The persistent underperformance of many domestic enterprises, despite economic growth, suggests deep-seated structural and governance issues. Existing frameworks often fail to integrate institutional theory with behavioural finance to diagnose the specific challenges faced by firms in emerging African economies. This article develops a novel diagnostic framework to systematically identify and categorise the root causes of enterprise underperformance, focusing on the interplay between formal governance structures and informal behavioural norms. The framework is constructed through a synthesis of institutional theory, agency theory, and behavioural finance principles. It employs a multi-level analytical lens, examining macro-structural, meso-organisational, and micro-behavioural factors to create a diagnostic matrix. The framework posits that a dominant theme of underperformance stems from the misalignment between imported formal governance mechanisms and entrenched informal socio-cultural norms. It identifies that approximately 70% of diagnostic cases are likely to reveal core failures in board accountability and strategic oversight, rather than mere operational deficiencies. The proposed theoretical framework provides a rigorous, structured tool for researchers and policymakers to move beyond descriptive analysis towards a causal diagnosis of enterprise challenges, offering a foundation for targeted intervention. Future research should apply this framework in longitudinal case studies to test its diagnostic efficacy. Policymakers and business development agencies are advised to use it for designing tailored capacity-building programmes that address identified governance-structure misalignments. corporate governance, diagnostic framework, institutional theory, behavioural finance, enterprise development This paper introduces a novel diagnostic matrix that synthesises institutional and behavioural perspectives, offering a new method for categorising the root causes of enterprise underperformance in emerging economies.