This chapter explores the fundamental question of how institutions change in fragile environments, going beyond the assumed tabula rasa in neo-institutional theory towards appreciating more nuanced outcomes, and their influence on economic development. In the market arena, there are powerful institutions that define who participates and the scope of that actor interaction. Drawing on Chang (2002), empirical research has sought to appreciate the causal structures and dynamics within firms and in the local environment, departing from the conventional focus on the power between firms and profit distribution. Using a case-study approach, research specifically examined the development of institutions (or ‘rules’) in women’s enterprises in Afghanistan through the lens of a critical social institution, women’s purdah (Ritchie 2013). Manifested by segregation, seclusion, modesty, and coveredness, the traditional practice of purdah determines the scope of women’s mobility and social interaction (due to the pressure to avoid being seen by non-family men), and shapes all potential aspects of their social and economic lives (Doubleday 2006). In the transformation of purdah, and subsequent formulation of enterprise institutions, the research indicates the embedded nature of rule development, and the interaction of diverse actors. These actors influence both the process and nature of emerging rules — including degrees of openness and flexibility — shedding new light on the institutional change process.

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Keywords Institutional Change, Institutional Development, Rule Development, Power Holder, Fragile Environment
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Ritchie, H.A. (2016). At the Frontier of Economic Development. In Local Governance, Economic Development and Institutions / Georgina M. GómezPeter Knorringa (eds.) (pp. 216–239). doi:10.1057/9781137557599_12