A Time and a Place: Non-Profit Engagement in the Creation of Markets and Industry Emergence

Abstract

This paper sheds light on how non-profit organizations can aid economic development by supporting the emergence of markets and industries in developing country contexts. We qualitatively examine archival data on the development of two industries: grain-storage metal silos in Central America during the late 1900s where nonprofits “seeded” new firms, and mobile money in Africa during the early 2000s where non-profits “transplanted” an established firm into Africa. Our comparison of these cases reveals two key findings. We find that either non-profits or firms can accomplish some activities, while other activities are undertaken only by non-profits. We also find that both nonprofits and firms circumvent institutional voids–that is they devise solutions that allow the focal industry to function while not necessarily providing a solution for the economy as a whole. We highlight opportunities for integrating institutional theory, organizational economics, and theories of industry and technology evolution to better understand how nonprofits and firms can work together to develop industries in underserved regions that have traditionally lacked strong institutions.