Strategies of New Firms in the Formative Years of a Developing Economy : The Case of Rwanda

This thesis explores how new firms navigate the regulatory environment of a developing economy in its formative stage to ensure their continued operations and survival. The study’s context is Rwanda which is a developing economy that is undergoing a process of reconstruction and transformation after devastation by the 1994 Genocide against the Tutsi. The study seeks to understand the strategies undertaken by new firms to navigate uncertain regulatory environment to ensure their continued operations and survival. The study identifies four strategies undertaken by new firms in response to pressures arising from the changes in the regulatory environment, namely maneuvering, foresight and proactiveness, changing paths and professionalizing. The findings highlight: (1) the unlocking and lock-in effects of the changes in regulatory environment on firms’ strategies, (2) a continuous integration of strategies in a trial-and-error approach to find a tradeoff between the strategies and the pressures arising from the regulatory environment, (3) a learning-by-doing approach which also indicates the strategies undertaken at each stage of development, and (4) a boomerang effect of some of the strategies on the firms’ continued operations and survival. The study extends our understanding of how new firms cope with uncertain institutional environments. The study’s findings and theorization elucidate critical dynamics between the specificities of changes in the regulatory environment, the strategies undertaken by new firms, and the firms’ continued operations and survival. The study will also help entrepreneurs and managers to devise tailored strategies in response to the challenges associated with the specificities of changes in the regulatory environment