Sight Unseen: Selective Visibility in the Informal Economy

Abstract

Management and entrepreneurship research treats venture visibility as a strategic imperative but derives this prescription from the study of privileged Western firms operating in the formal economy. In the informal economy, visibility comes with unique hazards of attracting undesirable state, criminal, and community attention. We identify a visibility paradox: as informal economy ventures seek to increase visibility to garner support from resource-providing stakeholders, they also risk over-exposing their ventures to resource-extracting stakeholders. We adopt an inductive quantitative approach leveraging a unique, hand-collected, census of all enterprises in the township of Delft South in Cape Town, South Africa. We find an inverted U-shape relationship between venture visibility and monthly net cash. We draw on this finding to develop the concept of selective visibility—a strategy to make an organization more visible to some stakeholders and simultaneously less visible to others—and explore the prevalence of visibility configurations as well as their associations with financial performance. Our study enhances theoretical understanding of venture visibility and derives new insights from the informal economy. More broadly, we seek to redirect conversations about the promise of entrepreneurship to alleviate poverty by connecting it to more reflective and critical conversations about decolonizing economic development.