In India, self-help groups aim to eradicate poverty. Groups access microcredit via banks, government, or nongovernmental organizations. A vast but inconclusive literature exists on the impacts of heterogeneity and freedom of participation on group functioning. We used survey data and curve estimation to study the effect of these variables on collective action. Survey results were triangulated with in-depth interviews. The applied mixed methods design is useful for empirical studies where the functional form of one variable on the other variable is contested and no a priori model exists for theory-driven deductive empirical testing. We found that both variables are mediated by their institutional context. Heterogeneity promotes the emergence of leadership in bank groups, but it reduces collective action in government-initiated groups.