The institutional complexity of a religious microfinance institution: a case study of an Islamic microfinance institution (Akhuwat)

The research aim of the study was to examine the institutional complexity of a religiousmicrofinance institution, which includes a case study of an Islamic microfinance institution(Akhuwat). The world remains as religious as it was. However, despite the spread ofsecularisation efforts and ideology, religion has continued to play a vital role in both societallife and the personal lives of individuals, and it is also one of the six core logics of institutionallogics. The importance of religion in everyday life and management literature is significant,and it is surprising to see the dearth of research on religion in management literature. Theresearch conducted on this topic is inadequate, and no in-depth analysis is available, given thetopic's importance.The focus of this study is on a case study of a religious microfinance institution (Akhuwat).Islamic microfinance organisation Akhuwat is unique for this research, as its operations arebased on institutional complexity in a long-term environment. Initially, Akhuwat was a nonprofitorganisation; religion and social welfare were the only institutional logics that influencedit, but due to its collaboration with Meezan Bank, it is now also influenced by the logic ofcommerce. This study employed a thematic literature review to highlight religion as aninstitutional logic, with a brief history of organisations experiencing institutional complexityand a discussion of different models of conventional and Islamic microfinance. The studyexamined the use of multiple logics by a religious organisation and its response to experiencinginstitutional complexity, using 14 closed-ended semi-structured interviews. It also investigatedits role in alleviating poverty, employing 385 questionnaires from microentrepreneurs. To fulfilthe objectives, a honeycomb was used as a research method, and a case study was employedas the research design.Research findings indicate that Islamic microfinance organisations have been historicallydrawn to specific institutional logics. The dominance of those logics has significantly changedover time, resulting in the standardisation of the organisation, in this case through the Shariahboard, to remain Shariah compliant and remain religious. Findings show that more than threeinstitutional logics influence Akhuwat and may increase to more than five due to the offeringof new Islamic microfinance products to microentrepreneurs. Descriptive analysis indicatesthat Akhuwat is making a significant impact on poverty alleviation through its Islamicmicrofinance products. Akhuwat’s organisational response to facing institutional complexityhas surprisingly surpassed and contradicted previous research. The more institutional logics itis influenced by, the better the performance due to robust practices, which Shariah defines.