What are institutional voids?

In emerging economies, the institutional infrastructure to support market-driven economies and

provide basic services often falls short.
Institutional development is a complex process, dependent upon specific factors related to the
historical, social, and cultural forces shaping the country or region in question.
The most important factor in a market economy is the ability of buyers and sellers to find one
another and complete transactions as seamlessly as possible. Institutional voids are the gaps that
exist in specific markets that serve as roadblacks to the ideal interactions and transactions of buyers
and sellers.
Institutional voids come in a variety of forms: absent or unreliable sources of information related
to the market as a whole, uncertain regulatory or intellectual property regimes, and inefficient
judicial apparatus are just some possible examples.
Although institutional voids are palpable impediments to effective transactions and the
proliferation of beneficial services (such as reliable healthcare), they are also opportunities for
entrepreneurial interventions.
Absence of Information is what is called institutional void. And when that information is not there,
then you have the most basic breakdown.
 Figure out the areas where corruption is high and figure out the institutional void.
 Fixing the corruption struck areas are a lucrative business opportunity in developing
economies
 Crowd source all pleas from corruption stricken people and here’s a business idea which
comes from, ‘citizen empowerment’.
 All you need is a cellphone and little advertising.
 Corruption causes people to consume expired goods, medicines, and access low quality
services and results in the country losing a lot of money. So addressing corruption will
definitely help the country improve economically in a sustainable way
 More people now are networked by trains, planes, and cellphones than ever before
Economies of Scale:
ECONOMIES OF SCALE
Economies of scale can be defined as the cost advantage that arises with increased output of a
product. Economies of scale arise because of the inverse relationship between the quantity
produced and per-unit fixed costs; i.e., the greater the quantity of a good produced, the lower the
per-unit fixed cost because these costs are shared over a larger number of goods. Economies of
scale may also reduce variable costs per unit because of operational efficiencies and synergies.
Economies of scale can be classified into two main types: Internal – arising from within the
company; and External – arising from extraneous factors such as industry size.
Assume you are a small business owner and are considering printing a marketing brochure. The
printer quotes a price of $5,000 for 500 brochures, and $10,000 for 2,500 copies. While 500
brochures will cost you $10 per brochure, 2,500 will only cost you $4 per brochure. In this case,
the printer is passing on part of the cost advantage of printing a larger number of brochures to you.
This cost advantage arises because the printer has the same initial set-up cost regardless of whether
the number of brochures printed is 500 or 2,500. Once these costs are covered, there is only a
marginal extra cost for printing each additional brochure.
Economies of scale can arise in several areas within a large enterprise. While the benefits of this
concept in areas such as production and purchasing are obvious, economies of scale can also
impact areas like finance. For example, the largest companies often have a lower cost of capital
than small firms because they can borrow at lower interest rates. As a result, economies of scale
are often cited as a major rationale when two companies announce a merger or takeover.
However, there is a finite upper limit to how large an organization can grow to achieve economies
of scale. After reaching a certain size, it becomes increasingly expensive to manage a gigantic
organization for a number of reasons, including its complexity, bureaucracy, and operating
inefficiencies. This undesirable phenomenon is referred to as "diseconomies of scale.