Adapt or Quit - A Passive Organizational Submission

'Adapt or quit', entirely disregarding flexibility, is a blunt statement that does not normally have desirable outcomes. A similar sort of experience has the microfinance sector gone through during the last two decades or so. During the period from the early to mid-1990s the sector witnessed a sharp shift in its approach to handling-poverty. The donor community started emphasizing profitability, self-sustainability, and cost-control on the part of MFOs around the word. This change of approach on the part of the donor community posed a situation to which MFOs had to adapt and reorient. Since these MFOs were highly dependent on the donor community for their sustained operations, they were left with no choice but to submit passively to the demands of their 'sustainers'. This empirical paper argues that the parent organizations - the 'power source', have ethical responsibilities in using their power over their 'dependents'. In the light of empirical data and the Laughlin (1991) Model of Organizational Change, the 'power source' must stop applying further power if it becomes evident the dependent organizations would not be able to retain their overall structure and real identity in the face of further pressure to change. The paper presents the case of the Aga Khan Rural Support Programme (AKRSP), a pioneer in micro-financing in Pakistan, and argues the Microfinance Organization could not keep its organizational structure intact in the face of externally dictated conditions for change, and that the 'power source' had an ethical responsibility to stop applying further pressure when the MFO started losing its basic coherence in the face of this pressure, and evolved into an entirely different organization with a predominantly commercial setup.