This paper aims to reconceptualize women’s necessity entrepreneurship in fragile emerging economies as an institutional substitution mechanism (ISM) – a process through which entrepreneurial activity replaces or supplements failed formal institutions. It proposes the substitution function index (SFI) as an illustrative measure of the institutional load-bearing capacity of ventures across finance, welfare and market coordination.
This study develops a conceptual framework grounded in institutional and entrepreneurship theory. It specifies the mechanisms through which necessity entrepreneurship aggregates into systemic substitution, network density, normative convergence and digital scaling, and outlines a roadmap for operationalizing the SFI using composite index construction and privacy-preserving data strategies.
Drawing on documented patterns from fragile Arab contexts, the framework proposes that women’s ventures may perform substitutive functions via informal finance (e.g. rotating savings and credit associations), embedded welfare provisioning and digitally mediated microtrading. Substitution intensity is theorized to be moderated by legitimacy and digital capability and to decline as formal institutional capacity recovers, yielding a dynamic trajectory from substitution to complementarity.
This paper proposes a sequenced policy approach, stabilize effective substitutes, complement with enabling infrastructure and graduate toward formalization, aligned with sustainable development goal 8 targets on decent work and inclusive growth. It highlights the need for legal safe harbors, care-sensitive support and data collaboratives to monitor substitution effectiveness.
By shifting from a barrier-centric view of institutional voids to a function-substitution logic, this study positions necessity entrepreneurship as institutional work rather than residual coping. The ISM framework and the proposed SFI offer a conceptual basis and illustrative measurement foundation for future comparative research and policy evaluation in fragile emerging economies.
