Institutional Theory and Firm-Level Entrepreneurship: Analysing How Formal and Informal Institutions Shape New Venture Creation in Nigeria

This study applies institutional theory to empirically analyse how formal institutions, including regulatory frameworks, property rights, and financial systems, and informal institutions, including social norms, ethnic networks, and trust relationships, jointly influence new venture creation rates and characteristics in Nigeria. Institutional theory has been widely applied in entrepreneurship research, but Nigerian-specific empirical analysis that distinguishes and measures the independent effects of formal and informal institutional dimensions on entrepreneurial activity across different geopolitical zones remains underdeveloped. The study employs a mixed-methods design combining state-level panel data analysis using new business registration statistics from the CAC database and economic, regulatory, and social capital proxies for institutional quality across Nigeria's 36 states, with qualitative interviews conducted with 25 entrepreneurs and 10 institutional experts in four representative states: Anambra, Lagos, Kano, and Borno. Panel regression analysis and thematic analysis are applied respectively to quantitative and qualitative data. Findings indicate that informal institutional variables, particularly ethnic business trust networks and access to rotating credit associations, show stronger positive associations with new venture creation rates than formal institutional quality in most Nigerian states, suggesting that entrepreneurs substitute informal institutions for weak formal ones. States with improving formal regulatory environments show a transition from informal to formal institutional dependence in venture creation over time. Keywords: institutional theory, new venture creation, formal institutions, informal institutions, Nigeria.