Digital Entrepreneurship and Institutional Voids: Bridging the Formal-Informal Divide

Okhawere; Paulson Young Ofenimu Ph.D

doi:10.56201/ijebm.vol.12.no9.2026.pg465.480

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Digital Entrepreneurship and Institutional Voids: Bridging the Formal-Informal Divide

Okhawere, Paulson Young Ofenimu Ph.D

Abstract

Emerging economies often experience regulatory uncertainty, weak market-supporting institutions, limited access to finance, and inadequate infrastructure, creating institutional voids that constrain entrepreneurial participation and sustain the formal-informal divide. This conceptual paper examines how digital entrepreneurship can bridge this divide and identifies the conditions under which digital platforms contribute to institutional integration. The paper adopts a conceptual approach, integrating institutional theory, institutional-voids theory, and digital entrepreneurship perspectives to examine how digital platforms function as institutional mechanisms through which entrepreneurs navigate formal and informal economic environments. Digital platforms can reduce information asymmetries and transaction costs, facilitate trust, expand market access, improve payment systems, generate transaction records, and support incremental formalisation. However, digitalisation does not automatically produce formalisation; rather, it may create hybrid forms of institutional participation in which entrepreneurs combine formal, informal, and digitally mediated practices. Digital entrepreneurship can contribute to bridging institutional divides, but it should not be regarded as a substitute for effective institutional development. Policymakers should strengthen digital infrastructure, develop digital and entrepreneurial capabilities, promote inclusive regulatory frameworks, and establish transparent platform-governance mechanisms to support sustainable formalisation, inclusion, resilience, and market expansion. The framework positions institutional voids as structural conditions, digital platforms as mediating mechanisms, entrepreneurial agency as a navigational force, and ecosystem conditions as moderators of developmental and exclusionary outcomes.

Keywords

Digital entrepreneurship; digital platforms; formal-informal divide; informal economy; institutional voids

References

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Digital Entrepreneurship and Institutional Voids: Bridging the Formal-Informal Divide

Abstract

Keywords

References

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