Beyond Market Failure: Business Support Organizations, Institutional Intermediation, and Gendered Futures of Entrepreneurship

Abstract

This study develops a meso-institutional analysis of Business Support Organizations (BSOs) within Azerbaijan’s post-2015 economic restructuring. While entrepreneurship policy is traditionally framed as market-failure correction, such perspectives often overlook the structural constraints inherent in resource-dependent transition economies. Drawing on second-best equilibrium theory, institutional economics, and collective action theory, this paper conceptualizes business associations not as first-best corrective mechanisms, but as institutional intermediaries stabilizing structurally constrained environments. The 2014–2015 oil price collapse, where hydrocarbons accounted for 95% of export revenues, triggered a 3.06% GDP contraction in 2016, marking a critical structural inflection point. In response, the Azerbaijani government’s 2016 Strategic Roadmaps repositioned SME development as a national priority, embedding business associations within formal public-private dialogue (PPD) and governance structures. This transformed their role from consultative entities into operational intermediaries. Utilizing qualitative institutional mapping and macroeconomic evidence (2016–2024), the findings indicate that associations exerted measurable influence in technical coordination domains, such as export facilitation, EU PGI certification in agriculture, and regulatory simplification. Conversely, redistributive domains like fiscal policy remained centralized. The study observes that SME growth and increased financial access for women-led enterprises correspond temporally with this institutionalized participation.