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How small details can made a big difference in economic development

March 7, 2018

Rotman professor looks at how micro-level factors might influence economic development in emerging economies — in ways we might not expect.

Photo of Rotman Professor Laura Doering | Photo taken by Yana Kaz/Rotman SchoolYears ago, while chatting with teenagers in Panama, Professor Laura Doering experienced a career-defining moment.

Doering had just graduated from college and was working for an international NGO at the time. While wrapping up an intensive grant-writing workshop for young people living in rural Panama, she was surprised to hear about what had resonated most with participants.

“We expected them to tell us that they’d learned a lot about the opportunities and resources available to them,” she recalls. “Instead, they seemed more excited about what they learned about us and what it was like to grow up in another country. The actual content of the workshop seemed secondary.”

The experience inspired her to think more thoughtfully about human factors and how they could impact the effectiveness of development programs, and economic growth in general.

Today, Doering’s research, which has been covered by a number of media outlets including the New York Times and the Globe and Mail, is focused on understanding economic development and how it unfolds in emerging economies, from the ground up.

“We often think about the macro-level forces that drive economic development, such as major policy changes, institutional practices or foreign investment,” says Doering, who is an assistant professor of Strategic Management at Rotman. “I’m interested in how micro-level influences, including interpersonal relationships, status, gender, housing and physical space, can add up to have a large scale effect.”

Her work has taken her to communities all over South America, where she spends time, on the ground, interviewing residents about their work and life, and observing their daily interactions. Further, Doering combines these qualitative observations with quantitative data from large-scale databases to identify larger, complex trends and patterns.

“Economic development isn’t just about policy. It’s also driven by how people think, feel and interact with others.”

—Laura Doering, Assistant Professor of Strategic Management

For instance, in a paper that will be published in the March 2018 issue of the American Journal of Sociology, she has explored the complicated impact of personal relationships on microfinance. Though there are a number of policies that have pushed for more microfinance initiatives in emerging economies — particularly programs where lenders advise and learn more about the micro-entrepreneurs they invest in — she has found that close relationships between lenders and borrowers can actually hurt lending institutions.

“On the surface, it makes sense that for loan officers, investing time in developing personal relationships with microfinance clients would be beneficial,” she says. “But, at some point, personal relationships can become detrimental. Lenders who have a personal bond with clients might not take the tough-but-necessary steps to intervene when a client stops making payments.”

It is worth taking a closer look at how to structure lending relationships so that microfinance programs and policies can be more productive, says Doering.

In previous work, she’s examined the effects of gendered occupational roles and women’s workplace authority in microfinance in Central America. After mining through data from a microfinance bank in the region, she observed that borrowers are less compliant with the terms of their loans when working with female loan managers. From this work, she was able to offer financial institutions practical advice — specifically, that they start endorsing and supporting female managers in a more public way to not only promote parity in the workplace, but also better lending compliance.

Next, she’s interested in exploring the concept of saving. For this work, she’s collaborating with a financial branch of the Colombian government.

“We can’t just think about economic development in terms of major policies. We have to look at how it unfolds from the ground up.”

—Laura Doering, Assistant Professor of Strategic Management

“There has been considerable focus on anti-poverty policies and programs designed to help low-income people accumulate capital and grow their savings by putting money in bank accounts. But in our data, we see even when people succeed in saving money, they often aren’t interested in putting that money in the bank. I’d like to figure out why that is.”

In addition to her research, she’s constantly looking for opportunities to bring research insights and practical experience into the classroom.

In March 2018, she’s co-hosting a forum on University-NGO collaborations at the School. Along with the faculty, students and NGO practitioners in attendance, she’s hoping to explore new ways for academics to produce rigorous research that is meaningful to NGOs.

After the event, several speakers will be coming to her Social Entrepreneurship class for Rotman Commerce students. One of the speakers — Doering’s research collaborator from Colombia — will Skype in from Latin America to participate in the class discussion.

“We’ll get into the nitty-gritty of NGO work with the students — what it’s like having to engage multiple sectors, such as governments, private sectors and communities. And we’ll take a look at what the research tells us about economic development across sectors,” she explains.

She can’t help but see a parallel between her class’s excitement and her experience working with Panamanian teenagers, years ago.

“Many students get a real kick out of knowing that someone has called in all the way from Colombia to speak with them.”

Written by Rebecca Cheung | More Rotman Insights »

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Laura Doering

Assistant Professor of Strategic Management

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