Purpose
The purpose of this paper is to examine the microcredit system, social networks within self-help groups (SHGs) and micro-entrepreneurial activities at the grassroots aiming at well-being, sustainability and income generation. The empirical study took place in Phnom Penh.
Design/methodology/approach
Focus group and in-depth interviews were employed. Two SHGs in Phnom Penh were selected for this study. The social network approach was used to distinguish the type of nodes and cliques within SHGs.
Findings
The result suggests that there exist lending and borrowing nodes and cliques. Strong ties exist within a clique and only weak ties link between cliques. Job and business information transmits well on weak ties but not entrepreneurship. This explains the failure of the process of microcredit in fostering microenterprise among very poor and low-educated borrowers.
Research limitations/implications
The findings were based on a small sample from two SHGs. Further study is needed for justification of the findings.
Originality/value
It was original research which took place in Phnom Penh. Homogeneous lending and borrowing cliques in microcredit networks were identified. A model of hierarchical microcredit network was hypothesized to explain how some members of a SHG are able to utilize the credit in starting up their microbusinesses while others failed.
