Informal institutions and international performance of Ghanaian small exporting firms: moderation role of formal institutions

Abstract

This paper accentuates the conviction that institutions play a significant role in SMEs internationalisation. Informal institutional mechanisms have been notable in localities in the African setting. However, most studies in business research have been focused on formal institutions. The role of informal institutions in the international performance of SMEs demands to be understood with more cases. This paper argues that the two dimensions of institutions do not work in isolation but complement each other to provide the desired results in SMEs' international performance. We analyse the complementation role of formal and informal institutions in the internationalisation of small exporting firms. This study is based on primary data collected through a survey of 134 small exporting firms from different sectors in Ghana and analysed with multiple regression in SPSS. Findings revealed that not every aspect of the informal institutional mechanism is relevant for superior firms' international performance. Formal institutions complement informal institutions in order to function effectively.