Management Research: Journal of the Iberoamerican Academy of Management
Abstract
This study asks how local institutions shape the establishment of fast-food outlets across urban districts in Peru, where many districts have no such outlets. The authors develop a market-entry framework in which the number of firms depends on local demand, available infrastructure, and the quality of municipal institutions. They construct institutional-quality measures from municipal administrative and organizational characteristics and estimate a zero-inflated count model that distinguishes whether outlets are present from how many operate when a market is served. Institutional quality is most clearly related to whether a district attracts outlets; urban-development management and information systems matter, while an investment-programming office is especially relevant to outlet counts. The results suggest that effective municipal administration can support infrastructure and reduce the costs of establishing businesses.