EVALUATING ENTREPRENEURS’ MOTIVES FOR PARTICIPATING IN THE INFORMAL SECTOR IN EUROPE

2021 ◽  
pp. 2150002
Author(s):  
COLIN C. WILLIAMS
Keyword(s):  
Informal Sector ◽  
Policy Implications ◽  
Liberal Theory ◽  
Economic Decision ◽  
Face To Face ◽  
Social Actors ◽  
Formal Economy ◽  
Structuralist Theory ◽  
Economic Necessity ◽  
Do So

Informal entrepreneurs have been viewed variously as reluctant participants in such endeavors doing so out of economic necessity because of their exclusion from formal work and welfare (structuralist theory), or as willing entrepreneurs who voluntarily exit the formal economy either as a rational economic decision (neo-liberal theory) or as social actors who do not agree with the formal rules and regulations of the state (neo-institutional theory). The aim of this paper is to evaluate these competing theorizations of entrepreneurs’ motives for participating in the informal sector. Reporting evidence from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries, the finding is that five percent are reluctant participants, twenty percent are willing participants doing so as a rational economic decision, 21 percent are willing participants doing so because of their disagreement with the rules and 54 percent do so for a mixture of these motives. A logistic regression analysis reveals who is more likely to engage in informal entrepreneurship and who is significantly more likely to do so for each motive. The theoretical and policy implications are then discussed.

ENTREPRENEURIAL DRIVE AND THE INFORMAL ECONOMY IN CAMEROON

2014 ◽  
Vol 19 (04) ◽  
pp. 1450024 ◽  
Author(s):  
CHRISTOPHER F. ACHUA ◽  
ROBERT N. LUSSIER
Keyword(s):  
Informal Economy ◽  
Developing Economies ◽  
Policy Implications ◽  
Future Research ◽  
Structured Interviews ◽  
Face To Face ◽  
Formal Economy ◽  
Curve Effect ◽  
Street Corner ◽  
Do So

There is a growing appreciation for the value and impact of the informal economy on the lives and livelihood of many in developing economies. A key question for researchers has been whether those operating in it do so out of necessity or voluntarily as opportunity seekers? Unlike previous studies that have examined the informal economy as one large block, this paper took a slightly different tangent. First, we analyzed and identified three distinct sub-groups within the informal entrepreneurial sector — the street walker (st. walker), the street corner (st. corner) and store owner (st. owner) — and then examined each group's motives. Reporting the results of face-to-face structured interviews with 200 informal entrepreneurs in Cameroon (West Africa), the finding is that the majority, especially st. walker and st. corner informal entrepreneurs, are predominantly necessity-driven while st. owner entrepreneurs are predominantly opportunity-driven. Our study also revealed a progression pattern whereby st. walkers do progress to st. corner and ultimately to st. owner entrepreneurs. The assumption is that this does create a learning curve effect in the entrepreneurial abilities and effectiveness of store owners. This is an area for future research. There are policy implications for institutional support that can grow the informal economy into the formal economy.

THE NATURE OF ENTREPRENEURSHIP IN THE INFORMAL SECTOR: EVIDENCE FROM ENGLAND

2007 ◽  
Vol 12 (02) ◽  
pp. 239-254 ◽  
Author(s):  
COLIN C. WILLIAMS
Keyword(s):  
Informal Sector ◽  
Third World ◽  
Policy Implications ◽  
Structured Interviews ◽  
Face To Face ◽  
The Public ◽  
Informal Workers ◽  
Formal Economy ◽  
Informal Entrepreneurship ◽  
Conventional Representation

Mirroring the representation of informal workers in a third world context as displaying entrepreneurial qualities, recent years have witnessed the emergence of a similar view of the informal sector in western nations as a hidden enterprise culture. Until now, however, few attempts have been made to analyze the nature and motives of informal entrepreneurs in western economies. Instead, it has been widely assumed that those engaged in entrepreneurship in the informal sector are those marginalized from the formal economy and driven out of necessity into this endeavor as a last resort. The aim of this paper is to evaluate critically this "marginalization thesis". Reporting the findings of face-to-face structured interviews with 130 informal entrepreneurs in England, the conventional representation of these entrepreneurs as necessity-driven, as well as an emergent depiction of them as opportunity-driven, is transcended. Instead, a richer and more textured understanding of informal entrepreneurship is developed that replaces such either/or thinking by a both/and approach that depicts how the majority are concurrently both necessity- and opportunity-driven. The paper then concludes by exploring the public policy implications of this rereading of the nature of informal entrepreneurship in western economies.

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.

SOCIAL RESPONSIBILITY AMONG INFORMAL ENTREPRENEURS: EVIDENCE FROM MEXICO

2020 ◽  
Vol 25 (03) ◽  
pp. 2050021
Author(s):  
CRISTIAN E. VILLANUEVA ◽  
ADRIANELA ANGELES ◽  
LUZ CECILIA REVILLA
Keyword(s):  
Developing Countries ◽  
Social Responsibility ◽  
Mexico City ◽  
Informal Sector ◽  
Informal Economy ◽  
Developed Countries ◽  
Structured Interviews ◽  
Face To Face ◽  
Formal Economy ◽  
Formal Organizations

Social responsibility (SR) has been widely studied within formal organizations, especially in large companies in developed countries. However, studies about SR in the informal sector is still insufficient. Addressing this gap is relevant for developing countries where informality is becoming extensive and is growing faster than the formal economy. This research has two main objectives: (1) determine whether in an informal economy context, entrepreneurs could perform SR and (2) if it is possible to have SR, to examine critically the way informal entrepreneurs perform it. To achieve these objectives, this study conducted 50 face-to-face, semi-structured interviews with informal entrepreneurs (IEs) in Mexico City. The outcome of this research shows evidence that IEs can perform SR in an implicit form, despite their adverse and vulnerable conditions.

scholarly journals EXPLAINING VARIATIONS IN THE COMMONALITY OF INFORMAL SECTOR COMPETITION ACROSS LATIN AMERICAN AND THE CARIBBEAN COUNTRIES

2019 ◽  
Vol 24 (01) ◽  
pp. 1950002 ◽  
Author(s):  
COLIN C. WILLIAMS ◽  
BO LIU
Keyword(s):  
Political Economy ◽  
Latin American ◽  
Informal Sector ◽  
State Intervention ◽  
Policy Implications ◽  
Liberal Theory ◽  
Probit Regression ◽  
Values And Beliefs ◽  
Latin American And Caribbean ◽  
Laws And Regulations

To advance understanding of the relationship between entrepreneurship and the informal sector, the aim of this paper is to evaluate and explain variations in the extent to which formal enterprises witness competition from unregistered or informal enterprises across Latin American and Caribbean countries. Reporting World Bank Enterprise Survey (WBES) data on 31 Latin American and Caribbean countries, this reveals that two-thirds (65.5 percent) of formal enterprises witness competition from informal sector enterprise. To explain the cross-country variations, four competing theories are evaluated, which variously view the prevalence of the informal sector to be determined by either: economic under-development (modernization theory); high taxes and state over-interference (neo-liberal theory); too little state intervention (political economy theory), or an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions (institutional theory). A probit regression analysis confirms the modernization, political economy and institutional theories, but not the neo-liberal theory. Beyond economic under-development, therefore, it is too little state intervention and whether the laws and regulations developed by governments are in symmetry with the norms, values and beliefs of entrepreneurs. The paper concludes by discussing the theoretical and policy implications of these findings.

EVALUATING THE MOTIVES OF INFORMAL ENTREPRENEURS IN KOFORIDUA, GHANA

2012 ◽  
Vol 17 (01) ◽  
pp. 1250005 ◽  
Author(s):  
KWAME ADOM ◽  
COLIN C. WILLIAMS
Keyword(s):  
Informal Economy ◽  
Sub Saharan Africa ◽  
Structured Interviews ◽  
Face To Face ◽  
Formal Economy ◽  
Majority World ◽  
Informal Entrepreneurship ◽  
Sub Saharan ◽  
Economic Necessity ◽  
Gender Variations

In recent years, there has been growing recognition in the entrepreneurship literature that many entrepreneurs operate in the informal economy and that not all these informal entrepreneurs are doing so out of economic necessity and because of a lack of choice. Instead, it has been asserted that some of these informal entrepreneurs choose to exit the formal economy and trade on an off-the-books basis more as a matter of choice. However, until now most research displaying this has been conducted in advanced western and post-socialist economies. Little has been written on whether this is also the case in third (majority) world countries. This paper starts to fill this gap by evaluating informal entrepreneurs' motives in sub-Saharan Africa. Reporting the results of face-to-face structured interviews with 80 informal entrepreneurs in Ghana, the finding is that the majority, especially the women informal entrepreneurs, are predominantly necessity-driven while those who are principally intentional participants in informal entrepreneurship are men. However, many women who initially entered informal entrepreneurship out of necessity have over time become more opportunity-driven entrepreneurs. The outcome is a call for wider research in other global regions on informal entrepreneurs' motives and whether similar gender variations prevail.

scholarly journals EXPLAINING CROSS-NATIONAL VARIATIONS IN THE PREVALENCE OF INFORMAL SECTOR ENTREPRENEURSHIP: LESSONS FROM A SURVEY OF 142 COUNTRIES

2018 ◽  
Vol 23 (01) ◽  
pp. 1850005 ◽  
Author(s):  
COLIN C. WILLIAMS ◽  
ABBI KEDIR
Keyword(s):  
Political Economy ◽  
Informal Sector ◽  
State Intervention ◽  
Informal Institutions ◽  
Policy Implications ◽  
Liberal Theory ◽  
Theoretical Perspectives ◽  
Informal Entrepreneurship ◽  
World Bank Enterprise Survey ◽  
Cross National

The aim of this paper is to evaluate four competing theoretical perspectives that explain cross-national variations in the level of informal sector entrepreneurship. Scholarship has until now argued that informal entrepreneurship is a result of either: economic under-development and a lack of modernization of governance (modernization theory); high taxes and state over-interference (neo-liberal theory); inadequate state intervention to protect workers from poverty (political economy theory) or the asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions (institutional theory). Reporting the World Bank Enterprise Survey (WBES) on the varying prevalence of informal entrepreneurship across 142 countries, the finding is that neo-liberal theory is refuted but the tenets of the modernization, political economy and institutional theories are confirmed. Informal entrepreneurship is found to be significantly higher when there is economic under-development, a lack of modernization of governance, inadequate state intervention to protect workers from poverty and greater asymmetry between the formal and informal institutions. The paper concludes by discussing the theoretical and policy implications of these findings.

scholarly journals AN INSTITUTIONAL THEORY OF INFORMAL ENTREPRENEURSHIP: SOME LESSONS FROM FYR MACEDONIA

2018 ◽  
Vol 23 (03) ◽  
pp. 1850019 ◽  
Author(s):  
COLIN C. WILLIAMS ◽  
SLAVKO BEZEREDI
Keyword(s):  
Informal Sector ◽  
Informal Economy ◽  
Poor Quality ◽  
Policy Implications ◽  
Social Actor ◽  
Face To Face ◽  
Values And Beliefs ◽  
Informal Entrepreneurship ◽  
Nationally Representative ◽  
Formal Rules

In recent years, a new institutionalist theory has emerged to explain the prevalence of informal sector entrepreneurship. This argues that formal institutional failures lead to the emergence of an asymmetry between the formal rules (laws and regulations) and the norms, values and beliefs of entrepreneurs regarding the acceptability of participating in the informal sector, which in turn leads to the prevalence of informal entrepreneurship. The aim of this paper is to evaluate this social actor approach by reporting evidence from 453 face-to-face interviews with a nationally representative sample of entrepreneurs in FYR Macedonia. This reveals not only a significant association between participation in the informal economy and the non-alignment of entrepreneurs’ views with the formal rules, but specific formal institutional failings that are significantly associated with the acceptability of informal entrepreneurship, namely poor quality public services, a lack of tax fairness, corruption and instability in the formal institutions. The theoretical and policy implications are then discussed.

scholarly journals EVALUATING THEORIZATIONS OF INFORMAL SECTOR ENTREPRENEURSHIP: SOME LESSONS FROM ZAMFARA, NIGERIA

2019 ◽  
Vol 24 (04) ◽  
pp. 1950022
Author(s):  
USMAN LADAN ◽  
COLIN C. WILLIAMS
Keyword(s):  
Informal Sector ◽  
Liberal Theory ◽  
Tropical Region ◽  
Survival Strategy ◽  
Modernization Theory ◽  
Political Resistance ◽  
Population Groups ◽  
Structuralist Theory ◽  
Modern System ◽  
Traditional Activity

The aim of this paper is to evaluate critically four competing theories that variously explain informal sector entrepreneurship as a traditional activity that has not yet been incorporated into the modern system (modernization theory), a form of production integral to contemporary capitalism conducted by marginalized population groups as a survival strategy (structuralist theory), a voluntarily chosen endeavor and popular reaction to excessive regulation by the state (neo[Formula: see text]liberal theory) or a voluntarily chosen practice conducted for social, redistributive, political resistance or identity reasons (post-structuralist theory). Reporting the results of face[Formula: see text]to[Formula: see text]face interviews with 215 informal entrepreneurs in Zamfara, a tropical region in Nigeria, the finding is that no one theory is universally valid. Instead, each theory is valid in relation to different groups of entrepreneur and only by combining all of them can a finer-grained and more nuanced explanation of the complex and heterogeneous character of informal sector entrepreneurship be achieved.

How Informal Sector Affects the Formal Economy in Pakistan? A Lesson for Developing Countries

2020 ◽  
Vol 9 (1) ◽  
pp. 7-21
Author(s):  
Khurrum S. Mughal ◽  
Friedrich G. Schneider
Keyword(s):  
Informal Sector ◽  
Policy Design ◽  
Negative Impact ◽  
Jel Classification ◽  
Policy Implications ◽  
Formal Sector ◽  
Bounds Testing ◽  
Dynamic Simulations ◽  
Distributed Lag ◽  
Formal Economy

We explore the interaction of the informal sector with the formal economy for a developing economy, that is, Pakistan. Estimation results are obtained via autoregressive distributed lag (ARDL) bounds testing approach, which show a significantly positive effect of the informal sector in the long run whereas a negative impact of informal sector is found in the short run. We also present dynamic simulations to show the effect/contribution in terms of revised GDP per capita if the informal sector is accounted for in official statistics. The novelty of results is the varying effects of the informal sector across two time horizons that can have serious policy implications for developing and transition economies with large informal sectors. Although, the findings of this article enrich our understanding on the behaviour of the informal sector, they further fuel the debate associated with eradication of the informal sector. Efforts to curb informal activities may burden the low-skilled workforce in this sector and increase corruption opportunities in bureaucracy in the absence of institutional reforms. On the contrary, it makes the formal sector policy design and implementation a challenging task. JEL Classification: E26, H26, K42, O17

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