Beyond institutional voids and the middle-income trap: The emerging business angel market in Malaysia

Abstract

Emerging economies are characterized by the presence of institutional voids which challenge and constrain the behavior of economic agents. In this paper we report on one set of agents, angel investors, in Malaysia, which investors fear is experiencing a middle income trap whereby economic growth and new venture formation stalls due to persistent institutional voids.This research addresses this question through interviews with 19 Malaysian business angel investors in 2015, utilizing a mixed methods approach. Results indicate that business angels in our sample generated strong returns, though they did find it a challenge to invest in and monitor new ventures in a highly uncertain and competitive environment where there is high political uncertainty, weak legal and financial support for investors and SMEs. In order to overcome weak institutional support, business angel investors develop informal institutions by co-investing and networking with family members and government officials. They also conduct careful due diligence before investing and closely monitor their investee companies after investing. This research provides several theory and practice contributions with respect to business-angel investing in emerging economies with weak formal institutional regimes.

Strategy Perception and Implementation on Less Developed Business Ecosystems Micro and Small Enterprises: The Service Sector of Eastern Macedonia and Thrace

“…When the firms living in a business ecosystem are less competitive, then the business ecosystem is comparatively weaker or less developed. According to Harrison et al (2018), a lack of a matching platform to make the connection between investors and entrepreneurs results in a poorly developed entrepreneurial ecosystem. Spigel and Harrison (2018) argue that less-developed ecosystems may see an outflow of resources as entrepreneurs realize they must leave the region to grow their firm successfully because of a lack of available investment capital, demands from investors that they relocate, or the need to move to broader labor markets to tap the talent they need.…”

Communication Barrier, Spillover Effect and Industrial-Technological Innovation

“…PCG depends on CB, because different levels of communication will directly affect the type and depth of information acquisitions [5,51], as well as the PCG shown in Equation (8).The FCFR is regulated by CB, and higher CB reduce the frequency of communication between firms, where the FCFR shown in Equation 9. FCF is determined by the PCG and FCFR, more frequent communication and greater differences will bring a stronger sense of crisis, the FCF as shown in Equation 10…”

“…"Made in China 2025" plan once again provides that the driving force of high-tech and innovation is an important support for China's sustainable development [7]. Changing the mode of economic growth and industrial-technological innovation (ITI) is related to the "middle-income trap" and the existing social contradictions in China, which is a major challenge for its future development [8].…”

The middle-income trap and Russian stagnation

“…Усложняются контрактные взаимоотношения, что требует соответствующей судебной защиты бизнеса [3]. Сложности инновационного процесса, неразвитость соответствующей инфраструктуры препятствуют созданию инноваций [8]. Национальные компании не способны генерировать собственные технологии, и, как следствие, проблемы перехода к производству продукции с высокой добавленной стоимостью порождают ограничения роста [9].…”