Developing an Original Theoretical Framework for Institutional Entrepreneurship and Industry Transformation in Nigeria’s Informal Economy

Institutional entrepreneurship theory explains how actors leverage resources to create or transform institutional arrangements, yet its application to Nigeria's vast informal economy, where most entrepreneurial activity occurs outside formal institutions, requires original theoretical development. This study develops and validates an original Informal Economy Institutional Entrepreneurship Framework (IEIEF) that accounts for the distinctive institutional logics, power dynamics, and legitimation mechanisms operating in Nigerian informal economic sectors. The framework is constructed through systematic conceptual synthesis of 180 theoretical and empirical sources and iterative expert validation involving 40 academics, practitioners, and policy specialists across Nigeria's six geopolitical zones. The IEIEF identifies three original theoretical constructs: Embedded Informal Authority (the quasi-institutional authority structures through which market leaders, guilds, and ethnic business associations govern informal economic activity), Incremental Formalisation Pathways (the staged processes through which informal enterprises selectively adopt formal institutional elements while retaining informal governance), and Institutional Layering Entrepreneurship (the strategic behaviour of entrepreneurs who stack informal and formal institutional resources to reduce uncertainty and gain competitive legitimacy). The framework is empirically tested using a multi-site comparative case study of institutional entrepreneurship in four informal sectors: Aba textile and garment production, Kano dry goods wholesale, Lagos road transport, and Port Harcourt artisan technical services. Data from 90 in-depth interviews, 200 structured questionnaires, and institutional mapping exercises inform the qualitative comparative analysis. The IEIEF successfully explains observed patterns of sector-level institutional evolution in all four cases, offering a theoretically original contribution to informal economy business administration research in sub-Saharan Africa.

Keywords: institutional entrepreneurship, informal economy, Nigeria, institutional theory, sector transformation