Asia Pacific Journal of Management

, Volume 35, Issue 4, pp 965–991 | Cite as

Beyond institutional voids and the middle-income trap: The emerging business angel market in Malaysia

  • Richard Harrison
  • William Scheela
  • P. C. Lai
  • Sivapalan Vivekarajah


Emerging economies are characterized by the presence of institutional voids which challenge and constrain the behavior of economic agents. In this paper we report on one set of agents, angel investors, in Malaysia, which investors fear is experiencing a middle-income trap whereby economic growth and new venture formation stalls due to persistent institutional voids. This research addresses this question through interviews with 19 Malaysian business angel investors in 2015, utilizing a mixed-methods approach. Results indicate that business angels in our sample generated strong returns, though they did find it a challenge to invest in and monitor new ventures in a highly uncertain and competitive environment where there is high political uncertainty, weak legal and financial support for investors and SMEs. In order to overcome weak institutional support, business angel investors develop informal institutions by co-investing and networking with family members and government officials. They also conduct careful due diligence before investing and closely monitor their investee companies after investing. This research provides several theory and practice contributions with respect to business-angel investing in emerging economies with weak formal institutional regimes.


Business angels Institutional theory Emerging economies Malaysia Entrepreneurial ecosystems Institutional voids Middle-income trap 


Compliance with ethical standards


Research for this paper was sponsored by the Malaysian Business Angels Network (MBAN) and Technopreneurs Association of Malaysia (TeAM) and funded by the Cradle Fund Sdn Bhd, all located in Kuala Lumpur, Malaysia.


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Copyright information

© Springer Science+Business Media, LLC 2017

Authors and Affiliations

  1. 1.Business School and University of EdinburghEdinburghUK
  2. 2.College of BusinessBemidji State UniversityBemidjiUSA
  3. 3.Innovation & Business Development and University of MalayaKuala LumpurMalaysia
  4. 4.Malaysian Business Angel NetworkKuala LumpurMalaysia

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