Entrepreneurship in and around institutional voids: A case study from Bangladesh

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Abstract

In many developing countries those living in poverty are unable to participate in markets due to the weakness or complete absence of supportive institutions. This study examines in microcosm such institutional voids and illustrates the activities of an entrepreneurial actor in rural Bangladesh aimed at addressing them. The findings enable us to better understand why institutional voids originate and to unpack institutional processes in a setting characterized by extreme resource constraints and an institutional fabric that is rich but often at odds with market development. We depict the crafting of new institutional arrangements as an ongoing process of bricolage and unveil its political nature as well as its potentially negative consequences.

Section snippets

Executive summary

Viewed as specialized social structures and important exchange mechanisms, markets require specific institutions and rules in order to come into existence and to function. As the World Bank reiterated in its 2002 World Development Report, building institutions that support the development of markets is of paramount importance to poor people's participation in them. Yet in many developing countries those living in poverty are unable to participate in markets because of ‘institutional voids’ –

Markets and institutional voids

Over the last decade efforts by development actors – from international bodies such as the World Bank to international and local NGOs – have increasingly focused on developing and transforming the institutions needed for engaging the poor in market activities. The assumption that underlies such efforts is that markets are an effective mechanism to attain sustained increases in living standards around the world (World Bank, 2002).

Scholars from different disciplines have elaborated on

Research site, methods, and data analysis

We opted to study BRAC's efforts to target the poorest segment of Bangladesh for several reasons. First, the extremity of the economic, social, political, and institutional constraints faced by the poorest of the poor in rural Bangladesh make their access and participation in markets particularly difficult. Although Bangladesh has made significant progress in reducing poverty and improving the lives of its people, nearly half of its population of 144 million still lives below the poverty line

Women and extreme poverty

In the late 1990s local and international development actors working in rural areas of Bangladesh started to recognize that an important segment of those living in poverty had been bypassed by their programs. Many microfinance programs – often seen as the most powerful approach to bring the poor into the market economy – have failed to reach out to the very poor (Abed and Matin, 2007). Today it is widely recognized that the poor are not a homogeneous group and that different levels of poverty

Discussion

Recent research in the institutional entrepreneurship literature has contributed to our understanding of how institutions are created and transformed. Yet we still know little about 1) where opportunities come from, and 2) how institutional entrepreneurs enact these opportunities: what resources they deploy and what strategies they use to deploy them, particularly in resource constrained environments.

This study speaks to the call for more research on “how the activities that constitute

Concluding remarks

Over 30 years of experimentation and expansion, BRAC has been able to build a raft of institutional arrangements by innovatively combining and redeploying the resources it had at hand and thus enabling social and economic inclusion for the poorest in Bangladesh. By examining in detail, specific processes initiated by BRAC, the main contributions of this paper are to: 1) advance theory by bridging institutional and entrepreneurship theory; 2) generate momentum for organizational scholarship on

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  • Cited by (0)

    We thank Christian Seelos, Kate Ganly, Marc Ventresca, two anonymous reviewers and Jared Harris for sharing ideas and providing inspiration and insights. The broader research project benefited from financial support from the European Academy of Business in Society (EABIS), the Anselmo Rubiralta Center for Globalization and Strategy, the Center for Business in Society, and the IESE Platform for Strategy & Sustainability at IESE Business School.

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    Authors are listed in alphabetical order.

    2

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