Better contract enforcement and stronger institutions expand the range of contract arrangements possible for businesses, thus alleviating frictions in trade, partnerships and investments. Nevertheless, the impact of better contract enforcement is unlikely to benefit all types of businesses equally. In particular, women suffer disproportionately from weak contract enforcement and face multiple barriers to justice. Plenty of evidence indeed show that women are still vulnerable to expropriation and violence, particularly in male-dominated fields and in settings with more limited contract enforcement (Wilson and Herrnstein,1985). Workplace sexual harassment is ubiquitous in male-dominated workplaces and sectors, where it affects as many as 30% of the female workforce (Folke and Rickne, 2022; Adams-Prassl et al., 2022). These figures in the developing world may be even higher (Lim et al., 2018), as unequal social norms and insecure rights, guiding behavior both at home and in the market, exacerbate physical vulnerability (Campos et al., 2015; Ashraf et al., 2022). Weak institutions may then perpetuate – or may even aggravate – the well-known worldwide gender gap in entrepreneurial performance (e.g., Global Entrepreneurship Monitor, 2018; OECD, 2012).
This leads to our research question: Does better contract enforcement disproportionately benefit female-led small-scale enterprises and enable women to achieve better economic outcomes? In particular, we hypothesize that weak contract enforcement may limit women’s ability to engage in a range of profitable interactions in the marketplace which expose them to expropriation risks. A clear example of these types of activities are one-shot collaborations that may allow to overcome scale constraints for SMEs (see Bassi et al, 2022). We are going to consider both formal contract enforcement institutions (e.g., small claims courts) as well as informal institutions, such as local urban chiefs. We believe this distinction is important as the latter are a far more common resource for small and informal businesses.
Identifying the causal effects of institutions on business performance and gender gaps is challenging empirically given the difficulty of exogenously varying institutions. We will construct such empirical variation in institutional access and quality through lowcost field interventions in Lusaka, Zambia. As in any other big city in Sub-Saharan Africa, businesses in Lusaka tend to cluster within brick-and-mortar markets (either council or cooperative). We plan to conduct the experiments by recruiting firms within or just outside markets, for easier access. While legal institutions may also improve business outcomes, we focus on exploring the role of a more informal type of institutional support: market chiefs (MC). While their exact functions vary depending on the market, all the MCs are involved in solving disputes arising between market members and/or clients. Interestingly, MCs are by far the main institutions supporting the needs of smallscale enterprises, either formal or informal. Chiefs have also the highest reputation, in terms of speed and fairness of resolution. Our first two activities focus on exploring the impact of MCs. The last one on some pilot activities about legal institutions (The Small Claims Courts). We aim to involve a total of 900 entrepreneurs, in three different types of field activities.
