This thesis provides an empirical analysis of enterprise development and informality in Mozambique. It explores factors which hinder the development of the enterprise sector, focussing on the heterogeneity of firm responses to the institutional environment, with important consequences for economic growth, employment and poverty reduction. With the growing consensus on the centrality of institutions to economic growth, this thesis provides firm-level evidence to support the findings of aggregate, cross-country level analyses. Using enterprise survey evidence, it comprises four case studies from Mozambique, a country characterised in recent years by high economic growth rates but persistently high unemployment and poverty levels.