Abstract
This paper explores how small firms that cannot abide by or defy institutional challenges manage to survive and persist in an ambiguous and complex environment. We seek to extend current literature by investigating the strategies of small firms in a developing country context that are not in the position to conform to institutions or alter them, which was the prominent assumption in previous studies. Drawing on in-depth interviews with Ethiopian small business owners, our findings show that bypassing strategies are evident in constraining institutional environments, and elaborate on how these strategies enable organizations to persist and perform. We argue that the institution-bypassing view can help us to understand how business enterprises attenuate the influence of institutions or use them to their advantage. We conclude by offering theoretical and policy implications for future work on the interaction between institutions and small firms.