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Institutional Quality and Economic Development in Sub-Saharan Africa: Can Management Effort and Bribes Compensate for Low-Quality Institutions?

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  • Gori Olusina Daniel
  • Kun Fu
  • Wilfred Dolfsma

Abstract

The industrial development in sub-Saharan Africa is perhaps more affected by the quality of institutions than that of other regions. We investigate what alternatives managers may have and what their firms would need to function in case the institutional furniture they encounter is of low quality. We find that, in high quality institutional environments, management spending effort to deal with the authorities and to navigate regulations negates the effect of the institutional environment. Managers do not need to spend such efforts. Perhaps surprisingly, we find that the positive effect of high-quality institutional environments on firm performance is enhanced by making informal payments.

Suggested Citation

  • Gori Olusina Daniel & Kun Fu & Wilfred Dolfsma, 2018. "Institutional Quality and Economic Development in Sub-Saharan Africa: Can Management Effort and Bribes Compensate for Low-Quality Institutions?," Journal of Economic Issues, Taylor & Francis Journals, vol. 52(2), pages 473-482, April.
    • Handle: RePEc:mes:jeciss:v:52:y:2018:i:2:p:473-482
    DOI: 10.1080/00213624.2018.1469920
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    Cited by:

    1. Sam Njinyah & Simplice A. Asongu & Ngozi B. Adeleye, 2022. "The interaction effect of government non-financial support and firm’s regulatory compliance on firm innovativeness in Sub Saharan Africa," Working Papers 22/074, European Xtramile Centre of African Studies (EXCAS).
    2. Lawrence Adu Asamoah, 2021. "Institutional Quality and Income Inequality in Developing Countries: A Dynamic Panel Threshold Analysis," Progress in Development Studies, , vol. 21(2), pages 123-143, April.
    3. Wandeda, Dickson O. & Masai, Wafula & Myandemo, Samuel M., 2021. "Institutional quality and economic growth: evidence from Sub-Saharan Africa countries," African Journal of Economic Review, African Journal of Economic Review, vol. 9(4), September.

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