Management Faculty Publications

How ethnic- and community-based informal institutions shape entrepreneurial resource acquisition in Ethiopia

Document Type

Article

Publication Date

9-26-2026

Abstract

Despite the growing recognition of the vital role informal institutions play in the entrepreneurial process, their influence on resource acquisition is less understood, especially in underexplored contexts such as those in many African countries, where formal institutions are ineffective and ethnic identities are salient. In this study, we contribute to bridging this gap by examining the implications of two distinct forms of informal institutions for financial resource access by entrepreneurs in Ethiopia. Specifically, we look at the political institution of ethnic-based neopatrimonialism and the economic institution of Iqub—an indigenous, community-based financial association. Drawing on survey data from 480 entrepreneurs in Ethiopia and nearly 100 experts on ethnic politics, we find empirical evidence suggesting that Iqub plays a key role in providing access to resources for entrepreneurs from political-minority ethnic groups. We also highlight a potential limitation: the localized and relational nature of Iqub may constrain growth and scalability, leaving these entrepreneurs at a persistent disadvantage.

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https://rdcu.be/eAjejFNfXhJa

Publication Title

Small Business Economics

DOI

10.1007/s11187-026-01274-9

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