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Playing With Fire: the Effects of Institutional Dysfunctions in Postdisaster Business Recovery

PMCID: PMC12516646

PMID: 40730509

Abstract

ABSTRACT Although previous research has illuminated our scholarly understanding of the general effects of institutional dysfunction, there remains a conspicuous dearth of research on how institutional dysfunction shapes postdisaster business recovery. Drawing on insights from entrepreneurs affected by fire outbreaks in marketplaces in a developing economy, this study uncovers two unique and interrelated stages that illuminate how institutional dysfunction manifests over time. Throughout these stages, we observe institutional dysfunction acting as an “accelerator” in the wake of the fire outbreaks, ultimately leading to business closures. Intriguingly, the study reveals that dysfunctions not only expose the faulty practices and routines of businesses but also highlight the fragilities and obstructive nature of existing formal and informal institutions. This multifaceted analysis unravels the more intricate process of how the effects of institutional dysfunction unfold over time, commencing with the sensemaking of marketplace fire outbreaks and focusing on institutional shortcomings and inadequacies (i.e., Stage 1). The unfulfilled promised financial and nonfinancial support by various political actors culminate in a downward spiral, ultimately resulting in disaster‐induced business demise (i.e., Stage 2). The theoretical implications and practical risk mitigation strategies of the study are outlined.

Full Text

In the past two decades, there has been a growing body of research on natural and man‐made disasters, such as heatwaves, fire outbreaks, hurricanes, earthquakes, and epidemics, along with studies shedding light on their effects, including environmental pollution, population displacement, and infrastructure damage in the global south (Marshall et al. 2020; Nielsen et al. 2023; Peek and Guikema 2021; World Bank 2013). In recent years, the number of disaster events and their frequency has increased exponentially, with a threefold increase over the last fifty years, leading to a diverse range of adverse impacts on communities and businesses (Marshall et al. 2020; Nielsen et al. 2023; World Bank 2013). Typical developing economies are characterized by institutional dysfunctions, such as high informality in the economy, underdeveloped transport infrastructure, poor hygiene and sanitation, and persistent incidents of fire, which can impede business activities (Asante and Helbrecht 2020; Bromley and Mackie 2009).
Although institutional dysfunction is a pervasive force shaping the business atmosphere in developing economies (Amankwah‐Amoah et al. 2018; Barnard and Mamabolo 2022; Rodgers et al. 2022), as well as a quintessential determinant of firm behavior (Peng 2002; Shrestha et al. 2010), the potential mechanisms through which institutional dysfunction shapes postdisaster business recovery remain underexplored. While a growing body of research has illuminated scholarly insights into the effects of institutional dysfunction (e.g., Barnard and Mamabolo 2022) and postdisaster business recovery (e.g., Morrish and Jones 2020), the potential linkages between the two remain largely unexplored. Despite a growing body of research on both topics, unfortunately, the current literature is disorganized, disjointed, and fails to explain the potential linkages between the two. Surprisingly limited scholarly attention has been paid to how institutional dysfunction shapes postdisaster recovery efforts. Against this backdrop, the primary purpose of this study is to examine how institutional dysfunction shapes postdisaster business recovery.
A marketplace fire outbreak is a multifaceted hazardous event epitomized by accidental combustion within a market trading area or space (Abunyewah et al. 2023; Ageboba et al. 2023; Oteng‐Ababio et al. 2015). In other words, it involves a blaze engulfing part or the entire major trading hub for goods and services. This disruptive event typically encompasses the rapid or incremental spread of flames within a market trading center or commercial areas, leading to damage to infrastructure, goods, lives, and property (Abunyewah et al. 2023; Nyame‐Asiamah et al. 2023; Oteng‐Ababio and Sarpong 2015). In some countries, marketplaces are also cultural centers, a source of vitality for urban life, and signal centers for demonstrating and celebrating the shared cultural heritage of the people (Abunyewah et al. 2023). Accompanying major fire events often have significant detrimental effects on both public and private property in commercial places (Oteng‐Ababio et al. 2015; World Bank 2013).
The paper makes several contributions to the literature. First, although previous research has illuminated the general effects of institutional dysfunction (e.g. Barnard and Mamabolo 2022; Ofori‐Dankwa and Julian 2013), there remains a conspicuous dearth of scholarly works on the effects in the aftermath of a disaster. Building upon the seminal work on institutions (North 1990; Peng et al. 2023; Scott 2013), this study delves into informal and formal institutional inefficiencies that enhance business vulnerabilities. Thus, the study illuminates the intricate interplay between external forces in driving the processes inherent in postdisaster recovery efforts. In addition, although past studies have illuminated the consequences of fire incidents, encompassing damage to property and supply chain disruptions (see also Peek and Guikema 2021), there has been limited attention given to how institutional deficiencies in the aftermath create conditions that accelerate business failure. The study also contributes to the burgeoning scholarly discourse on institutional dysfunction in times of crisis (Shrestha et al. 2010) by offering new insights into the nexus between institutional dysfunction and disaster events resulting in disaster‐induced business demise.
As defined by North (1990), institutions can be viewed as “the rules of the game in a society or, more formally, the humanly devised constraints that shape human interaction” (p. 3). Institutions tend to be more prevalent and influential when examining conditions for businesses in developing economies (Peng 2022; World Bank 2002). Studies indicate that formal aspects of institutions relate to rules, laws, and regulations that either facilitate or impede market functions (Peng 2022; World Bank 2002). The informal aspects of institutions are fundamentally unwritten and encompass the historical and traditional legacies that permeate and shape societies, including culture, norms, customs, and traditions (Helmke and Levitsky 2006; North 1990; Peng 2022).
One influential scholarly stream grounded in institutions is the institutional dysfunction perspective (Barnard and Mamabolo 2022; Ofori‐Dankwa and Julian 2013). Dysfunctionality can manifest in the form of inefficiencies and corruption, often hindering the development of countries (World Bank 2002). Institutional dysfunction is generally conceptualized to encompass shortcomings or inadequacies in the formal and informal “institutions that facilitate economic activity, as well as the absence of an associated set of rewards and sanctions to enforce those rules, norms, and belief systems” (Tracey and Phillips 2011, p. 31). Anchored in formal institutions are those officially established and enforced by the government and its agencies. Formal institutional dysfunction can be traced to deficiencies and inadequacies related to formal rules and regulations, such as governmental inefficiencies, regulatory compliance and enforcement issues, and poor regulatory environments (Abunyewah et al. 2023; Acquaah 2007; Amankwah‐Amoah and Hinson 2024; North 1990). Informal institutional dysfunction, stemming from unwritten norms and values, can impede and undermine trust and social legitimacy, affecting the functioning of the economy and business decisions (Helmke and Levitsky 2004, 2006; North 1990; Peng 2002, 2022). By adhering to the formal/legal “codes” of conduct and/or ingrained informal institutional practices, organizations would be better able to gain and sustain legitimacy in how they perform their functions (Barnard and Mamabolo 2022; North 1990; Peng 2002). Prior research has shown that these deficiencies can manifest in various ways, such as weak legal enforcement frameworks, incompetent government agencies and regulatory bodies, high incidences of corruption, weak intellectual property rights, government red tape, and inadequate basic infrastructure, including transportation, energy, and sanitation, that support business activities and the general economy (Amankwah‐Amoah et al. 2019; Chung and Luo 2008; Luo et al., 2009; Khanna & Palepu, 1997; Ofori‐Dankwa and Julian 2013; World Bank 2002). By recognizing the potentially pervasive influence of institutions, organizations can cultivate conditions that gain legitimacy as a means of competing and outsmarting market competition (North 1990).
A stream of research indicates that dysfunctional institutions, displaying government inefficiency, delays, bureaucratic inefficiencies, regulatory bottlenecks, corruption, and lack of transparency, have the potential to erode trust and legitimacy (see Acquaah 2011; Acquaah and Eshun 2010; Peng et al. 2023; World Bank 2002).
Research has also shown that these deficiencies can impede economic activities and affect how the market functions (see Khanna and Palepu 2005; North 1990). These deficiencies also create a permission structure that, over time, manifests to hamper the development of new ventures. For instance, the lack of or poorly enforced intellectual property rights can often create conditions that allow rampant counterfeiting of genuine brands and companies’ products and services (Amankwah‐Amoah 2023). This is particularly prevalent in developing countries, where weak legal and regulatory enforcement often hampers core pillars of market functioning, such as contract enforcement and interorganizational dispute resolution. The prevalence of high levels of corruption and lack of transparency in government decisions has the potential to erode public trust in government and government institutions (World Bank 2002), thereby leading some businesses to divert resources toward lobbying, political domination, and other political activities as a means of competing (Boso et al. 2023). Thus, addressing institutional dysfunction has the potential to create a fertile environment for business development and consequential economic growth. Thus, institutional dysfunction epitomizes the intricate interplay between formal and informal institutional conditions and their inadequacy in supporting and facilitating economic activities.
After gaining independence in 1957 and becoming a republic in 1960, Ghana's history in the late 1960s and 1970s was marred by political instability and government overthrows, leading to economic decline, de‐industrialization, and stagnation (Aryeetey and Kanbur 2017; Jedwab and Osei 2012). By the end of the 20th century, there was an increasing recognition that Ghana had failed to fulfill its full potential and take its rightful place at the center of the global economy. The country continued to be plagued by the underdevelopment of entrepreneurial activities, high levels of poverty, and limited industrialization (Jedwab and Osei 2012). In the early 2000s, following a successful transition from one political party to another after a period of single‐party rule, the new government under J.A. Kuffour announced a new era, known as the “Golden Age of Business” (Adomako et al. 2015). This culminated in a host of political and economic reforms designed to create a more conducive atmosphere for business development and entrepreneurship (Aryeetey and Kanbur 2017). Buoyed by increasing political stability in a region with pockets of unstable countries, Ghana emerged as an emerging economy in Sub‐Saharan Africa and is often seen as “Africa's democratic poster child” (African Business 2017, p. 82).
Since the year 2000, Ghana's population has grown from 19,665,502 to 34,121,985 in 2023, thereby exerting further pressure on public services, leading to rural–urban migrations to major cities such as Kumasi, Accra, Tamale, and Tema (Worldometers 2023). Over the six decades since its independence, there has been an increasing number of fire outbreaks, which have been further exacerbated by a lack of or limited adherence to effective health and safety regulations. Since the growth and geographical concentration of shopping centers and stores in the early 2000s, there has been an increasing incidence of fire outbreaks, not only in shopping centers and complexes but also in major cities. In 2020 alone, there were at least five major fire outbreaks across the country, causing damage to properties and leading to the closure of many viable businesses, as well as the destruction of numerous shopping complexes. Reports of fire incidents in Ghana's major markets, such as Kejetia Market in Kumasi and Makola Market in Accra, and the accompanying carnage and damages from these incidents have brought them to public attention, but limited efforts have been made to curb the incidence of fire outbreaks (Amenuveve 2023; Ghanaweb 2023). Combating and mitigating fire outbreaks are characterized by the involvement of multiple vital stakeholders, including market traders and businesses, consumers, Ghana's Environmental Protection Agency, the Ghana National Fire Service, the Ghana Health Service, and the Ambulance Service (Abunyewah et al. 2023).
For instance, in the March 2023 incident, a major fire occurred in Kejetia Market in the Ashanti Regional capital after the 2021 outbreak, and in October 2023, there was another major incident in Accra (Amenuveve 2023; Ghanaweb 2023). In October 2023, over 200 shops and makeshift structures at the Makola Mall were destroyed in a fire outbreak, thereby forcing the local authorities to temporarily close down the mall (Amenuveve 2023). This led to the destruction of many products from companies, including cosmetics and jewelry. The proliferation of fire outbreaks serves as an additional impetus for scholarly examination of how fire outbreak‐induced business failure impacts entrepreneurs and their potential successive ventures.
In light of the limited insights on the effects of institutional dysfunction in underdeveloped countries, a qualitative inductive method was considered the most appropriate to offer more robust and in‐depth insights into this complex issue (Bell et al. 2022; Gehman et al. 2018; Lim 2025; Yin 2018). Accordingly, semistructured interviews were considered the most suitable method to allow for greater flexibility and adaptability in eliciting insights from the informants (Bell et al. 2022). We adopted semistructured interviews with entrepreneurs/business owners in Ghana affected by fire incidents, whose businesses were eventually closed down after the fire outbreak in the markets. The informants were owners of retail outlets affected by major local fires. The respondents interviewed are part of a wider study into business failures in Ghana. In all, 12 affected business owners and three government officials working in the area of fire prevention were interviewed from 2020 to 2023. The interviews were recorded and transcribed within 24 h. In addition to data from the informants, we also mobilized reports and information from businesses’ annual reports, financial statements, past social media posts of some businesses, small businesses, and other trade association documents, as well as government reports and information on fire incidents. In addition, one of the researchers also visited the fire‐damaged stores and sites in Kejetia Market in Kumasi to observe the damage to vital physical infrastructure such as roads, the marketplace, and stores. This was also used as an opportunity for informal discussions with multiple traders and business owners in the area. The field observations, combined with the semi‐structured interviews, also provided the researchers with an opportunity to elicit insights into the damages sustained by existing businesses. Table 1 provides details of the different respondents/informants in the study.
To provide a deeper understanding of institutional dysfunction while maintaining a systematic approach to data analysis, we adopted the analytical method advanced and illustrated by Gioia and colleagues (see Corley & Gioia, 2011; Gioia et al. 1994; Gioia et al. 2013; Gioia, 2021). The Gioia and colleagues’ approach has been found to consistently meet rigorous scientific standards of quality (Magnani and Gioia 2023). This method involves developing first‐order, second‐order, and aggregate themes derived from semi‐structured qualitative data (Corley & Gioia, 2011; Gioia et al. 2000; Gioia et al. 2013; Gioia, 2021; Lim 2025; Magnani and Gioia 2023). As explained by Gioia and colleagues, the first‐order dimension signifies surface‐level or foundational characteristics and raw insights derived from interview data and field notes (Corley & Gioia, 2004; Gioia et al. 2013). The initial round of first‐order coding (see Corbin and Strauss 2008) integrated insights from archival documents provided by informants, interview transcripts, and other secondary data sources. Guided by the first‐order (open) coding, the second‐order (axial coding) dimensions represent a deeper analysis of the issues, identifying pivotal patterns, issues, and interconnected themes derived from the first‐order dimension (Corley & Gioia, 2011; Gioia et al. 2013). This process aimed to provide a foundational understanding of the effects of institutional dysfunction in the aftermath of fire outbreaks.
To further illustrate this process leading to the findings, two of the key themes, such as “non‐certification and illegal connections, highlight regulatory deficiencies and lack of oversight,” and “the role of unqualified middlemen (“goro boys”) in increasing fire risk becomes increasingly visible to other stakeholders,” were integrated to deduce a second‐order theme focusing on “institutional and regulatory deficiencies as catalysts for fire outbreaks” as the outcome of the sense‐making process. The aggregate dimension represents a cumulative effort that synthesizes the second‐order themes to deduce overarching themes related to institutional dysfunction in developing countries. This integrative approach is effective in uncovering deeper insights into key patterns, relationships, and overarching themes (Lim 2025; Magnani and Gioia 2023; Nag et al. 2007). Based on these themes, we identified two distinct waves in the evolution of the effects of institutional dysfunction in developing countries. Figure 1 illustrates the data structure and emerging themes, shedding light on how institutional dysfunction in the aftermath of crises and disasters acts as an accelerator, leading to business failure.
The analysis reveals two interconnected stages of how institutional dysfunction shapes postdisaster business recovery efforts, as demonstrated in Figure 1. Often, institutional dysfunctions, such as a lack of legal enforcement mechanisms and sanctions, coupled with weak governance systems, appear to have created conditions for limited regulatory compliance and ineffective fire risk management.
Given that the country's economy is epitomized by a high level of informality, uncontrolled growth of business infrastructure, coupled with poor environmental and safety regulations within a market space, it increases the fire hazards (Abunyewah et al. 2023; Nyame‐Asiamah et al. 2023). In the aftermath of a disaster, another informant (MK‐5), who is a widely respected owner in the retail sector, emphasized:


According to Thebftonline.com (2023), three out of four shops in the recently inferno‐affected area of the Kejetia Market in Kumasi (i.e., Ghana's second‐largest city) do not have any form of insurance and view insurance companies as dishonest. Indeed, the market consists of numerous traders and informal businesses that are increasingly affected by infernos, often destroying many shops and businesses in the area. Following the corrosive effects of institutional dysfunction in the aftermath of the disaster, failure becomes imminent. In the weeks after the outbreak, existing customers of the businesses began to switch to alternative firms and change suppliers. This termination of relationships and loss of current customers create harsh conditions that eventually lead to the demise of the businesses. Often, the cost of repairing the damaged structure, restocking, and fixing infrastructure absorbs all the available cash, resulting in closure. As further elaborated by the informant:


From a theoretical standpoint, although past studies have examined the effects of disasters (Mostafavi and Ganapati 2021; Peek and Guikema 2021; Sherman‐Morris et al. 2021), prior research has failed to account for how fire outbreak‐induced business failure manifests. In line with the prevailing institutional dysfunctional literature (Khanna & Palepu, 1997; Luo et al., 2009; Ofori‐Dankwa and Julian 2013; Peng 2022), this study illuminates and addresses this gap by capitalizing on insights from developing countries to shed light on how institutional dysfunction in the wake of disasters can create the conditions leading to business failure. Building upon the institutional dysfunction literature presented previously (North 1990; Scott 2013), this study addresses this deficiency in the current literature by developing and illustrating a phase model that explains the processes, decision points, and effects of fire outbreaks.
Departing from conventional wisdom, the study illuminates the destabilizing influences of fire outbreaks and institutional dysfunction as accelerators in creating conditions in the postcrisis period. By delving into the interplay between depleted or lost organizational resources in the context of institutional dysfunction, we shed light on the accelerated process. While business failure has garnered significant and growing scholarly attention (Contreras et al. 2023), a review of the literature indicates that the effects of disasters manifest in shaping the closure process remain largely unaccounted for in the current literature. Drawing on data from failed enterprises in Ghana, this investigation contributes to the current literature by conceptualizing business failure as an outcome of externally driven conditions, shedding light on the intersection between disaster studies and business failure. Given that around 80% of Ghana's workforce operates in the informal sector, typified by informal institutions (Ghana Statistical Service 2013), the effects of institutional dysfunctions are likely to differ fundamentally from conditions in advanced economies. For instance, a typical Ghanaian marketplace tends to be heavily congested with numerous informal traders and their customers (Abunyewah et al. 2023; Boamah et al. 2020). Accordingly, this study addresses the current paucity of scholarly works on how the effects of informal institutions manifest in hampering disaster recovery efforts.
In closing, this field study advances the scholarly discourse on risk analysis (Gokmenoglu and Dasci Sonmez 2024; Nyame‐Asiamah et al. 2023) and recovery from disasters (Xie et al. 2018) by examining the effects of institutional dysfunction on postdisaster recovery. This study's focus on developing countries, shaped by institutional deficiencies, provides valuable insights into the different types of risks that manifest in the aftermath of fire outbreaks. It is hoped that this research serves as a catalyst for new streams of inquiry into how institutional dysfunction contributes to fire outbreaks in sub‐Saharan African countries and beyond.

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In recent years, the number of disaster events and their frequency has increased exponentially, with a threefold increase over the last fifty years, leading to a diverse range of adverse impacts on communities and businesses (Marshall et\\u00a0al. 2020; Nielsen et\\u00a0al. 2023; World Bank 2013). Typical developing economies are characterized by institutional dysfunctions, such as high informality in the economy, underdeveloped transport infrastructure, poor hygiene and sanitation, and persistent incidents of fire, which can impede business activities (Asante and Helbrecht 2020; Bromley and Mackie 2009).\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0011\", \"risa70085-bib-0016\", \"risa70085-bib-0066\", \"risa70085-bib-0062\", \"risa70085-bib-0069\", \"risa70085-bib-0016\", \"risa70085-bib-0050\"], \"section\": \"Introduction\", \"text\": \"Although institutional dysfunction is a pervasive force shaping the business atmosphere in developing economies (Amankwah\\u2010Amoah et\\u00a0al. 2018; Barnard and Mamabolo 2022; Rodgers et\\u00a0al. 2022), as well as a quintessential determinant of firm behavior (Peng 2002; Shrestha et\\u00a0al. 2010), the potential mechanisms through which institutional dysfunction shapes postdisaster business recovery remain underexplored. While a growing body of research has illuminated scholarly insights into the effects of institutional dysfunction (e.g., Barnard and Mamabolo 2022) and postdisaster business recovery (e.g., Morrish and Jones 2020), the potential linkages between the two remain largely unexplored. Despite a growing body of research on both topics, unfortunately, the current literature is disorganized, disjointed, and fails to explain the potential linkages between the two. Surprisingly limited scholarly attention has been paid to how institutional dysfunction shapes postdisaster recovery efforts. Against this backdrop, the primary purpose of this study is to examine how institutional dysfunction shapes postdisaster business recovery.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0001\", \"risa70085-bib-0008\", \"risa70085-bib-0059\", \"risa70085-bib-0001\", \"risa70085-bib-0056\", \"risa70085-bib-0060\", \"risa70085-bib-0001\", \"risa70085-bib-0059\", \"risa70085-bib-0075\"], \"section\": \"Introduction\", \"text\": \"A marketplace fire outbreak is a multifaceted hazardous event epitomized by accidental combustion within a market trading area or space (Abunyewah et\\u00a0al. 2023; Ageboba et\\u00a0al. 2023; Oteng\\u2010Ababio et\\u00a0al. 2015). In other words, it involves a blaze engulfing part or the entire major trading hub for goods and services. This disruptive event typically encompasses the rapid or incremental spread of flames within a market trading center or commercial areas, leading to damage to infrastructure, goods, lives, and property (Abunyewah et\\u00a0al. 2023; Nyame\\u2010Asiamah et\\u00a0al. 2023; Oteng\\u2010Ababio and Sarpong 2015). In some countries, marketplaces are also cultural centers, a source of vitality for urban life, and signal centers for demonstrating and celebrating the shared cultural heritage of the people (Abunyewah et\\u00a0al. 2023). Accompanying major fire events often have significant detrimental effects on both public and private property in commercial places (Oteng\\u2010Ababio et\\u00a0al. 2015; World Bank 2013).\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0016\", \"risa70085-bib-0057\", \"risa70085-bib-0055\", \"risa70085-bib-0064\", \"risa70085-bib-0067\", \"risa70085-bib-0061\", \"risa70085-bib-0069\"], \"section\": \"Introduction\", \"text\": \"The paper makes several contributions to the literature. First, although previous research has illuminated the general effects of institutional dysfunction (e.g. Barnard and Mamabolo 2022; Ofori\\u2010Dankwa and Julian 2013), there remains a conspicuous dearth of scholarly works on the effects in the aftermath of a disaster. Building upon the seminal work on institutions (North 1990; Peng et\\u00a0al. 2023; Scott 2013), this study delves into informal and formal institutional inefficiencies that enhance business vulnerabilities. Thus, the study illuminates the intricate interplay between external forces in driving the processes inherent in postdisaster recovery efforts. In addition, although past studies have illuminated the consequences of fire incidents, encompassing damage to property and supply chain disruptions (see also Peek and Guikema 2021), there has been limited attention given to how institutional deficiencies in the aftermath create conditions that accelerate business failure. The study also contributes to the burgeoning scholarly discourse on institutional dysfunction in times of crisis (Shrestha et\\u00a0al. 2010) by offering new insights into the nexus between institutional dysfunction and disaster events resulting in disaster\\u2010induced business demise.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0055\", \"risa70085-bib-0063\", \"risa70085-bib-0074\", \"risa70085-bib-0063\", \"risa70085-bib-0074\", \"risa70085-bib-0039\", \"risa70085-bib-0055\", \"risa70085-bib-0063\"], \"section\": \"Institutional Dysfunction: A Conceptual Integration\", \"text\": \"As defined by North (1990), institutions can be viewed as \\u201cthe rules of the game in a society or, more formally, the humanly devised constraints that shape human interaction\\u201d (p. 3). Institutions tend to be more prevalent and influential when examining conditions for businesses in developing economies (Peng 2022; World Bank 2002). Studies indicate that formal aspects of institutions relate to rules, laws, and regulations that either facilitate or impede market functions (Peng 2022; World Bank 2002). The informal aspects of institutions are fundamentally unwritten and encompass the historical and traditional legacies that permeate and shape societies, including culture, norms, customs, and traditions (Helmke and Levitsky 2006; North 1990; Peng 2022).\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0016\", \"risa70085-bib-0057\", \"risa70085-bib-0074\", \"risa70085-bib-0073\", \"risa70085-bib-0001\", \"risa70085-bib-0002\", \"risa70085-bib-0012\", \"risa70085-bib-0055\", \"risa70085-bib-0038\", \"risa70085-bib-0039\", \"risa70085-bib-0055\", \"risa70085-bib-0062\", \"risa70085-bib-0063\", \"risa70085-bib-0016\", \"risa70085-bib-0055\", \"risa70085-bib-0062\", \"risa70085-bib-0010\", \"risa70085-bib-0024\", \"risa70085-bib-0057\", \"risa70085-bib-0074\", \"risa70085-bib-0055\"], \"section\": \"Institutional Dysfunction: A Conceptual Integration\", \"text\": \"One influential scholarly stream grounded in institutions is the institutional dysfunction perspective (Barnard and Mamabolo 2022; Ofori\\u2010Dankwa and Julian 2013). Dysfunctionality can manifest in the form of inefficiencies and corruption, often hindering the development of countries (World Bank 2002). Institutional dysfunction is generally conceptualized to encompass shortcomings or inadequacies in the formal and informal \\u201cinstitutions that facilitate economic activity, as well as the absence of an associated set of rewards and sanctions to enforce those rules, norms, and belief systems\\u201d (Tracey and Phillips 2011, p. 31). Anchored in formal institutions are those officially established and enforced by the government and its agencies. Formal institutional dysfunction can be traced to deficiencies and inadequacies related to formal rules and regulations, such as governmental inefficiencies, regulatory compliance and enforcement issues, and poor regulatory environments (Abunyewah et\\u00a0al. 2023; Acquaah 2007; Amankwah\\u2010Amoah and Hinson 2024; North 1990). Informal institutional dysfunction, stemming from unwritten norms and values, can impede and undermine trust and social legitimacy, affecting the functioning of the economy and business decisions (Helmke and Levitsky 2004, 2006; North 1990; Peng 2002, 2022). By adhering to the formal/legal \\u201ccodes\\u201d of conduct and/or ingrained informal institutional practices, organizations would be better able to gain and sustain legitimacy in how they perform their functions (Barnard and Mamabolo 2022; North 1990; Peng 2002). Prior research has shown that these deficiencies can manifest in various ways, such as weak legal enforcement frameworks, incompetent government agencies and regulatory bodies, high incidences of corruption, weak intellectual property rights, government red tape, and inadequate basic infrastructure, including transportation, energy, and sanitation, that support business activities and the general economy (Amankwah\\u2010Amoah et\\u00a0al. 2019; Chung and Luo 2008; Luo et\\u00a0al., 2009; Khanna & Palepu, 1997; Ofori\\u2010Dankwa and Julian 2013; World Bank 2002). By recognizing the potentially pervasive influence of institutions, organizations can cultivate conditions that gain legitimacy as a means of competing and outsmarting market competition (North 1990).\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0003\", \"risa70085-bib-0004\", \"risa70085-bib-0064\", \"risa70085-bib-0074\"], \"section\": \"Institutional Dysfunction: A Conceptual Integration\", \"text\": \"A stream of research indicates that dysfunctional institutions, displaying government inefficiency, delays, bureaucratic inefficiencies, regulatory bottlenecks, corruption, and lack of transparency, have the potential to erode trust and legitimacy (see Acquaah 2011; Acquaah and Eshun 2010; Peng et\\u00a0al. 2023; World Bank 2002).\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0042\", \"risa70085-bib-0055\", \"risa70085-bib-0009\", \"risa70085-bib-0074\", \"risa70085-bib-0021\"], \"section\": \"Institutional Dysfunction: A Conceptual Integration\", \"text\": \"Research has also shown that these deficiencies can impede economic activities and affect how the market functions (see Khanna and Palepu 2005; North 1990). These deficiencies also create a permission structure that, over time, manifests to hamper the development of new ventures. For instance, the lack of or poorly enforced intellectual property rights can often create conditions that allow rampant counterfeiting of genuine brands and companies\\u2019 products and services (Amankwah\\u2010Amoah 2023). This is particularly prevalent in developing countries, where weak legal and regulatory enforcement often hampers core pillars of market functioning, such as contract enforcement and interorganizational dispute resolution. The prevalence of high levels of corruption and lack of transparency in government decisions has the potential to erode public trust in government and government institutions (World Bank 2002), thereby leading some businesses to divert resources toward lobbying, political domination, and other political activities as a means of competing (Boso et\\u00a0al. 2023). Thus, addressing institutional dysfunction has the potential to create a fertile environment for business development and consequential economic growth. Thus, institutional dysfunction epitomizes the intricate interplay between formal and informal institutional conditions and their inadequacy in supporting and facilitating economic activities.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0014\", \"risa70085-bib-0040\", \"risa70085-bib-0040\", \"risa70085-bib-0006\", \"risa70085-bib-0014\", \"risa70085-bib-0007\"], \"section\": \"Research Context: Ghana\", \"text\": \"After gaining independence in 1957 and becoming a republic in 1960, Ghana's history in the late 1960s and 1970s was marred by political instability and government overthrows, leading to economic decline, de\\u2010industrialization, and stagnation (Aryeetey and Kanbur 2017; Jedwab and Osei 2012). By the end of the 20th century, there was an increasing recognition that Ghana had failed to fulfill its full potential and take its rightful place at the center of the global economy. The country continued to be plagued by the underdevelopment of entrepreneurial activities, high levels of poverty, and limited industrialization (Jedwab and Osei 2012). In the early 2000s, following a successful transition from one political party to another after a period of single\\u2010party rule, the new government under J.A. Kuffour announced a new era, known as the \\u201cGolden Age of Business\\u201d (Adomako et\\u00a0al. 2015). This culminated in a host of political and economic reforms designed to create a more conducive atmosphere for business development and entrepreneurship (Aryeetey and Kanbur 2017). Buoyed by increasing political stability in a region with pockets of unstable countries, Ghana emerged as an emerging economy in Sub\\u2010Saharan Africa and is often seen as \\u201cAfrica's democratic poster child\\u201d (African Business 2017, p. 82).\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0076\", \"risa70085-bib-0013\", \"risa70085-bib-0032\", \"risa70085-bib-0001\"], \"section\": \"Research Context: Ghana\", \"text\": \"Since the year 2000, Ghana's population has grown from 19,665,502 to 34,121,985 in 2023, thereby exerting further pressure on public services, leading to rural\\u2013urban migrations to major cities such as Kumasi, Accra, Tamale, and Tema (Worldometers 2023). Over the six decades since its independence, there has been an increasing number of fire outbreaks, which have been further exacerbated by a lack of or limited adherence to effective health and safety regulations. Since the growth and geographical concentration of shopping centers and stores in the early 2000s, there has been an increasing incidence of fire outbreaks, not only in shopping centers and complexes but also in major cities. In 2020 alone, there were at least five major fire outbreaks across the country, causing damage to properties and leading to the closure of many viable businesses, as well as the destruction of numerous shopping complexes. Reports of fire incidents in Ghana's major markets, such as Kejetia Market in Kumasi and Makola Market in Accra, and the accompanying carnage and damages from these incidents have brought them to public attention, but limited efforts have been made to curb the incidence of fire outbreaks (Amenuveve 2023; Ghanaweb 2023). Combating and mitigating fire outbreaks are characterized by the involvement of multiple vital stakeholders, including market traders and businesses, consumers, Ghana's Environmental Protection Agency, the Ghana National Fire Service, the Ghana Health Service, and the Ambulance Service (Abunyewah et\\u00a0al. 2023).\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0013\", \"risa70085-bib-0032\", \"risa70085-bib-0013\"], \"section\": \"Research Context: Ghana\", \"text\": \"For instance, in the March 2023 incident, a major fire occurred in Kejetia Market in the Ashanti Regional capital after the 2021 outbreak, and in October 2023, there was another major incident in Accra (Amenuveve 2023; Ghanaweb 2023). In October 2023, over 200 shops and makeshift structures at the Makola Mall were destroyed in a fire outbreak, thereby forcing the local authorities to temporarily close down the mall (Amenuveve 2023). This led to the destruction of many products from companies, including cosmetics and jewelry. The proliferation of fire outbreaks serves as an additional impetus for scholarly examination of how fire outbreak\\u2010induced business failure impacts entrepreneurs and their potential successive ventures.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0017\", \"risa70085-bib-0030\", \"risa70085-bib-0045\", \"risa70085-bib-0078\", \"risa70085-bib-0017\", \"risa70085-tbl-0001\"], \"section\": \"Method\", \"text\": \"In light of the limited insights on the effects of institutional dysfunction in underdeveloped countries, a qualitative inductive method was considered the most appropriate to offer more robust and in\\u2010depth insights into this complex issue (Bell et\\u00a0al. 2022; Gehman et\\u00a0al. 2018; Lim 2025; Yin 2018). Accordingly, semistructured interviews were considered the most suitable method to allow for greater flexibility and adaptability in eliciting insights from the informants (Bell et\\u00a0al. 2022). We adopted semistructured interviews with entrepreneurs/business owners in Ghana affected by fire incidents, whose businesses were eventually closed down after the fire outbreak in the markets. The informants were owners of retail outlets affected by major local fires. The respondents interviewed are part of a wider study into business failures in Ghana. In all, 12 affected business owners and three government officials working in the area of fire prevention were interviewed from 2020 to 2023. The interviews were recorded and transcribed within 24\\u00a0h. In addition to data from the informants, we also mobilized reports and information from businesses\\u2019 annual reports, financial statements, past social media posts of some businesses, small businesses, and other trade association documents, as well as government reports and information on fire incidents. In addition, one of the researchers also visited the fire\\u2010damaged stores and sites in Kejetia Market in Kumasi to observe the damage to vital physical infrastructure such as roads, the marketplace, and stores. This was also used as an opportunity for informal discussions with multiple traders and business owners in the area. The field observations, combined with the semi\\u2010structured interviews, also provided the researchers with an opportunity to elicit insights into the damages sustained by existing businesses. Table\\u00a01 provides details of the different respondents/informants in the study.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0036\", \"risa70085-bib-0033\", \"risa70085-bib-0083\", \"risa70085-bib-0046\", \"risa70085-bib-0034\", \"risa70085-bib-0033\", \"risa70085-bib-0083\", \"risa70085-bib-0045\", \"risa70085-bib-0046\", \"risa70085-bib-0033\", \"risa70085-bib-0027\", \"risa70085-bib-0033\"], \"section\": \"Data Analysis\", \"text\": \"To provide a deeper understanding of institutional dysfunction while maintaining a systematic approach to data analysis, we adopted the analytical method advanced and illustrated by Gioia and colleagues (see Corley & Gioia, 2011; Gioia et al. 1994; Gioia et\\u00a0al. 2013; Gioia, 2021). The Gioia and colleagues\\u2019 approach has been found to consistently meet rigorous scientific standards of quality (Magnani and Gioia 2023). This method involves developing first\\u2010order, second\\u2010order, and aggregate themes derived from semi\\u2010structured qualitative data (Corley & Gioia, 2011; Gioia et al. 2000; Gioia et\\u00a0al. 2013; Gioia, 2021; Lim 2025; Magnani and Gioia 2023). As explained by Gioia and colleagues, the first\\u2010order dimension signifies surface\\u2010level or foundational characteristics and raw insights derived from interview data and field notes (Corley & Gioia, 2004; Gioia et\\u00a0al. 2013). The initial round of first\\u2010order coding (see Corbin and Strauss 2008) integrated insights from archival documents provided by informants, interview transcripts, and other secondary data sources. Guided by the first\\u2010order (open) coding, the second\\u2010order (axial coding) dimensions represent a deeper analysis of the issues, identifying pivotal patterns, issues, and interconnected themes derived from the first\\u2010order dimension (Corley & Gioia, 2011; Gioia et\\u00a0al. 2013). This process aimed to provide a foundational understanding of the effects of institutional dysfunction in the aftermath of fire outbreaks.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0045\", \"risa70085-bib-0046\", \"risa70085-bib-0053\", \"risa70085-fig-0001\"], \"section\": \"Data Analysis\", \"text\": \"To further illustrate this process leading to the findings, two of the key themes, such as \\u201cnon\\u2010certification and illegal connections, highlight regulatory deficiencies and lack of oversight,\\u201d and \\u201cthe role of unqualified middlemen (\\u201cgoro boys\\u201d) in increasing fire risk becomes increasingly visible to other stakeholders,\\u201d were integrated to deduce a second\\u2010order theme focusing on \\u201cinstitutional and regulatory deficiencies as catalysts for fire outbreaks\\u201d as the outcome of the sense\\u2010making process. The aggregate dimension represents a cumulative effort that synthesizes the second\\u2010order themes to deduce overarching themes related to institutional dysfunction in developing countries. This integrative approach is effective in uncovering deeper insights into key patterns, relationships, and overarching themes (Lim 2025; Magnani and Gioia 2023; Nag et\\u00a0al. 2007). Based on these themes, we identified two distinct waves in the evolution of the effects of institutional dysfunction in developing countries. Figure\\u00a01 illustrates the data structure and emerging themes, shedding light on how institutional dysfunction in the aftermath of crises and disasters acts as an accelerator, leading to business failure.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-fig-0001\"], \"section\": \"Main Findings\", \"text\": \"The analysis reveals two interconnected stages of how institutional dysfunction shapes postdisaster business recovery efforts, as demonstrated in Figure\\u00a01. Often, institutional dysfunctions, such as a lack of legal enforcement mechanisms and sanctions, coupled with weak governance systems, appear to have created conditions for limited regulatory compliance and ineffective fire risk management.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0001\", \"risa70085-bib-0056\"], \"section\": \"Stage 1: Deciphering the Blaze\", \"text\": \"Given that the country's economy is epitomized by a high level of informality, uncontrolled growth of business infrastructure, coupled with poor environmental and safety regulations within a market space, it increases the fire hazards (Abunyewah et\\u00a0al. 2023; Nyame\\u2010Asiamah et\\u00a0al. 2023). In the aftermath of a disaster, another informant (MK\\u20105), who is a widely respected owner in the retail sector, emphasized:\\n\\n\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0072\"], \"section\": \"Stage 2: Unraveling Disaster\\u2010Induced Business Demise\", \"text\": \"According to Thebftonline.com (2023), three out of four shops in the recently inferno\\u2010affected area of the Kejetia Market in Kumasi (i.e., Ghana's second\\u2010largest city) do not have any form of insurance and view insurance companies as dishonest. Indeed, the market consists of numerous traders and informal businesses that are increasingly affected by infernos, often destroying many shops and businesses in the area. Following the corrosive effects of institutional dysfunction in the aftermath of the disaster, failure becomes imminent. In the weeks after the outbreak, existing customers of the businesses began to switch to alternative firms and change suppliers. This termination of relationships and loss of current customers create harsh conditions that eventually lead to the demise of the businesses. Often, the cost of repairing the damaged structure, restocking, and fixing infrastructure absorbs all the available cash, resulting in closure. As further elaborated by the informant:\\n\\n\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0051\", \"risa70085-bib-0061\", \"risa70085-bib-0068\", \"risa70085-bib-0057\", \"risa70085-bib-0063\", \"risa70085-bib-0055\", \"risa70085-bib-0067\"], \"section\": \"Theoretical Contributions\", \"text\": \"From a theoretical standpoint, although past studies have examined the effects of disasters (Mostafavi and Ganapati 2021; Peek and Guikema 2021; Sherman\\u2010Morris et\\u00a0al. 2021), prior research has failed to account for how fire outbreak\\u2010induced business failure manifests. In line with the prevailing institutional dysfunctional literature (Khanna & Palepu, 1997; Luo et\\u00a0al., 2009; Ofori\\u2010Dankwa and Julian 2013; Peng 2022), this study illuminates and addresses this gap by capitalizing on insights from developing countries to shed light on how institutional dysfunction in the wake of disasters can create the conditions leading to business failure. Building upon the institutional dysfunction literature presented previously (North 1990; Scott 2013), this study addresses this deficiency in the current literature by developing and illustrating a phase model that explains the processes, decision points, and effects of fire outbreaks.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0026\", \"risa70085-bib-0031\", \"risa70085-bib-0001\", \"risa70085-bib-0019\"], \"section\": \"Theoretical Contributions\", \"text\": \"Departing from conventional wisdom, the study illuminates the destabilizing influences of fire outbreaks and institutional dysfunction as accelerators in creating conditions in the postcrisis period. By delving into the interplay between depleted or lost organizational resources in the context of institutional dysfunction, we shed light on the accelerated process. While business failure has garnered significant and growing scholarly attention (Contreras et\\u00a0al. 2023), a review of the literature indicates that the effects of disasters manifest in shaping the closure process remain largely unaccounted for in the current literature. Drawing on data from failed enterprises in Ghana, this investigation contributes to the current literature by conceptualizing business failure as an outcome of externally driven conditions, shedding light on the intersection between disaster studies and business failure. Given that around 80% of Ghana's workforce operates in the informal sector, typified by informal institutions (Ghana Statistical Service 2013), the effects of institutional dysfunctions are likely to differ fundamentally from conditions in advanced economies. For instance, a typical Ghanaian marketplace tends to be heavily congested with numerous informal traders and their customers (Abunyewah et\\u00a0al. 2023; Boamah et\\u00a0al. 2020). Accordingly, this study addresses the current paucity of scholarly works on how the effects of informal institutions manifest in hampering disaster recovery efforts.\"}, {\"pmc\": \"PMC12516646\", \"pmid\": \"40730509\", \"reference_ids\": [\"risa70085-bib-0037\", \"risa70085-bib-0056\", \"risa70085-bib-0077\"], \"section\": \"Conclusion\", \"text\": \"In closing, this field study advances the scholarly discourse on risk analysis (Gokmenoglu and Dasci Sonmez 2024; Nyame\\u2010Asiamah et\\u00a0al. 2023) and recovery from disasters (Xie et\\u00a0al. 2018) by examining the effects of institutional dysfunction on postdisaster recovery. This study's focus on developing countries, shaped by institutional deficiencies, provides valuable insights into the different types of risks that manifest in the aftermath of fire outbreaks. It is hoped that this research serves as a catalyst for new streams of inquiry into how institutional dysfunction contributes to fire outbreaks in sub\\u2010Saharan African countries and beyond.\"}]"

Metadata

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