Can informal institutions facilitate enterprise growth through resolving business disputes in the contexts where formal mechanisms are near-complete failure? Descriptive statistics from original survey data in Somalia, a country with decades long conflict and weak formal institutions, revels that trust in formal and semi-formal institutions are positively correlated with microenterprise ownership by female respondents. More importantly, interventions targeted for microenterprise growth show stronger association with business ownership in communities with higher trust in formal, (clan-based) semi-formal or informal institutions. Our findings suggest that while improving institutions remain a priority for the country, enterprise development initiatives can be more effective by factoring in community trust in institutions for dispute resolution.
