2134/22836
Matthias Olthaar
Matthias
Olthaar
Wilfred Dolfsma
Wilfred
Dolfsma
Clemens Lutz
Clemens
Lutz
Florian Noseleit
Florian
Noseleit
Markets and institutional swamps: tensions confronting entrepreneurs in developing countries
Loughborough University
2016
Developing countries
Institutional entrepreneurship
Institutional fabrics
Institutional voids
2016-10-13 15:33:11
Journal contribution
https://repository.lboro.ac.uk/articles/journal_contribution/Markets_and_institutional_swamps_tensions_confronting_entrepreneurs_in_developing_countries/9463277
Unrealized potential of entrepreneurial activities in developing countries has often been attributed to missing formal market-based institutions. In new institutional economics, the concept of ‘voids’ is suggested as describing an absence of market-based institutions. In reality, however, ‘institutional fabrics’ are always and necessarily complex and rich in institutions. No societal sphere is institutionally void. In the current article we contribute to existing literature on entrepreneurship and institutional economics s by presenting a framework for studying the richness and complexities of institutional fabrics, as well as ways in which entrepreneurs respond to institutions. Distinguishing four types of institutions relevant for entrepreneurs, we analyze case study data from Ethiopia, and discuss how ‘tensions’ between potentially incompatible institutions result in behavioral frictions. Some entrepreneurs play the complex institutional environment and benefit from the tensions in it, whereas others may drown into the institutional ‘swamp’ they face. Policy makers should acknowledge that institutions not only result from formal policy making and that in many cases a diverse set of institutions is needed to facilitate market exchange and solve constraining tensions. The diversity that results from initiatives of institutional entrepreneurs may create a more effective institutional environment for development.