Egypt: a fluid institutional affair - an institutional theory interrogation of the Egyptian business services sector: the triad relationship of institutions, entrepreneurship and institutional intermediaries

Mansour, Dina Mohamed Khaled Khalil (2022) Egypt: a fluid institutional affair - an institutional theory interrogation of the Egyptian business services sector: the triad relationship of institutions, entrepreneurship and institutional intermediaries. PhD thesis, Birkbeck, University of London.

Abstract

This research is set out to examine the interrelation between high-growth entrepreneurship and institutions in Egypt. A triad relationship was identified among high-growth firms, formal institutions, and institutional intermediaries (hereafter II). Firstly, a set of institutional voids were examined on regulative, normative, and cultural aspects. The examined voids preclude entrepreneurship from achieving its full potential amid a challenging institutional framework. This gave rise to informal institutions and different forms of response behaviours while the institutional framework adjusts itself. Entrepreneurs in the meantime had to make do with what’s possible to capitalise on newly emerged market gaps following 2011. As such both market and political entrepreneurs exploited various forms of informal institutions resulting in both productive and unproductive forms of entrepreneurship. Secondly, IIs emerged as important players in the Egyptian institutional framework. This exploratory research identified five types of institutional intermediaries: user, process, regime-based, systemic, and niche. The IIs conduct an interchangeable variety of activities including institutional support, demand articulation, capacity building and knowledge brokering. The role of political economy particularly emerges when the Egyptian institutions are examined up close, especially as IIs play such salient roles. Here, the political economy interacts with the economy at large, and entrepreneurship in particular in three ways: First, the 2016 economic reform program should be questioned. Albeit positive reviews by the IMF (systemic II), and observable leaps for the economy, the Egyptian political power is still owned by an unaccountable few. A political few which are not subject to auditing, answerability, nor are they publicly voted in (or out). Secondly, Egypt has been all but receiving less development aid and concessional funding. Albeit rising voices against human rights violation and draconian crackdown on opposition, programs to promote entrepreneurship, develop technical and vocational education, female-led businesses and the like (systemic and process IIs), cannot fix the flawed institutions at their core. Thirdly, and perhaps most important, the involvement of the Egyptian military in the economy, at best as a monitoring authority, and at worst as a large market player, has been greatly disrupting the economy. State-owned and army-affiliated firms provide the market with much-needed merchandise that is both cheap and fast. This activity crowds out private investors, big and small, unless, of course, they join the military-affiliated businesses, thus exacerbating the already challenging problems of cronyism and clientelism. Finally, amid the rapid institutional changes, the Egyptian government, IIs and high-growth firms have been manifesting patterns of institutional entrepreneurship. In this sense, they do not simply react to the changes occurring in their environment. Rather, they display a variety of entrepreneurial behaviours, and rely on their good judgement to shape the institutions around them. Through collective institutional entrepreneurship market and political entrepreneurs pool their skills, resources, and power together to challenge their surrounding institutions. However, as the political economy of Egypt introduces an extra set of complications, informal institutions will remain stronger than formal ones, giving rise to evasive behaviour and unproductive entrepreneurship. Hence, institutional and regime uncertainty will deepen, and the Egyptian institutions will remain in a constant state of flux, i.e. fluidity. Accordingly, market and political entrepreneurs will keep adapting to the fluid institutions until either side subsides. Hopefully, this will not be the entrepreneurs.

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