Perpetuating enforcement weakness: entrepreneurs’ destructive actions in normalizing rule-breaking

Ashenafi Biru and Pia Arenius ()
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Ashenafi Biru: RMIT University - Royal Melbourne Institute of Technology University
Pia Arenius: EM - EMLyon Business School

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Abstract: Entrepreneurs' rule-breaking behavior in its various forms is prevalent across settings, undermining economic and societal values. Previous research has explored rule-breaking in emerging economies, often attributing noncompliance to cumbersome regulatory frameworks. However, there is limited understanding of how entrepreneurs actively undermine enforcement efforts to normalize rule-breaking. In this study, we examine the actions entrepreneurs in an emerging economy adopt to weaken enforcement and normalize rule-breaking activities. We find that entrepreneurs perceive rule-breaking as a way to outsmart the regulatory system and act, both individually and collectively, to discourage authorities from applying penalties for activities deemed noncompliant. We highlight how these actions are inherently destructive, as they sustain enforcement weaknesses in the setting. Our study contributes to the growing literature on rule-breaking and destructive entrepreneurship, offering theoretical implications and policy suggestions aimed at redirecting destructive entrepreneurial behaviors toward more productive ends.

Keywords: Enforcement weakness; Ambiguous regulatory environment; Destructive entrepreneurship; Rule breaking (search for similar items in EconPapers)
Date: 2025-07-08
New Economics Papers: this item is included in nep-law and nep-sbm
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Published in Small Business Economics, inPress, 23 p. ⟨10.1007/s11187-025-01091-6⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-05196640

DOI: 10.1007/s11187-025-01091-6

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