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Laura Claus first traveled to Tanzania as a volunteer with Villages for Africa (VFA), a Dutch organization that won recognition from the United Nations in 2014 for helping rural communities establish locally owned enterprises. VFA pioneered macro loans, a lending mechanism for villages designed to spur rural economic development while avoiding some of the pitfalls of microcredit lending to individuals. Claus, a first-year doctoral student at the University of Cambridge Judge Business School, was interested in poverty, social entrepreneurship, and social innovation, and as a volunteer in Tanzania she interviewed staff and villagers.
She shared the preliminary data she had collected with fellow scholar Royston Greenwood, whom she met in the early days of her program. He encouraged her to gather more. What began as volunteer work eventually turned into a case study of the collapse of a seemingly successful social enterprise. How did VFA dissolve after the tremendous initial success of its macro-credit initiative?
A new paper by Claus, now a professor in the Department of Strategy and Entrepreneurship at the University College London School of Management; Greenwood, a professor in the Department of Strategic Management and Organization at the Alberta School of Business at the University of Alberta; and John Mgoo, who is based in Babati, Tanzania, and has worked for several NGOs, examines the rise and fall of VFA and how it affected the village enterprises it supported. Their findings have profound implications for foreign organizations working in local contexts.
“There are so few papers in the discipline that explore organizational dynamics in Africa, particularly in the leading journals, that this is a distinguishing feature of the study in its own right,” says Paul Tracey, a professor of innovation and organization at the Cambridge Judge Business School at the University of Cambridge. “It sheds light on why well-meaning initiatives by Western organizations often fall short of their objectives. So often we read about the success stories and the best practices, but we also need to hear about what doesn’t work as well.”
Claus and her coauthors discovered that while VFA successfully forged a localized way to establish village enterprises, by working through people from the area, it neglected the importance of history in its dealings with local populations. “People talk about local culture as important cultural context,” Claus says. “But one factor that is often ignored, at least in the management science community, is history and historical context.”
When organizations go to Africa, Claus explains, they arrive with the notion that Africa is a tabula rasa. The scholarly literature emphasizes institutional voids. “But it’s the opposite of a void or blank slate,” Claus says, “given all the imagery and memories of the past, including other development initiatives, as well as culture and traditions. History is the opposite of a void.” VFA failed to account for the colonial past and historical relationships between locals and mzungu (Swahili for “foreigner”) who previously came to help and typically left, creating a cycle of ambivalence, disappointment, and frustration.
The second finding is that VFA, having tailored the macro-credit idea as much as possible to the local culture, made it more difficult to reenter with new ideas and expectations. The organization took painstaking efforts to get to know Tanzanians and understand what they cared about: family and community, and the group over the individual. To facilitate the assimilation of the macro-credit idea, VFA adapted itself to the local culture. But when it returned with its assumptions about enterprise, lending, and repayment, tensions erupted. Tanzanians had priorities that took precedence over repaying the loans. They prized the village enterprises as socially accepted communal enterprises, which required large investments in schools, teacher houses, and health care for community members.
“From what we found, I would say it’s important to introduce some tensions early on, so that local populations see the idea as grounded in a different culture,” Claus says. Eliding the differences between local and foreign culture, VFA left itself out of the picture. When it returned with its own priorities, friction resulted.
And yet, Claus cautions, Villages for Africa should not be understood as a universal failure. Some village entrepreneurs and even some in the organization cite skill building and other successes. The authors analyze VFA in terms of failure because the organization did not endure.
The study’s lessons are critical for anyone “seeking to change beliefs and practices on the African continent in ways that they perceive as progressive,” Tracey says. “Initiatives, especially market-based initiatives, need to be navigated with humility and an acknowledgment of the past.”
Laura Claus, Royston Greenwood, and John Mgoo, “Institutional Translation Gone Wrong: The Case of Villages for Africa in Rural Tanzania,” Academy of Management Journal, forthcoming.
Read more stories by Daniela Blei.