The endogamy tradition and the performance of informal owner-manager ventures in Sub-Saharan Africa

Informal businesses, ubiquitous in developing countries, operate on the fringes of the (often ineffective) state, and are instead influenced by informal institutions. This paper applies a cultural anthropology perspective to provide explanations on the origins and dynamics of informal institutions and their effects on informal business performance. We posit that informal institutions originate from the traditions embedded in family systems, and we consider endogamy - the practice of marrying within a specific social group or local community - as a key dimension of family traditions relevant for performance of informal entrepreneurs. First, endogamy can make bridging trust more difficult to establish, limiting wider market opportunities for informal businesses in Sub-Saharan Africa and lowering their performance. Second, the evolution of informal institutions can be driven by external cultural interventions that are antipathetic to the pre-existing family systems. For example, the effect of endogamy might be attenuated by specific experiences of Africa’s colonial past, especially if the colonial powers were characterised by individualistic cultures. Our hypotheses are supported by the empirical analysis based on surveys of informal entrepreneurs in multiple regions of eight African countries.