How Open System Intermediaries Address Institutional Failures: The Case of Business Incubators in Emerging-Market Countries

Abstract

In emerging-market countries, commercial institutions do not always develop quickly or effectively to support ambitious entrepreneurs. How do intermediaries remedy these problems? We address this question by drawing on institutional literatures to develop the concept of open system intermediaries (OSIs). Our research design involves examining business incubators in emerging markets as a form of OSI. Empirically, we examine the relative emphasis that business incubators in emerging-market countries place on developing markets versus developing specific businesses. The study further examines how private, government, academic, and NGO sponsorship of incubators influences the mix of services that incubators provide. In sum, this work contributes to our understanding of how, why, and when intermediaries emerge to address institutional failures.

Keywords: Emerging economies, Business Incubators, Business-level resources/capabilities, Entrepreneurship