"Dealing with institutional voids in emerging markets A small and medium sized enterprise perspective"

Abstract

The primary focus of this article is to investigate how developed market (Dutch) SMEs deal with so called institutional voids in emerging markets. Various institutions serve as intermediaries in trade with the task of facilitating the trade. These institutions, like employment agencies, allow trade to take place easier and with lower transaction costs. When the institutions are absent or poorly functioning, there is a so called institutional void. Previous literature has shown that emerging markets have significantly more of these voids than developed markets. In this article the type of institutional voids SMEs deal with, are uncovered. The type of tactics these companies use to deal with the voids are investigated as well. A lot of the existing literature on this matter is based on large companies. This research shows that SMEs are faced by the same voids as large companies but that the tactics used by SMEs are different. These conclusions are drawn after a qualitative study based on in-depth interviews with relevant SMEs.