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Article
Publication date: 14 April 2014

Colin Williams and Sara J. Nadin

Although it has been recognised that many entrepreneurs operate in the informal economy, little is so far known about their reasons for doing so. The purpose of this paper is to…

Abstract

Purpose

Although it has been recognised that many entrepreneurs operate in the informal economy, little is so far known about their reasons for doing so. The purpose of this paper is to begin to unravel entrepreneurs’ rationales for trading in the informal economy in order to consider what policy measures need to be adopted to facilitate their formalisation.

Design/methodology/approach

To do this, the results of an empirical survey are reported conducted in Ukraine during 2006/2007 with 331 individuals who had started-up or owned/managed an enterprise.

Findings

Revealing that the rationales for entrepreneurs operating in the informal economy markedly differ according to whether they are wholly or partially informal entrepreneurs operating temporarily or permanently in the informal economy, the result is a call for a move beyond a “one-size-fits-all” policy approach and towards a variegated public policy approach whereby policy measures are tailored to tackling the different types of informal entrepreneurship, each of which operate informally for varying reasons.

Research limitations/implications

No evidence yet exists of whether the rationales for engaging in each type of informal entrepreneurship, and the consequent policy measures that need to be used to formalise each type, are more widely valid. Further research to evaluate this is required.

Originality/value

This is the first paper to start to move beyond a “one size fits all” policy approach when considering how to facilitate the formalisation of entrepreneurs in the informal economy.

Details

Journal of Entrepreneurship and Public Policy, vol. 3 no. 1
Type: Research Article
ISSN: 2045-2101

Keywords

Open Access
Article
Publication date: 2 January 2024

Kasimu Sendawula, Shamirah Najjinda, Marion Nanyanzi, Saadat Nakyejwe Lubowa Kimuli and Ahmad Walugembe

The purpose of this study is to explore how the personal traits of the informal entrepreneurs influence their formalization decisions.

Abstract

Purpose

The purpose of this study is to explore how the personal traits of the informal entrepreneurs influence their formalization decisions.

Design/methodology/approach

This study adopted a qualitative approach using a multicase design in which 28 informal entrepreneurs situated in Kampala district, Uganda, were engaged. An interview guide, recorders and note books were used in data collection.

Findings

The results indicate that the traits of informal and semiformal entrepreneurs are distinct. Informal entrepreneurs have been noted to be more courageous and resilient, while their semiformal counterparts have greater passion for their businesses. It is thus observed that the formalization prospects are higher for the semiformal entrepreneurs than for their informal counterparts. Entrepreneurs that would be willing to formalize their businesses are discouraged by distance, technology and the cost of involving middlemen. Whereas the resilient entrepreneurs are noted to work through these challenges, the passive ones in both the informal and semiformal categories will not formalize their businesses by giving such excuses.

Originality/value

This study contributes to the extant literature on informal entrepreneurship by providing initial empirical evidence on how the personal traits of the entrepreneurs influence their formalization decisions specifically.

Details

New England Journal of Entrepreneurship, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2574-8904

Keywords

Article
Publication date: 15 December 2022

Tien Dung Luu

This paper aims to examine the factors associated with a household business entrepreneur’s decisions to formalise the firm at a multidimensions level.

Abstract

Purpose

This paper aims to examine the factors associated with a household business entrepreneur’s decisions to formalise the firm at a multidimensions level.

Design/methodology/approach

The data set is a panel of 2,336 SMEs and household businesses from Vietnamese SME surveys during the 2005–2015 period.

Findings

This study elucidates how firm-level resources, entrepreneur characteristics and costs of doing business influence an entrepreneur’s decision to enter, the speed and the degree of formality.

Originality/value

This study provides insight into the origins of an entrepreneur’s decisions to the multidimensions of business formality through the lenses of the resource-based view, entrepreneurship and institution theories.

Details

Journal of Entrepreneurship in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2053-4604

Keywords

Article
Publication date: 5 September 2016

Emiel L. Eijdenberg

The purpose of this paper is to investigate the impact of entrepreneurial motivation and entrepreneurial orientation in Tanzania’s informal economy. The development of personal…

2009

Abstract

Purpose

The purpose of this paper is to investigate the impact of entrepreneurial motivation and entrepreneurial orientation in Tanzania’s informal economy. The development of personal wealth is used to measure the performance of subsistence entrepreneurs in the mama lishe sector.

Design/methodology/approach

On the basis of a literature review and a qualitative pre-study involving 27 interviewees, a questionnaire was completed by 152 subsistence entrepreneurs who are known as the mama lishe. Subsequently, a correlation analysis, a factor analysis, and regression analyses were performed to test the hypotheses.

Findings

On the basis of a factor analysis, a distinction is made between the development of basic personal wealth and the development of advanced personal wealth. Entrepreneurial motivation and entrepreneurial orientation, as constructed by studies in western countries, have little effect on both forms of personal wealth. Instead, the owner’s age, as an indicator of entrepreneurial experience, is a relatively strong predictor for the development of personal wealth.

Originality/value

By examining the determinants of the performance of subsistence entrepreneurs in an African least developed country (LDC), this study shows that the western definitions of entrepreneurial motivation and entrepreneurial orientation are not directly applicable in this context. By using performance measures such as the development of personal wealth, this study supports the perspective that entrepreneurs in the informal economy of an LDC operate under a different paradigm than their counterparts in the industrialized nations of the west. Accordingly, it is concluded that one size does not fit all.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 22 no. 6
Type: Research Article
ISSN: 1355-2554

Keywords

Book part
Publication date: 13 March 2023

Sujata Mukherjee and Santana Pathak

Among the various global options for self-employment, venturing into the micro-enterprise sector has been recognized as an important way for employment generation and poverty…

Abstract

Among the various global options for self-employment, venturing into the micro-enterprise sector has been recognized as an important way for employment generation and poverty alleviation in many developing/emerging economies. In this context, women-owned businesses at the grassroots play a vital role in developing countries like India far beyond contributing to job creation and economic growth. The informal sector is a sizeable and expanding feature of the contemporary global economy.

However, the informal economy operates at the cusp of the institutional framework, which makes them susceptible to many risks like lack of formal financing options, legal aid or increasing margin through access to formal markets. Non-Profit Development Agencies (NPDAs) have emerged as a viable and essential middle ground support in promoting women entrepreneurship in their capacity to contribute beyond governmental institutions.

The study adopted an inductive qualitative option through a case study design to explore the approaches adopted by NPDAs in promoting micro-entrepreneurship among women at the base of the pyramid (BoP) in the urban informal sector in India. The findings suggest that the NPDAs created an impact through the services, which translated into monetary earnings for the entrepreneurs. They could make financial contributions to their families, which boosted their self-confidence and overall personality. The findings also indicate positive changes like increased self-confidence, self-dependence, and inner strength as reported by the entrepreneurs.

Details

New Horizons and Global Perspectives in Female Entrepreneurship Research
Type: Book
ISBN: 978-1-83982-781-5

Keywords

Article
Publication date: 1 November 2022

Muhammad Shehryar Shahid, Peter Rodgers, Natalia Vershinina, Mashal E. Zehra and Colin C. Williams

Informal entrepreneurship is seen as a direct outcome of either the failure of formal institutions or the asymmetry between formal and informal institutions. These two viewpoints…

Abstract

Purpose

Informal entrepreneurship is seen as a direct outcome of either the failure of formal institutions or the asymmetry between formal and informal institutions. These two viewpoints are so far debated as alternative theoretical explanations for the prevalence of informal entrepreneurship. In this paper, the authors offer a theoretically integrative approach to further advance the institutional perspective of informal entrepreneurship. The purpose of this paper is to address these issues.

Design/methodology/approach

Using face-to-face surveys of 322 street entrepreneurs from Lahore, Pakistan, the authors deploy the hitherto unused partial least square approach (PLS) to structural equation modeling (SEM) to analyze data within the field of informal entrepreneurship.

Findings

The empirical findings strongly support the theoretical propositions of the new institutional perspective that the authors present in their paper. The authors find no direct impact of factors like procedural justice, redistributive justice and public sector corruption (i.e. formal institutional failings) on the formalization intentions of street entrepreneurs. Their findings demonstrate that the relationship between formal institutional failings and formalization intentions can only be explained through the mediating role of institutional asymmetry (i.e. tax morality).

Research limitations/implications

From a policy perspective, the authors find that if they can encourage street entrepreneurs to obtain a local-level registration as the first step toward formalization, it will significantly increase their chances to opt for higher national-level registrations.

Originality/value

This paper presents a unique attempt to further understand the context of street entrepreneurship through the theoretical lens of the institutional theory. In doing so, it synthesizes the arguments of existing institutional perspectives and further develops the institutional theory of informal entrepreneurship. Moreover, the paper develops the concept of “formalization intentions”.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 28 no. 8
Type: Research Article
ISSN: 1355-2554

Keywords

Article
Publication date: 29 March 2011

Colin C. Williams and Anjula Gurtoo

Studies on women entrepreneurs either view women through a structuralist lens, as marginalised populations engaged in low‐quality work, or through a neo‐liberal lens, as engaged…

1440

Abstract

Purpose

Studies on women entrepreneurs either view women through a structuralist lens, as marginalised populations engaged in low‐quality work, or through a neo‐liberal lens, as engaged in relatively higher quality endeavour more as a rational choice. The aim of this paper is to evaluate critically these explanations in relation to women entrepreneurs in the informal sector in India.

Design/methodology/approach

To evaluate the contrasting explanations of structuralist and new liberal approaches, questionnaire surveys were conducted in two phases, namely 2007 and 2010, over a period of several months. The sample design was stratified random and the sample was taken from a range of cities in different parts of India.

Findings

The survey of 457 women entrepreneurs of the informal sector shows that although the structuralist representation is largely appropriate for women working as waged informal employees, it is not as valid for women informal entrepreneurs working on a self‐employed basis. The results challenge the traditional understanding of the informal sector, and self‐employed women in particular, and are discussed in the light of the institutional rational choice framework.

Research limitations/implications

The analysis highlights how the decision of entrepreneurship does not stand in isolation from other decisions and choices, is in line with normative considerations, and is a collective rational choice for women entrepreneurs in the informal sector. This analysis is a first of its kind and calls for additional surveys to be undertaken of female (and male) informal entrepreneurs in other countries to establish this concept.

Originality/value

The analysis critically evaluates established explanations in relation to women entrepreneurs in the informal sector through an empirical survey and establishes new explanations on women entrepreneurship.

Details

International Journal of Gender and Entrepreneurship, vol. 3 no. 1
Type: Research Article
ISSN: 1756-6266

Keywords

Article
Publication date: 30 January 2009

Colin C. Williams and John Round

Recently, distinctions between “necessity‐driven” entrepreneurs who have limited options for work and “opportunity‐driven” entrepreneurs pulled into the exploitation of a…

1831

Abstract

Purpose

Recently, distinctions between “necessity‐driven” entrepreneurs who have limited options for work and “opportunity‐driven” entrepreneurs pulled into the exploitation of a perceived business opportunity have been transcended by commentators displaying the co‐presence of opportunity and necessity in entrepreneurs' motives and how their relative importance shifts over time. This paper aims to evaluate, critically, whether this re‐theorisation is also valid when considering the motives of informal entrepreneurs.

Design/methodology/approach

A household survey of entrepreneurship is reported conducted in Moscow during late 2005 and early 2006. In the 313 households surveyed, 81 entrepreneurs were identified who had started‐up a business venture in the past 42 months, all of whom reported that they were operating wholly or partially in the informal economy.

Findings

For some 80 per cent of informal entrepreneurs, both necessity‐ and opportunity‐drivers were co‐present in their decision to start up an enterprise. There was also a clearly identifiable shift in their motives away from necessity‐ and towards opportunity‐drivers as their ventures became more established.

Research limitations/implications

Akin to recent literature on mainstream (legitimate) entrepreneurs' motives, the survey thus displays the need for a less bifurcated understanding of informal entrepreneurs' motives that recognises the co‐existence of necessity‐ and opportunity‐drivers and the temporal changes in their relative importance.

Originality/value

The study reveals the need to transcend the currently dominant simplistic portrayals of informal entrepreneurs as either universally necessity‐driven or universally opportunity‐driven.

Details

International Journal of Entrepreneurial Behavior & Research, vol. 15 no. 1
Type: Research Article
ISSN: 1355-2554

Keywords

Article
Publication date: 5 October 2012

Colin C. Williams and Sara J. Nadin

Although there is emerging an understanding that many entrepreneurs conduct some or all of their transactions off‐the‐books, there has so far been little attempt to consider what…

1600

Abstract

Purpose

Although there is emerging an understanding that many entrepreneurs conduct some or all of their transactions off‐the‐books, there has so far been little attempt to consider what can and should be done about entrepreneurship in the informal economy. The purpose of this paper is to bridge this gap.

Design/methodology/approach

Following a review of what is known about the prevalence and nature of informal entrepreneurship, this paper evaluates what can and should be done about informal entrepreneurs by analyzing the various policy options and their implications.

Findings

Evaluating the possible policy approaches of doing nothing, eradication, de‐regulation and facilitating formalisation, the finding is that doing nothing leaves intact the existing negative impacts on formal and informal businesses, customers and governments, whilst eradicating informal entrepreneurship results in governments stamping out precisely the entrepreneurship and enterprise culture that they wish to nurture, and de‐regulation results in a levelling down rather than up of working conditions. Only facilitating the formalisation of informal entrepreneurship is found to be a viable policy approach. How this might be achieved is then considered.

Research limitations/implications

More research is required on the hurdles informal entrepreneurs witness when seeking to legitimize their business ventures in different populations before it can be known whether specific policy measures to facilitate formalisation are appropriate.

Practical implications

This paper evaluates various public policy options for tackling informal entrepreneurship and their impacts.

Originality/value

This is one of the first evaluations of the policy options available for tackling informal entrepreneurship.

Details

Journal of Entrepreneurship and Public Policy, vol. 1 no. 2
Type: Research Article
ISSN: 2045-2101

Keywords

Open Access
Article
Publication date: 3 August 2021

Oluyemi Theophilus Adeosun, Ayodele Ibrahim Shittu and Daniel Ugbede

Despite the noticeable consequences of disruptive financial innovations, access to finance remains a major factor inhibiting the sustainable-growth potentials of young micro…

2837

Abstract

Purpose

Despite the noticeable consequences of disruptive financial innovations, access to finance remains a major factor inhibiting the sustainable-growth potentials of young micro-entrepreneurs in informal settings. This study examines the determinants of financing options among micro-entrepreneurs in informal settings. Specifically, the study seeks to establish whether credit history, income, asset, gender, awareness and network capability have effects on formal and informal financing options among micro-entrepreneurs in informal settings.

Design/methodology/approach

This article uses the survey research design and administers a structured questionnaire among 300 purposively selected micro-entrepreneurs within the University of Lagos, Nigeria. Only 291 completed questionnaires are retrieved. This article also uses the multiple regression analysis to estimate the empirical model and test the research hypotheses respectively.

Findings

This article establishes that: (1) credit history and assets-based financing are significant determinants of formal financing options among young micro-entrepreneurs in informal settings, (2) gender and network capability are significant determinants of informal financing options among young micro-entrepreneurs in informal settings and (3) awareness is significant of both formal and informal financing options among young micro-entrepreneurs in informal settings.

Originality/value

This article examines the determinants of financing option among young micro-entrepreneurs in informal settings. Specifically, the study seeks to establish whether credit history income asset gender awareness and network capability have effects on formal and informal financing options among micro-entrepreneurs in informal settings.

Details

Journal of Business and Socio-economic Development, vol. 3 no. 1
Type: Research Article
ISSN: 2635-1374

Keywords

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