scholarly journals EVALUATING THE EFFECTS OF THE INFORMAL SECTOR ON THE GROWTH OF FORMAL SECTOR ENTERPRISES: LESSONS FROM ITALY

2020 ◽  
Vol 25 (03) ◽  
pp. 2050019
Author(s):  
BRUNILDA KOSTA ◽  
COLIN C WILLIAMS
Keyword(s):  
World Bank ◽  
Informal Sector ◽  
Productivity Growth ◽  
Policy Implications ◽  
Future Research ◽  
Sales Growth ◽  
Formal Sector ◽  
Annual Productivity ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey

This paper evaluates the effect of unregistered and informal sector business ventures on the growth of formal sector enterprises. The hypotheses tested is that formal sector enterprises that have to compete against unregistered or informal sector business ventures suffer from lower levels of performance, measured by annual sales growth, annual employment growth and annual productivity growth. To evaluate this thesis, data is reported from a World Bank Enterprise Survey (WBES) of 760 enterprises in Italy collected in 2019. The finding is that formal sector enterprises that report competing against unregistered or informal sector business ventures have significantly lower annual sales growth and annual productivity growth than enterprises that do not. The paper concludes by discussing the theoretical and policy implications, along with the limitations of the study and future research required.

scholarly journals EVALUATING THE IMPACT OF INFORMAL SECTOR COMPETITORS ON THE PERFORMANCE OF FORMAL ENTERPRISES: EVIDENCE FROM BOSNIA AND HERZEGOVINA

2020 ◽  
Vol 25 (02) ◽  
pp. 2050014
Author(s):  
COLIN C. WILLIAMS ◽  
BRUNILDA KOSTA
Keyword(s):  
World Bank ◽  
Bosnia And Herzegovina ◽  
Informal Sector ◽  
Employment Growth ◽  
Policy Implications ◽  
Sales Growth ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey ◽  
The Impact ◽  
Do So

It is widely assumed that informal sector enterprises have a harmful impact on the performance of formal enterprises. This paper aims to provide an evidence-based evaluation of whether this is the case. To do so, it reports World Bank Enterprise Survey (WBES) data collected from 360 formal enterprises in Bosnia and Herzegovina in 2019. The finding is that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower sales growth, employment growth or productivity growth. Indeed, such enterprises witness significantly higher sales growth than those who do not view informal sector competitors as a severe obstacle. The theoretical and policy implications are discussed.

EVALUATING THE IMPACTS OF STARTING UP UNREGISTERED ON FIRM PERFORMANCE IN AFRICA

2017 ◽  
Vol 22 (03) ◽  
pp. 1750017 ◽  
Author(s):  
COLIN C. WILLIAMS ◽  
ABBI M. KEDIR
Keyword(s):  
Firm Performance ◽  
World Bank ◽  
Productivity Growth ◽  
Informal Economy ◽  
Poor Performance ◽  
Policy Implications ◽  
African Countries ◽  
Formal Economy ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey

The aim of this paper is to contribute to an understanding of the entrepreneurship process in Africa by evaluating the link between starting up unregistered and future firm performance. The widespread assumption has been that firms starting up unregistered in the informal economy suffer from poor performance compared to those starting up registered and in the formal economy. To test this poorer performance thesis, World Bank Enterprise Survey (WBES) data is evaluated from across 41 African countries covering the period from 2006 to 2013. Controlling for a comprehensive set of other determinants of firm performance, the finding is that formal enterprises with five or more employees that started up unregistered have significantly higher annual sales, employment and productivity growth rates compared with those firms that registered their operations at startup. The paper concludes by discussing the theoretical and policy implications of this finding.

scholarly journals EVALUATING THE IMPLICATIONS OF STARTING-UP UNREGISTERED ON FUTURE FIRM PERFORMANCE: EVIDENCE A 2019 SURVEY IN ALBANIA

2020 ◽  
Vol 25 (02) ◽  
pp. 2050010
Author(s):  
COLIN C. WILLIAMS ◽  
BRUNILDA KOSTA
Keyword(s):  
Firm Performance ◽  
World Bank ◽  
Informal Sector ◽  
Sales Growth ◽  
Widespread Belief ◽  
Informal Entrepreneurship ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey ◽  
Start Ups ◽  
The Relationship

This paper evaluates critically the relationship between starting-up unregistered and firm performance. The widespread belief across all the dominant theories of informal entrepreneurship is that unregistered start-ups experience poorer future firm performance than those registered from the outset of their operations. To evaluate this poorer performance thesis, this paper reports World Bank Enterprise Survey (WBES) data on 377 enterprises in Albania collected in 2019. After controlling for other determinants of firm performance, the finding is that formal enterprises that started-up unregistered have significantly higher annual sales growth than enterprises that registered from the outset. To explain this, the argument is that in weak institutional environments, such as Albania, the advantages of operating unregistered at the outset outweigh the benefits of registration. The result is a call to re-theorize firm performance in the informal sector and for policy to shift toward a more facilitating approach that enhances benefits of registration.

MSMEs Productivity in Nigeria

2017 ◽  
Vol 7 (1) ◽  
pp. 114
Author(s):  
Oluseye Samuel Ajuwon ◽  
Sylvanus Ikhide ◽  
Joseph Oscar Akotey
Keyword(s):  
Growth Rate ◽  
Survey Data ◽  
World Bank ◽  
Productivity Growth ◽  
Small Businesses ◽  
The World Bank ◽  
The World ◽  
Product Customization ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey

This study uses the World bank enterprise survey data for Nigeria to examines Micro, Small and Medium Enterprises (MSMEs) productivity rate in the Nigerian economy. The study explores factors that constrain MSMES output growth in Nigeria. Some of the factors identified include huge infrastructural gap, inadequate institutional support and low access to credit. The resultant effect is a low investment commitment amongst MSMEs thus hampering the productivity of MSMEs in the Nigerian economy. The MSMEs productivity growth rate was measured using annual sales of firms from the World bank enterprise survey data for Nigeria. This research employs the non-parametric variance estimation using the locally-weighted scatterplot smoothing (LOWESS) method on three sets of two-points data (2006 and 2003, 2008 and 2002, and finally 2012 and 2009) of annual fiscal sales for each category of firms comprising micro, small, medium and large firms. The result shows that the small businesses have a negative productivity growth rate in Nigeria. This in line with IFC (2013) which found that small businesses have the least productivity growth rate amongst firms of all sizes. However, this study departs from IFC findings which states that small businesses’ low productivity growth rate is tenable across all the sectors of the economy. The study found that small businesses actually recorded high productivity growth rate in some subsectors of the economy that specializes in product customization such as garment and furniture. Therefore, this study validates the flexible specialization theory that emphases the economic importance of MSMEs in the post-industrial era where product customization is the new order of production. The policy implication of this study is that any targeted intervention in the MSMEs sub-sector of the economy designed to increase productivity, should be channeled into the subsector with the most employee specialization as well as product customization.Keyword(s): MSMEs, small business, Output, Productivity, JEL Classifications: P42 M13 O55

scholarly journals Evaluating competing theories of informal sector entrepreneurship

2018 ◽  
Vol 19 (3) ◽  
pp. 155-165 ◽  
Author(s):  
Colin C Williams ◽  
Abbi Kedir
Keyword(s):  
Political Economy ◽  
Informal Sector ◽  
State Intervention ◽  
Policy Implications ◽  
Probit Regression ◽  
Formal Institutions ◽  
Shared Beliefs ◽  
Cross Country ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey

To advance understanding of the reasons for informal sector entrepreneurship, this article evaluates the determinants of cross-country variations in the extent to which enterprises are unregistered when they start operating. Reporting the World Bank Enterprise Survey data on 67,515 enterprises across 142 countries, the finding is that one in five (19.9%) of the formal enterprises surveyed started-up unregistered, although this varies from all enterprises surveyed in some countries (e.g. Pakistan) to 1% of surveyed enterprises in Slovakia. To explain these cross-country variations, four competing theories are evaluated which variously assert that nonregistration is determined by either: economic under-development and poorer quality governance (modernization theory); too much state interference (neoliberal theory); too little state intervention (political economy theory); or an incongruence between the laws and rules of formal institutions and the beliefs, values, and norms of informal institutions (institutional theory). A multilevel probit regression analysis confirms the modernization, political economy, and institutional theories but not neoliberal theory. Beyond economic under-development, therefore, nonregistration is associated with too little state intervention and the rules of formal institutions being incongruent with the socially shared beliefs of entrepreneurs. The article concludes by discussing the theoretical and policy implications of these findings.

scholarly journals BUSINESS REGISTRATION AND FIRM PERFORMANCE: SOME LESSONS FROM INDIA

2016 ◽  
Vol 21 (03) ◽  
pp. 1650016 ◽  
Author(s):  
COLIN C WILLIAMS ◽  
ABBI M. KEDIR
Keyword(s):  
Firm Performance ◽  
World Bank ◽  
Institutional Environment ◽  
Policy Implications ◽  
Performance Reporting ◽  
Start Up ◽  
Tentative Explanation ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey ◽  
Productivity Gains

The aim of this paper is to evaluate the impacts on future firm performance of a firm deciding to register from the outset of its operations. Until now, the assumption has been that starting up registered is linked to higher future firm performance. Reporting World Bank Enterprise Survey (WBES) data collected in 2014 on 9,281 formal enterprises in India, and controlling for other determinants of firm performance as well as the endogeneity of the registration decision, the finding is that formal enterprises that start up unregistered and spend longer unregistered have significantly higher subsequent annual sales and employment growth rates compared with those registered from the outset. When the number of years spent unregistered is included, there are also productivity gains from delaying registration. The tentative explanation is that in this weak institutional environment, the advantages of registering from the outset are outweighed by the benefits of deferring registration. Evaluating the policy implications, the argument is that there is a need to shift away from the conventional eradication approach toward unregistered startups based on the assumption they are unproductive, and toward a more facilitating approach that improves the benefits of being registered and tackles the systemic formal institutional deficiencies that lead entrepreneurs to delay their decision to register.

Informal Entrepreneurship in Developing Economies: The Impacts of Starting up Unregistered on firm Performance

2017 ◽  
Vol 41 (5) ◽  
pp. 773-799 ◽  
Author(s):  
Colin C. Williams ◽  
Alvaro Martinez–Perez ◽  
Abbi M. Kedir
Keyword(s):  
Firm Performance ◽  
World Bank ◽  
Developing Economies ◽  
Policy Implications ◽  
Subsequent Growth ◽  
Informal Entrepreneurship ◽  
Performance Determinants ◽  
The Cost ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey

To advance understanding of the entrepreneurship process in developing economies, this article evaluates whether registered enterprises that initially avoid the cost of registration, and focus their resources on overcoming other liabilities of newness, lay a stronger foundation for subsequent growth. Analyzing World Bank Enterprise Survey data across 127 countries, and controlling for other firm performance determinants, registered enterprises that started up unregistered and spent longer operating unregistered are revealed to have significantly higher subsequent annual sales, employment, and productivity growth rates compared with those that registered from the outset. The theoretical and policy implications are then discussed.

Determinants of Informal Competition faced by Formal Firms inPakistan: AnEmpirical Evaluation from 2013 World Bank Enterprise Survey

2021 ◽  
pp. 20-41
Keyword(s):  
World Bank ◽  
Informal Sector ◽  
Logit Model ◽  
Regulatory System ◽  
Rapid Progression ◽  
Ordered Logit ◽  
Regulatory Requirements ◽  
Regulatory Measures ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey

There is no denying in the fact that informal sector of any economy offersemployment flexibility by absorbing a pool of labor force. However, the rapid progression of the informal sector in Pakistan andthe consequent increase in competition faced by the formal firms urge a need to understand the dynamics of informal competition.The current study is an attempt toidentifythecorefactors responsible for the incidence of informal competition faced by formal firms in Pakistan,along with an investigation of the determinantsof the severity of thiscompetition.The study investigates the variables of firm’s characteristics and regulatory measures in order to examine the incidence and severity of informal competition faced by formal firms employing World Bank Enterprise Survey 2013 (WBES).The study not only conducts frequency analysis of the variables but based on the nature of data;it uses thelogit and ordered logit techniques todetermine the significant variables.The results of the study show that out of totalof 1125 formal firms used inthe analysis, 583 firms (46.75%) reported facing informal competition. Among these firms facing informal competition, only 16.98% reported informal competition as no obstacle in terms of its severity, however, rests of the firms (almost 83 %) consider the severity of informal competition as an obstacle in one or the other form and consider informal competition as a threat to their businesses.The result of logit model shows thatcharacteristics of formal firms resembling more to the informal firms in terms of size and locality have more likelihood of facing the informal competition. However, indetermining the severityof informal competition through the ordered logit model, theregulatory variables such as taxation, licensing & permits and corruption are found to be more significant and relevant.These results call on to introduce regulatory reforms making the regulatory system less burdensome and better enforcement mechanism of those reforms. There’s a need to create ease for the existing formal firms to fulfill the regulatory requirements as well as encourage the informal firms to join the mainstream formal setup of economy. Furthermore, the current research can be extended by availing the latest datasettoexplore the dynamics of informal sector andthe resultant competitionfor the formal firms in an ever-changingbusiness environment.

scholarly journals Evaluating the Impact of the Informal Economy on Businesses in South East Europe: Some Lessons from the 2009 World Bank Enterprise Survey

2012 ◽  
Vol 7 (1) ◽  
pp. 99-110 ◽  
Author(s):  
John Hudson ◽  
Colin Williams ◽  
Marta Orviska ◽  
Sara Nadin
Keyword(s):  
World Bank ◽  
Informal Economy ◽  
Employment Relations ◽  
East Europe ◽  
South East Europe ◽  
Adverse Impacts ◽  
World Bank Enterprise Survey ◽  
Enterprise Survey ◽  
The Impact ◽  
Targeted Approach

Evaluating the Impact of the Informal Economy on Businesses in South East Europe: Some Lessons from the 2009 World Bank Enterprise SurveyThe aim of this paper is to evaluate the variable impacts of the informal economy on businesses and employment relations in South East Europe. Evidence is reported from the 2009 World Bank Enterprise Survey which interviewed 4,720 businesses located in South East Europe. The finding is not only that a large informal sector reduces wage levels but also that there are significant spatial variations in the adverse impacts of the informal economy across this European region. Small, rural and domestic businesses producing for the home market and the transport, construction, garment and wholesale sectors are most likely to be adversely affected by the informal economy. The paper concludes by calling for similar research in other global regions and for a more targeted approach towards tackling the informal economy.

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