Navigating Institutional Voids and Informal Networks in Nepalese Entrepreneurship

Abstract

This study examines the process through which Nepali entrepreneurs work their way around institutional shortcomings by applying informal networks and the subsequent effects on business results. Thus, the study utilized a quantitative strategy where data collection was achieved via surveys with 350 entrepreneurs within Nepal's small and medium-scale enterprises (SMEs). Findings of this research show that although entrepreneurs experience constraints emanating from regulatory obstacles, corruption, and limited access to finance, informal networks based on their size, trust, and dependence on kinship relations have an important role to play in promoting sales growth, profitability, and firm survival. Furthermore, this research makes a contribution to theoretical understanding by emphasizing the connection between institutional deficiencies and social networks in emerging economies, and provides practical implications for entrepreneurs and policymakers interested in improving entrepreneurial outcomes in situations of institutional weakness. Finally, this research offers empirical proof on how social capital is employed by entrepreneurs to overcome the weakness of formal institutions in emerging economies, as is the Nepalese situation