How Institutions Shape Uncertainty and Risk

Purpose: The study proposes a conceptual framework on how institutions influence risk and uncertainty. Beyond the nuances in defining concepts existing literature, role of shaping risks uncertainties remains understudied. This paper adopts new institutional economics (NIE) perspective to revisit uncertainty provide deeper reflection about its interactions with formal informal institutions. Method: Our model is based four propositions that support theoretical explanation relationships between uncertainties, risks, risks. Findings: While have primary reducing can be seen as source risk. These findings imply firms’ strategic decisions. In this regard, we also research agenda for future empirical studies area. Originality/value: highlights importance companies deal uncertainties. “known part” uncertainty, allowing evaluate different scenarios decision-making. Theoretical/Methodological Contributions: differentiates interaction according theory. Additionally, offer an academic discussion shape