UNIVERSITY OF SOUTH AFRICA
College of Economic and Management Sciences
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MNB3701: International Business Management
Portfolio of Evidence (POE) — Assignment 3, Semester 1, 2026
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MNB3701
Module Code:
International Business Management
Module Name:
Fast Food Investment in Barbados: The
Case Study:
Experience of McDonald’s
Assignment 3 (POE)
Assignment Number:
100
Total Marks:
Submitted in partial fulfilment of the requirements for MNB3701 — UNISA 2026
,UNISA | MNB3701 McDonald’s in Barbados – POE Assignment 3
Question 1: Types of Formal and Informal Institutions in Barbados
Institutional theory, rooted in the foundational work of North (1990), distinguishes between
formal and informal institutions as two complementary pillars that shape the environment in
which businesses operate (North, 1990). Formal institutions comprise the written, codified
rules such as laws, regulations, and government policies, while informal institutions encompass
the unwritten cultural norms, values, and social practices that govern behaviour within society
(Chacar, Newburry and Hesterly, 2017). When McDonald’s first entered Barbados, both sets
of institutions played a decisive role in its eventual failure and exit from the market.
1.1 Formal Institutions
1.1.1 The Franchise Control Act and Regulatory Intervention
A central formal institutional barrier that McDonald’s encountered in Barbados was the regu-
latory framework governing franchise and business licencing. According to the United States
Department of State (2019), Barbados maintains a business licencing structure under which
franchises, banking, broadcasting, and insurance are subject to government approval. Impor-
tantly, new entrants in the retail and restaurant sectors historically faced objection processes
whereby established local interests could delay or block the granting of licences to foreign
competitors (United States Department of State, 2019). This mechanism, while not a blan-
ket prohibition, functioned as a regulatory tool that protected incumbent local businesses
from outside competition. McDonald’s franchise application reportedly encountered significant
delays as a result of this process, making the formal regulatory environment one of the first
obstacles the company had to navigate.
The broader significance of this dynamic is confirmed by Chacar et al. (2017), who note that
formal market-supporting institutions are critical to enabling contractual market entry modes,
and that their absence or obstruction forces foreign entrants to seek alternative strategies or
abandon entry altogether (Chacar et al., 2017). For McDonald’s, the regulatory delay was
compounded by a change in political leadership, which eroded the institutional support that
had initially facilitated the company’s entry.
Page 2 of 24
, UNISA | MNB3701 McDonald’s in Barbados – POE Assignment 3
1.1.2 Political Leadership Transition and Loss of Institutional Support
The formal political environment in Barbados constitutes another important institutional
factor. Government leadership transitions in small economies with concentrated political
power can directly alter the fortunes of foreign investors, since approval for investment is
often tied to the preferences of specific administrations. When the political leadership that
had supported McDonald’s entry was replaced, the company lost a critical source of formal in-
stitutional backing, leaving it exposed to regulatory uncertainty and local opposition without
adequate political shelter.
This phenomenon aligns with what Boso et al. (2023) describe as the vulnerability of multi-
national enterprises (MNEs) to host-country institutional complexity, particularly in contexts
where formal institutional frameworks are personalised rather than consistently applied (Boso
et al., 2023). In Barbados, political goodwill functioned effectively as an informal extension of
formal regulatory access, illustrating the blurring between the two institutional categories in
developing country contexts.
Key Distinction
Formal versus Informal Institutions: Formal institutions are the written, legally
enforceable rules such as laws, licensing requirements, and government policies. Infor-
mal institutions are unwritten social norms, cultural values, and community practices
that shape behaviour. Both operate simultaneously and interact with each other, par-
ticularly in small developing economies like Barbados where personal relationships and
political goodwill can effectively function as extensions of formal regulatory access.
1.2 Informal Institutions
1.2.1 Barbadian Food Culture and Dietary Preferences
Informal institutions in Barbados are strongly shaped by the island’s culinary heritage and
food culture. Barbadians have a deep attachment to locally produced food, characterised by
fresh fish, root vegetables, and traditional dishes that reflect the island’s African and British
colonial heritage. This cultural attachment to local cuisine represents a powerful informal
institution, defined by Springer Nature (2022) as the unwritten norms, practices, and values
that govern social behaviour and shape consumer preferences (Chacar et al., 2022).
Page 3 of 24
College of Economic and Management Sciences
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MNB3701: International Business Management
Portfolio of Evidence (POE) — Assignment 3, Semester 1, 2026
⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄ ⋄⋄
MNB3701
Module Code:
International Business Management
Module Name:
Fast Food Investment in Barbados: The
Case Study:
Experience of McDonald’s
Assignment 3 (POE)
Assignment Number:
100
Total Marks:
Submitted in partial fulfilment of the requirements for MNB3701 — UNISA 2026
,UNISA | MNB3701 McDonald’s in Barbados – POE Assignment 3
Question 1: Types of Formal and Informal Institutions in Barbados
Institutional theory, rooted in the foundational work of North (1990), distinguishes between
formal and informal institutions as two complementary pillars that shape the environment in
which businesses operate (North, 1990). Formal institutions comprise the written, codified
rules such as laws, regulations, and government policies, while informal institutions encompass
the unwritten cultural norms, values, and social practices that govern behaviour within society
(Chacar, Newburry and Hesterly, 2017). When McDonald’s first entered Barbados, both sets
of institutions played a decisive role in its eventual failure and exit from the market.
1.1 Formal Institutions
1.1.1 The Franchise Control Act and Regulatory Intervention
A central formal institutional barrier that McDonald’s encountered in Barbados was the regu-
latory framework governing franchise and business licencing. According to the United States
Department of State (2019), Barbados maintains a business licencing structure under which
franchises, banking, broadcasting, and insurance are subject to government approval. Impor-
tantly, new entrants in the retail and restaurant sectors historically faced objection processes
whereby established local interests could delay or block the granting of licences to foreign
competitors (United States Department of State, 2019). This mechanism, while not a blan-
ket prohibition, functioned as a regulatory tool that protected incumbent local businesses
from outside competition. McDonald’s franchise application reportedly encountered significant
delays as a result of this process, making the formal regulatory environment one of the first
obstacles the company had to navigate.
The broader significance of this dynamic is confirmed by Chacar et al. (2017), who note that
formal market-supporting institutions are critical to enabling contractual market entry modes,
and that their absence or obstruction forces foreign entrants to seek alternative strategies or
abandon entry altogether (Chacar et al., 2017). For McDonald’s, the regulatory delay was
compounded by a change in political leadership, which eroded the institutional support that
had initially facilitated the company’s entry.
Page 2 of 24
, UNISA | MNB3701 McDonald’s in Barbados – POE Assignment 3
1.1.2 Political Leadership Transition and Loss of Institutional Support
The formal political environment in Barbados constitutes another important institutional
factor. Government leadership transitions in small economies with concentrated political
power can directly alter the fortunes of foreign investors, since approval for investment is
often tied to the preferences of specific administrations. When the political leadership that
had supported McDonald’s entry was replaced, the company lost a critical source of formal in-
stitutional backing, leaving it exposed to regulatory uncertainty and local opposition without
adequate political shelter.
This phenomenon aligns with what Boso et al. (2023) describe as the vulnerability of multi-
national enterprises (MNEs) to host-country institutional complexity, particularly in contexts
where formal institutional frameworks are personalised rather than consistently applied (Boso
et al., 2023). In Barbados, political goodwill functioned effectively as an informal extension of
formal regulatory access, illustrating the blurring between the two institutional categories in
developing country contexts.
Key Distinction
Formal versus Informal Institutions: Formal institutions are the written, legally
enforceable rules such as laws, licensing requirements, and government policies. Infor-
mal institutions are unwritten social norms, cultural values, and community practices
that shape behaviour. Both operate simultaneously and interact with each other, par-
ticularly in small developing economies like Barbados where personal relationships and
political goodwill can effectively function as extensions of formal regulatory access.
1.2 Informal Institutions
1.2.1 Barbadian Food Culture and Dietary Preferences
Informal institutions in Barbados are strongly shaped by the island’s culinary heritage and
food culture. Barbadians have a deep attachment to locally produced food, characterised by
fresh fish, root vegetables, and traditional dishes that reflect the island’s African and British
colonial heritage. This cultural attachment to local cuisine represents a powerful informal
institution, defined by Springer Nature (2022) as the unwritten norms, practices, and values
that govern social behaviour and shape consumer preferences (Chacar et al., 2022).
Page 3 of 24
