Entrepreneurial networks as informal institutions in transitional economies

Abstract

This mixed-method study examines entrepreneurial networks as informal institutions established by local entrepreneurs in order to navigate the voids of formal institutions in the context of transitional economies. We first hypothesize the model developed in the qualitative study based on the voice of local practitioners and supported with literature. Then, we quantitatively test the model in two different contexts of institutional void – in the rent-seeking Ukraine and state-controlled Belarus in 2000s. It reveals that entrepreneurs who embrace norms of ‘right ties,’ ‘right identity,’ ‘right interests’ and ‘right actions’ rease their chances to join local entrepreneurial networks as perceived reliable personally and professionally, which results in network support. In a rent-seeking economy, entrepreneurs refer to ‘right identity’ and ‘right interests’ as priorities for their networks as informal institutions, while in the state-controlled economy, entrepreneurs prioritize ‘right identity’ and ‘right actions’.