Emerging Economies, Institutional Voids, and Innovation Drivers: A Study in India

Research has highlighted the importance of the institutional context on innovation and entrepreneurship. The focus of this qualitative research was to study small and medium enterprises (SMEs) in the manufacturing sector in India with the purpose of understanding how institutional voids affect the drivers of innovation. We find that in presence of regulatory institutional voids such as an absence of explicit innovation policy frameworks, technical support and information, trusted government administration and safety nets, and formal finance institutions, SME entrepreneurs take recourse to a range of normative and cognitive institutions to support their innovation goals. Specifically, the SMEs owners use local cultural norms and public awareness as reference framework as well as international quality norms standards. Moreover, information is sourced via informal ties and networks in the personal sphere and business contacts, both locally and internationally. A last critical norm observed is to function independently as an entrepreneur, while not engaging with regulatory institutions.