Institutional Risk and Firm Performance in Africa: The Moderating Role of Corruption Control†

How does institutional risk influence firm performance in Africa? While most studies focus on formal institutional risk, I argue that informal institutional risks are equally influential. Consistent with that view I use informal institutions theory and multilevel techniques to analyze data from 411 firms in 18 African countries. I find negative effects of informal institutional risks (socioeconomic conditions) on firm performance. In addition, I find interactive effects of control of corruption. I discuss the implications of the findings for research and practice.