Poison or antidote: How subnational informal institutions exacerbate and ameliorate institutional voids

Abstract We explore the mechanisms through which subnational informal institutions exacerbate or ameliorate voids in national formal institutions. Informed by a within-country, cross-sub-region case comparison, we find two exacerbating mechanisms: Competition between the logics embedded in national and subnational institutions and the sabotage of a formal national institution by a void in a subnational informal institution. We also find two ameliorating mechanisms: Strong subnational informal institutions substitute for weak national institutions and bridge voids in formal institutions. Finally, we identify the conditions of expectation alignment and engagement associated with the competition, sabotage, substitution, and bridging mechanisms. Our findings contribute to institutional theory by providing a more subtle and contingent understanding of the interaction between informal and formal, and subnational and national, institutions. Our results also suggest ways in which constrained managers and bureaucrats can reduce the effects of voids in national formal institutions.