Trade associations as indigenous institutions: exploring trust and entrepreneurial behaviour in challenging institutional environments

This paper examines the institutional logics shaping entrepreneurial behaviour. It investigates how institutional contexts affect entrepreneurial behaviour especially in challenging environments. By drawing on a rich empirical study of small and medium-sized enterprises (SMEs), the paper uncovers how indigenous institutional forms such as trade associations have evolved to replace dysfunctional formal institutions. The institutional logics perspective was useful in understanding the effects of culture on trade associations. Our interview data reveal how entrepreneurs take advantage of institutional-based trust to enforce trade agreements in the absence of formal institutional trust. The paper contributes to the field of entrepreneurship concerning SMEs and trade associations, by examining issues in relation to economic-institutional contexts that have been largely neglected.