Dialectic Evolution through the Social Innovation Process: from Microcredit to Microfinance

This paper uses literature reviews and descriptive research to present different aspects of the relationship between the availability of microfinancial services and the establishment of microenterprises. It places the developments in this sector in a social innovation process perspective and tries to show that microfinance, through its wide range of innovatively distributed products, can be a key factor to foster entrepreneurship. The paper also provides a brief background of different microfinance products and also identifies the challenges in providing these products to the poor people at the bottom of the pyramid. The key topics covered in the paper include:

• Overview of microcredit services and a discussion of the microcredit model;
• Impact of microcredit and the relationship between microcredit and entrepreneurial opportunities;
• Guarantees as an alternative to collaterals and the impact of such guarantee schemes on entrepreneurship among the poor;
• Overview of microinsurance services with a focus on its importance and impact;
• Promoting savings among the poor and a discussion of the impact of microsavings on entrepreneurship;
• Meaning of remittances and the scope of using it as investment for entrepreneurial activities;
• Discussion of microequity services, need for microangels, and the potential impact of the availability of these services on entrepreneurship.