Social ties, as informal institutions, contribute to firms' performance in emerging economies. Formal market-supporting institutions in emerging economies are in general less developed, social ties cultivated by entrepreneurs thus serve as substitutes for formal institutional support. However,...

We study the role of contract enforcement in shaping the dynamics of international trade at the firm level. We develop a theoretical model to describe how agents build reputations to overcome the problems created by weak enforcement of international contracts. We find that, all else equal,...