Institutional voids are impediments to a thriving market economy and cannot simply be mandated away. It takes a substantial amount of work, expertise, and time for gaps in infrastructure and intermediaries to be recognized & addressed.Source: Prof. Tarun Khanna (HarvardX)
Spotting Institutional voids thus provides a crucial jumping-off point for assessing business opportunities, market conditions, and risk.
But how does one begin to recognise Institutional voids?
Activity in any economy is driven by three major markets:
Institutional voids can be found in any or all of these markets in developing countries.
The Power of Context
The unique Institutional context of a market determines the ways in which an entrepreneur can intervene, and to a greatest extent, also determines the successor failure of a particular strategy.
Within a given market, there maybe a number of appropriate interventions & opportunities, including:
- Replicate or adapt an existing business model in that market.
- Collaborate with domestic partners or go alone.
- Navigate around that market’s voids or actively try to fill them.
- Enter the market now or look for opportunities elsewhere.
- Stay in or exit the market if current strategies are not working.
One needs to understand the Institutional structure of the economy to understand how to solve its problems.Source: Prof. Tarun Khanna (HarvardX)