Institutional Voids as Catalysts: Entrepreneurial Orientation and Informal Business Innovation Among Street Vendors in Bangladesh

Abstract

Purpose - This paper examines the practices of street vendors in Bangladesh as entrepreneurs who respond to institutional voids, characterized by lax regulations, inadequate infrastructure, and limited access to financial services.

Methodology - A quantitative, cross-sectional design, based on the Institutional and Bricolage theories, was used to collect the data on 237 street vendors in Dhaka via structured questionnaires. Validated Likert scales were used to measure constructs, and regression and mediation analyses were used to test hypotheses (PROCESS Macro). Cronbach's alpha, multicollinearity diagnostics, bootstrapping, and reliability, validity, and robustness were used to ensure reliability and validity.

Findings: Institutional voids are a significant positive predictor of entrepreneurial orientation (β = 0.42, p < 0.001), which, in turn, mediates the relationship between institutional voids and informal business innovation (β = 0.56, p < 0.001). The partial mediation through EO (β = 0.24, p < 0.001) confirms that entrepreneurial orientation is the key behavioral mechanism through which environmental constraints are converted into adaptive innovation.

Implications and Value - The theory of entrepreneurship was further developed in the study through the implementation of the Institutional and Bricolage approaches to the explanation of innovation in informal economies. It is an empirical repositioning of street vendors as pro-entrepreneurs and not survivalist players. To make the informal infrastructure, training, and microfinance more sustainable, policymakers are advised to identify and incorporate street vendors in inclusive urban innovation systems.