strategic Value Management Issues in a Fast Changing Industry. Strategic Change, 27(4), 301–311.Google Scholar
  7. Ashta, A., Couchoro, M., & Musa, A. S. M. (2014). Dialectic Evolution Through the Social Innovation Process: From Microcredit to Microfinance. Journal of Innovation and Entrepreneurship, 3, 4. Scholar
  8. Audretsch, D. B., & Woolf, A. G. (1986). The Industry Life Cycle and the Concentration Profits Relationship. American Economist, 30(2), 46–51.CrossRefGoogle Scholar
  9. Bilir, L. K. (2014). Patent Laws, Product Life-Cycle Lengths, and Multinational Activity. American Economic Review, 104(7), 1979–2013. Scholar
  10. BNP Paribas. (2016). German Sparkassen: A Model to Follow? Conjoncture, Vol. April 2016. Paris: BNP Paribas.Google Scholar
  11. Bugg-Levine, A., Kogut, B., & Kulatilaka, N. (2012). A New Approach to Funding Social Enterprises. Harvard Business Review, 90(1/2), 118–123.Google Scholar
  12. Carbonell-Esteller, M. (2012). Montes de Piedad and Savings Banks as Microfinance Institutions on the Periphery of the Financial System of Mid-Nineteenth-Century Barcelona. Business History, 54(3), 363–380. Scholar
  13. Churchman, C. W. (1967). Wicked Problems. Management Science, 12, B-141–B-142.Google Scholar
  14. Clifford, D. K., Jr. (1965). Managing the Product Life Cycle. Management Review, 54(6), 34.Google Scholar
  15. Costanza, R., Cumberland, J. H., Daly, H., Goodland, R., & Norgaard, R. B. (1997). An Introduction to Ecological Economics. Boca Raton, FL: CRC Press.CrossRefGoogle Scholar
  16. de Vicq, A., & Van Bochove, C. (2019). Balancing Sustainability and Outreach: The Case of Dutch Loan Funds, 1850–1950 (Working Paper). Utrecht, NL: Utrecht University.Google Scholar
  17. Dibrell, C., Craig, J., & Hansen, E. (2011). Natural Environment, Market Orientation, and Firm Innovativeness: An Organizational Life Cycle Perspective. Journal of Small Business Management, 49(3), 467–489. Scholar
  18. Drury, I. (2014). Performance Management for Wicked Problems. Administrative Theory & Praxis (ME Sharpe), 36, 398–411. Scholar
  19. Foucault, M. (2003 [1961]). Madness and Civilization: A History of Insanity in the Age of Reasons [Folie et déraison: Histoire de la folie à l’âge classique]. London and New York: Routledge.Google Scholar
  20. Frederick, W. C. (1998). Creatures, Corporations, Communities, Chaos, Complexity: A Naturological View of the Corporate Social Role. Business and Society, 37(4), 358–389.CrossRefGoogle Scholar
  21. Hasan, M. M., & Cheung, A. (2018). Organization Capital and Firm Life Cycle. Journal of Corporate Finance, 48, 556–578. Scholar
  22. Hill, R. P., & Cassill, D. L. (2004). The Naturological View of the Corporation and Its Social Responsibility: An Extension of the Frederick Model of Corporation-Community Relationships. Business and Society Review, 109(3), 281–296.CrossRefGoogle Scholar
  23. Hollis, A., & Sweetman, A. (1998). Microcredit in Prefamine Ireland. Explorations in Economic History, 35(4), 347–380.CrossRefGoogle Scholar
  24. Hollis, A., & Sweetman, A. (2001). The Life-Cycle of a Microfinance Institution: The Irish Loan Funds. Journal of Economic Behavior & Organization, 46(3), 291–311.CrossRefGoogle Scholar
  25. Houghton, L. (2015). Engaging Alternative Cognitive Pathways for Taming Wicked Problems. Emergence: Complexity & Organization, 17(1): 1–18.
  26. Jayashankar, P., Ashta, A., & Rasmussen, M. (2018). What Are the Lessons from Nature for Doing Well and Doing Good in Different Environments? A Hybrid Perspective of Microfinance and Slow Money. Strategic Change: Briefings in Entrepreneurial Finance, 27(6), 523–538.CrossRefGoogle Scholar
  27. Koistinen, D. (2012). Development Credit Corporations: Not-for-profit Development Finance Institutions in the Postwar United States. Business History, 54(3), 424–440.CrossRefGoogle Scholar
  28. Kotler, P. (1965). Competitive Strategies for New Product Marketing Over the Life Cycle. Management Science, 12(4): B-104–B-119.Google Scholar
  29. Lecy, J. D., & Searing, E. A. (2016). Changes Over the Life Cycles of Social Enterprise Animals. In D. R. Young, E. A. Searing, & C. V. Brewer (Eds.), The Social Enterprise Zoo (pp. 113–140). Glos, UK and Northampton, MA: Edward Elgar Publishing.CrossRefGoogle Scholar
  30. Mueller, D. C. (1972). A Life Cycle Theory of the Firm. Journal of Industrial Economics, 20(3), 199.CrossRefGoogle Scholar
  31. Phelps, R., Adams, R., & Bessant, J. (2007). Life Cycles of Growing Organizations: A Review with Implications for Knowledge and Learning. International Journal of Management Reviews, 9(1), 1–30.CrossRefGoogle Scholar
  32. Pinto, J. E., Henry, E., Robinson, T. R., & Stowe, J. D. (2015). Equity Asset Valuation. Hoboken, NJ: Wiley.Google Scholar
  33. Schmidt, R. H., Seibel, H. D., & Thomes, P. (2016). From Microfinance to Inclusive Finance: Why Local Banking Works. Weinheim, Germany: Wiley-VCH Verlag.Google Scholar
  34. Seanor, P. (2018). Of Course, Trust Is Not the Whole Story: Narratives of Dancing with a Critical Friend in Social Enterprise—Public Sector Collaborations. In P. Dey & C. Steyaert (Eds.), Social Entrepreneurship: An Affirmative Critique (pp. 159–181). Cheltenham, UK and Northampton, MA: Edward Elgar Publishing.CrossRefGoogle Scholar
  35. Searing, E. A., Lecy, J. D., & Andersson, F. O. (2016). Ecologies Within the Habitats of the Zoo. In D. R. Young, E. A. Searing, & C. V. Brewer (Eds.), The Social Enterprise Zoo: A Guide for Perplexed Scholars, Entrepreneurs, Philanthropists, Leaders, Investors, and Policymakers (pp. 93–112). Glos, UK and Northampton, MA: Edward Elgar Publishing.CrossRefGoogle Scholar
  36. Smith, N. R., & Miner, J. B. (1983). Type of Entrepreneur, Type of Firm, and Managerial Motivation: Implications for Organizational Life Cycle Theory. Strategic Management Journal, 4(4), 325–340.CrossRefGoogle Scholar
  37. Vernon, R. (1966). International Investment and International Trade in the Product Cycle. The Quarterly Journal of Economics, 80(2), 190–207. Scholar
  38. Wadhwani, R. D. (2011). Organisational Form and Industry Emergence: Nonprofit and Mutual Firms in the Development of the US Personal Finance Industry. Business History, 53(7), 1152–1177.CrossRefGoogle Scholar
  39. Whyte, K., & Thompson, P. (2012). Ideas for How to Take Wicked Problems Seriously. Journal of Agricultural & Environmental Ethics, 8, 441–445.Google Scholar
  40. Wright, M., & Thompson, S. (1986). Vertical Disintegration and the Life-Cycle of Firms and Industries. Managerial and Decision Economics, 7(2), 141–144.CrossRefGoogle Scholar
  41. Young, D. R., Searing, E. A., & Brewer, C. V. (Eds.). (2016). The Social Enterprise Zoo: A Guide for Perplexed Scholars, Entrepreneurs, Philanthropists, Leaders, Investors, and Policymakers. Glos, UK and Northampton, MA: Edward Elgar Publishing.Google Scholar

Copyright information

© The Author(s) 2020

Authors and Affiliations

  1. 1.CERENBurgundy School of BusinessDijonFrance

Personalised recommendations