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Shades of Grey: How do Informal Firms Navigate Between Macro and Meso Institutional Environments?

Julio O. De Castro1; Susanna Khavul2; Garry D. Bruton3

1 IE Business School Madrid Spain · 2 Department of Management College of Business, University of Texas at Arlington Arlington Texas U.S.A. · 3 Neeley School of Business, Texas Christian University Fort Worth Texas U.S.A

Strategic Entrepreneurship Journal 2014

Our qualitative research shows that when making decisions about informality, entrepreneurs in emerging economies purposefully navigate between the enabling and constraining rules of the macro institutional environment and the norms of the meso institutional environment. We show that: (1) informality is a multidimensional continuum along which path to formalization unfolds; (2) as entrepreneurs grow more successful they become simultaneously more attuned to the countervailing constraints of both the macro and meso institutional environments; and (3) informal firms and formal firms weave together an exchange system that legitimizes the persistence of informality. In the context of informality, meso institutions serve as the connective tissue which cross‐link levels of the environment and shape the context in which entrepreneurs make decisions. Copyright © 2014 Strategic Management Society.

DOI
10.1002/sej.1172
Volume
8 (1)
Pages
75-94
Language
en
Export
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Sources
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