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

Richard Harrison, William Scheela, Joan Lai, Sivapalan Vivekarajah

Research output: Contribution to journalArticlepeer-review


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.
Original languageEnglish
Pages (from-to)965-991
JournalAsia Pacific Journal of Management
Issue number4
Early online date17 Sep 2017
Publication statusPublished - Dec 2018


  • business angels
  • institutional theory
  • emerging economies
  • Malaysia
  • entrepreneurial ecosystems
  • institutional voids
  • middle income trap


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