Informal Economy Integration, Institutional Entrepreneurship, and Market Development: Evidence from Nigerian Urban Markets

This study investigates how institutional entrepreneurship drives the integration of informal economy actors into formal market development pathways in Nigerian urban markets, generating an original theory of informal-formal institutional bridging with broad applicability to developing economy market development contexts. Nigeria's urban markets, including Onitsha (South East), Kano central market (North West), and Balogun Market Lagos (South West), represent massive informal economic ecosystems whose integration into formal institutional frameworks remains a persistent governance and economic development challenge. Employing a multi-site ethnographic and institutional analysis methodology over thirty months, this research combines 104 interviews with market association leaders, government officials, formal businesses, and traders with participant observation, transaction analysis, and institutional document review. The analytical strategy integrates institutional entrepreneurship theory with informality scholarship and market development literature to generate an original process model of informal-formal integration. The study identifies market association leaders as the primary institutional entrepreneurs, demonstrating through process tracing how they leverage cultural legitimacy, network centrality, and strategic framing to progressively institutionalise rules that bridge informal practices with formal market governance requirements. Original theoretical contributions include the concept of incremental institutional bridging, describing the non-disruptive integration pathway that preserves informal economy social capital while expanding formal participation, and cultural legitimacy arbitrage as a specific institutional entrepreneurship mechanism in African market contexts. Keywords: informal economy, institutional entrepreneurship, market development, urban markets, Nigeria.