- Title
- Private sector development: how business interacts with informal institutions
- Creator
- Nicholas, Stephen; Maitland, Elizabeth
- Relation
- Informal Institutions: How Social Norms Help or Hinder Development p. 109-129
- Relation
- Development Centre Studies
- Relation
- http://www.oecd.org/document/19/0,3343,en_2649_33935_39471507_1_1_1_1,00.html
- Publisher
- Organisation for Economic Co-operation and Development (OECD)
- Resource Type
- book chapter
- Date
- 2007
- Description
- This chapter explores the impact of informal institutions on private sector development. Informal institutions are critical in countries with weak formal economic institutions, such as inadequate bankruptcy and contract laws. In these countries, kinship systems, which are usually restricted to members of the same ethnicity or religion, offer a more reliable mechanism to enforce agreements. Based on experiences from Hong Kong, China and India, this chapter illustrates how different access to formal institutions influences the design of contractual arrangements. Depending on a manager's understanding of the country's formal and informal institutions, the quality of contracts for business exchange varies significantly. In order to support the gradual development of open business networks, development agencies should foster informal economic institutions that support private business. In this context, it is vital to improve the flow of information about the availability, reliability and skill levels of suppliers, distributors and partner firms. Access to such information will reduce the costs of designing and managing contracts.
- Subject
- business; informal institutions; kinship systems; contracts
- Identifier
- http://hdl.handle.net/1959.13/803519
- Identifier
- uon:6419
- Identifier
- ISBN:9789264039063
- Language
- eng
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