Negotiating new institutional logics: market access amongst
smallholder farmers in Zambia and Malawi
Article (Accepted Version)
http://sro.sussex.ac.uk
Luiz, John, Kachika, Kondwani and Kudzurunga, Tapfumaneyi (2019) Negotiating new
institutional logics: market access amongst smallholder farmers in Zambia and Malawi. Society
and Business Review, 14 (4). pp. 360-377. ISSN 1746-5680
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Accepted for publication in: Society and Business Review
DOI (10.1108/SBR-01-2019-0015)
Negotiating new institutional logics: Market access amongst smallholder farmers in
Zambia and Malawi
John M. Luiz*, Kondwani Kachika** & Tapfumaneyi Kudzurunga**
* University of Sussex Business School, UK, and University of Cape Town, South Africa
** Graduate School of Business, University of Cape Town, South Africa
1. Introduction
The study analyses how processes of institutional change in environments of institutional
voids
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affect smallholder farmer market access in Zambia and Malawi, and explores the role of
different dis/enabling institutional agents and logics. We examine this in the context of two
divergent routes of institutional change - one externally imposed and the second driven from within
the ecosystem itself. We consider how these different institutional processes impact upon
smallholder farmers and how they are able to adapt to these changes.
The availability and affordability of food is a priority for many developing countries and
well-functioning agricultural markets can also be utilized as engines for sustainable economic
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We park for the moment the contestation over the concept of institutional voids (Seremani & Clegg, 2016;
Bothello, Nason & Schnyder, 2019) but return to this later in the paper and explain why we persist with this
terminology in this context.
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growth and the reduction of poverty. But developing countries often have rural markets fraught
with market failures and institutional settings which increase transaction costs and reduce market
inclusivity especially for smallholder farmers. Business can be part of the solution or part of the
problem in these contexts and our case studies illustrate divergent approaches. In the case of
Malawi, we see a foreign institutional logic being imposed by multinational enterprises (MNEs)
due to pressures for more sustainable supply chains and the problems that smallholder farmers
have with compliance and therefore market participation; whilst in the case of Zambia we see
intermediaries trying to transcend institutional voids (or what Mair, Martí, & Ventresca (2012)
term as interfaces between different institutional orders) by embedding the new institutional logics
in local social structures.
Creating business linkages through market inclusivity and making markets work for the
poor is important to transform the fortunes of the rural poor where the majority of the world still
reside and where effective participation of the poor is hindered by the existence of institutional
voids (Mair, Martí, & Ventresca, 2012). We explore the prevalence of such voids and the role that
new institutional logics can play both positively or negatively as regards market access for
smallholder farmers - focusing on how these new institutional logics arise. These farmers are
confronted by significant transaction costs in trying to commercialize operations and to participate
in markets and they wield neither sufficient power to influence price nor advantageous market
knowledge and thus often self-select out of markets and continue with their subsistence methods
of farming (Sartorius & Kirsten, 2007).
The research demonstrates the tension that multiple institutional logics can create
especially amongst those most vulnerable. It contributes to our understanding of poverty
alleviation in developing regions (Saripalli & Chawan, 2017), on overcoming institutional voids,
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market inclusivity and the role of social entrepreneurs and intermediaries (Pärenson, 2011), builds
on the perspective of markets as social spaces for economic exchange (Bourdieu, 2005; Zelizer,
1979, 2013), and the development of African management solutions that are cognizant of the
importance of embedding business solutions in social realities (Luiz, Ganson, & Wennmann, 2019;
Seny Kan, Apitsa, & Adegbite, 2015). By focusing on how new institutional logics emerge we
contribute towards our understanding of the impact of embeddedness, or the lack thereof, on
institutional processes and institutional change, and how these affect local market actors (Hanekom
& Luiz, 2017).
The paper is structured as follows. The literature review presents alternate approaches to
markets from a transaction cost, new institutional economics (NIE) perspective and from a social
construct perspective. Furthermore, we examine these two strands in the context of multiple
institutional logics and how to reconcile these approaches. Section 3 presents the research
methodology. This is followed by the findings and discussion of our two case studies and their
institutional logics. Section 5 concludes and outlines areas for future research.
2. Literature review
2.1 Institutional voids and logics in rural developing markets
From a new institutional economics perspective (NIE), markets are bundles of institutions
that provide a platform for social and economic exchange of goods and services (North, 1990).
Markets require good governance but also inclusive political and economic institutions. These
institutions play a significant role in regulating transaction costs within markets and this
incentivizes the economic actors to participate through productive activities. Weak institutions
result in high and unpredictable transaction costs thereby reducing market access and dis-
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incentivizing the market actors from future participation (Khanna & Palepu, 1997). In addition to
market exclusion, weak institutions result in the formation of institutional voids through ‘empty
spaces’ (Mair et al., 2012).
In emerging markets, these institutional voids may affect exchanges at all stages of the
supply chain – from the raw material sourcing, to manufacturing, distribution, and the sales and
marketing stages (Parmigiani et al., 2015). Khanna and Palepu (1997) identify five categories of
institutional voids that affect supply chains in emerging markets, namely product markets voids,
labor markets voids, capital market voids, regulatory voids, and contracting voids. The existence
and prevalence of these voids depends on the stage of the supply chain at which the market
exchanges are taking place. These voids tend to be severe in subsistence markets where formal
institutions are often most ineffective and affected by corruption (Khanna & Palepu, 1997).
Furthermore, in these environments, informal institutions like traditional rulers often wield
influence and are able to formulate their own rules which further compound the unpredictability
of the regulatory framework (Parmigiani et al., 2015).
Exchanges in emerging markets are frequently challenged by the difficulty of enforcing
formal contracts. Whilst in developed countries, companies rely on strong institutions and formal
contracting to protect their resources and technology and thereby maintain a competitive edge, in
developing countries because of the high transaction costs and inefficiencies associated with the
enforcement of contracts, market actors habitually develop their own set of informal institutions
to counter these costs. They thereby develop an alternative institutional logic.
Market players in developing countries learn to improvise and make do with whatever is
at hand and engage in entrepreneurial activity through bricolage (Chikweche & Fletcher, 2017;
Mair and Marti, 2009). In these extreme settings, bricolage and cultural entrepreneurship are