The Impact of Institutional Settings on Business Survival: Evidence from Saudi Arabia

Abstract

Entrepreneurship is a multi-layered phenomenon, where various factors contribute to its development. While individuals’ skills, resources, and attributes play critical roles in firms’ survival, the fact that these activities are located within the specific institutional environment implies that their survival is influenced by contextual factors. This thesis seeks to advance the literature on the relationship between institutions and business survival, an area that has been relatively underexplored. Business survival refers to continuity over time, which involves complex and interconnected relationships that tend to transcend the firm and market levels, encouraging the adoption of a micro-foundation of institutions perspective while dealing with such complexity. As an empirical setting, this study uses the Productive Family Businesses (PFBs) in Saudi Arabia to address gaps in the literature and further the understanding of the relationship between institutions and business survival while highlighting the role of key stakeholders, including family and policymakers. Thematic analysis is employed to analyse 42 interviews with entrepreneurs, officials, and NGOs, as well as 52 documents. By using PFBs, this study contributes to theory, practice, and policy. While it explores business challenges and how they turn into barriers to survival at the firm level, it also highlights the role of institutions for surviving in challenging institutional environments. This study suggests that, while firm-level factors, i.e., market, money, and management, pose direct survival barriers, contextual factors, i.e., family context and the macro/meso environment, pose indirect survival barriers by influencing the availability and accessibility of firm-level factors. In centring on the emerging country context, this study contributes to the debate regarding the effectiveness of entrepreneurship policy on survival and the role of policymakers. It advances the literature on the influence of family embeddedness on survival, highlighting how family plays a role in navigating challenging institutional environments. This thesis provides several recommendations for policymakers and researchers.