Conventional wisdom holds that informal institutions that are not good for society cannot survive. Interestingly, however, informal institutions like Viveza, a Latin American informal institution that encourages opportunism, exist in the world. Little is known about why informal institutions contrary to societal interests continue to exist and persist. In this qualitative study, we unravel the mechanisms that activate and maintain informal institutions promoting opportunism. Through a grounded theory approach, we conducted 60 semi-structured interviews with Latin American workers and managers and developed a model detailing how Viveza encourages economic agents to behave opportunistically and why Viveza persists in Latin American societies. Our findings reveal that Viveza exists and persists because two distinct but complementary iterative processes are activated simultaneously. First, individuals use Viveza to overcome inefficient formal rules, delegitimizing formal institutions. Second, society pressures individuals to behave opportunistically to avoid social exclusion, which grants Viveza legitimacy. The main contribution of our study is to offer a new insight that advances our understanding of the negative effects of informal institutions on the improvement of society. We also present practical contributions, as Viveza presents significant hurdles for economic agents when dealing with customers, business partners, and government agents.
