Microlevel Analysis of Institutional Intermediation in a Rudimentary Market-Based Economy: Entrepreneurship in Kathmandu’s Indrachok Market

W Mitchell, Zhiyan Wu, G Bruton, D Gautam

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Abstract

Institutional theory research on institutional intermediation typically focuses on how institutional intermediaries address voids in market-based institutions that inhibit entrepreneurship. In doing so, the research rarely studies what types of institutional intermediaries entrepreneurs prefer to use. We address this gap with a microinstitutional inquiry of how entrepreneurs in a rudimentary market-based economy differ in the relevance they place on different types of institutional intermediaries. Using a sample from the Indrachok market in Kathmandu, Nepal, and using a three-stage qualitative and quantitative abductive investigation of a cascading set of increasingly refined research questions, we identify two key preferences for institutional intermediaries. First, we find a key institutional intermediation tripod consisting of three locally focused institutional intermediaries: family, suppliers, and peer entrepreneurs. The tripod is supplemented by institutional intermediaries with more moderate preference in this context: four other locally focused institutional intermediaries (local politicians, police, religious figures, and political gangs) and three broad-based institutional intermediaries (government, microlenders, and nongovernmental organizations). Second, the importance of suppliers and peers as institutional intermediaries reflects entrepreneurs’ registration status (registered versus unregistered) and microgeographic location (dispersed versus clustered businesses). The research reconceptualizes institutional intermediation in rudimentary market-based economies from the entrepreneurs’ perspective, identifying mechanisms that shape entrepreneurs’ preferences and providing proposition for future testing.
Original languageEnglish
Pages (from-to)2106-2134
Number of pages29
JournalOrganization Science
Volume33
Issue number6
DOIs
Publication statusPublished - Nov 2022

Bibliographical note

Funding Information:
Funding: This research was partially supported by the National Natural Science Foundation of China [Grant 71620107001]. Supplemental Material: The online appendix is available at https://doi.org/10.1287/orsc.2021.1531.

Funding Information:
This research was partially supported by the National Natural Science Foundation of China [Grant 71620107001]. We are indebted to Will Mitchell, who unexpectedly passed away in December 2021, for his wisdom and kindness. He is missed by many colleagues including his three co-authors here. The authors thank the editor Wesley Sine and three anonymous reviewers for their constructive comments and guidance throughout the review process. The authors are also grateful for comments from Daniel Armanios, Stefan Dimitriadis, Chuck Eesley, and Geoff Kistruck, as well as from audience members at the 2017 Jilin University Conference on Innovation & Entrepreneurship (China), 21st Uddevalla Symposium 2018 (Sweden), 3rd International Conference on New Business Model (Bulgaria), Vision Conference INTRO-2018 (Ukraine), ACEDE Conference 2018 (Spain), Sun Yat-Sen University (China), and Carnegie Mellon University in November 2019.

Publisher Copyright:
© 2022 INFORMS.

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