Shades of Grey: How do Informal Firms Navigate Between Macro and Meso Institutional Environments?
Article first published online: 4 MAR 2014
Copyright © 2014 Strategic Management Society
Strategic Entrepreneurship Journal
Special Issue: Entrepreneurship and Strategy in the Informal Economy. Guest Editors: R. Duane Ireland, David J. Ketchen, Jr., and Justin W. Webb
Volume 8, Issue 1, pages 75–94, March 2014
How to Cite
De Castro, J. O., Khavul, S. and Bruton, G. D. (2014), Shades of Grey: How do Informal Firms Navigate Between Macro and Meso Institutional Environments?. Strat.Entrepreneurship J., 8: 75–94. doi: 10.1002/sej.1172
- Issue published online: 4 MAR 2014
- Article first published online: 4 MAR 2014
- emerging market;
- institutional environments
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.