THE COMMONALITY AND CHARACTER OF OFF-THE-BOOKS ENTREPRENEURSHIP: A COMPARISON OF DEPRIVED AND AFFLUENT URBAN NEIGHBORHOODS

Abstract

Until now, few studies have evaluated whether there are geographical variations in the extent and character of off-the-books entrepreneurship. The aim of this paper is to evaluate whether and how the prevalence and nature of off-the-books entrepreneurship varies across deprived and affluent neighborhoods in an advanced economy. To do this, face-to-face interviews were conducted with 511 households in English affluent and deprived urban neighborhoods, and are reported here. The finding in both communities surveyed is that wholly legitimate enterprises represent just the tip of the iceberg. Beneath the surface in all areas is a large hidden enterprise culture composed of both registered businesses trading off-the-books as well as unregistered wholly off-the-books enterprises. However, the preponderance of both early-stage entrepreneurs as well as the established self-employed to trade off-the-books is greater in deprived than affluent urban communities, as is the tendency for entrepreneurs to operate business on a wholly off-the-books basis, intimating that deprived urban communities are perhaps relatively more enterprising and entrepreneurial than is currently recognized. The paper thus concludes by contending that across all localities, but especially in deprived urban neighborhoods, legitimizing the hidden enterprise culture could be an important but so far untapped means of promoting enterprise and economic development.