Digital Shadow Economy Research Articles

Investigating successful Government Digital Economic Framework Adoption in Indian MSMEs: The Interplay of Perceived Organisational E-Readiness and Intention to Adopt

The digital economy is growing in India. At the same time, the digital shadow economy is also growing. Economists and intellectuals warn that the digital shadow economy threatens the global economy. If left unchecked, it could hinder a country's social and economic development. This study analyzed the success factors that enable Indian micro, small, and medium enterprises (MSMEs) to adopt the Indian government's Digital Economic Framework (GDEF) to prevent the growth of digital shadow economy (DSE). The study looked at the relationship between the government's intention to create a digital framework and successful adoption. In addition, the latent elements affecting the organizational and external readiness of Indian MSMEs, the intention to adopt the GDEF, and the successful adoption were examined. Finally, the study examined whether the intention to adopt GDEF influences Indian MSMEs' organizational preparation and effective adoption. In this quantitative study, 372 managers of MSMEs were surveyed. The results of the study show that market forces, government support, and supplier industry support significantly influence the propensity of Indian MSMEs to adopt the GDEF compared to organizational readiness. In contrast, the organizational preparation of the Indian MSME, comprising awareness, human resources, and top management commitment, had little impact on the GDEF adoption. This study also found a partial mediating relationship between Indian MSMEs' internal readiness and effective adoption. The study's findings can be used by policymakers, governments, and international organizations to strengthen or create e-business-enabling strategies and policies to safeguard their traditional economies against threats posed by the digital economy.

Some questions of reducing the threat of the unobservable (shadow) economy

The main purpose of the article is to formulate reasonable proposals that have theoretical, methodological and practical significance in the direction of reducing the dangers of the digital shadow economy, which is characterized as a new phenomenon in the modern world. The author emphasizes the theoretical description of the sphere of the digital shadow (unobserved) economy, its characteristics, conceptual approach in the field of quantitative assessment, as well as the analysis of possible development trends based on information from reliable sources. The article substantiates the influence of digital transformation on various aspects of the economic sphere and its possible directions, substantiates an original conceptual approach to the assessment of both quantitative and qualitative characteristics of the shadow (unobserved) economy, and also makes an attempt to form a classification of factors affecting it and a map of tensions (stresses ).

Shadow Digital Economy

The article is devoted to the shadow digital economy as part of the shadow economy. The authors believe that, unlike the traditional shadow economy, the digital shadow economy is aimed not only at making a profit, but also at getting access to valuable digital, financial resources and/or databases. This topic is poorly studied in Russia, while foreign research centers have already started a serious analysis of statistical data on the digital shadow economy for commercial purposes. Most of the sources of this study are foreign publications, which indicates the international nature of the analyzed phenomenon. The lack of consensus of the world community on the shadow markets and cryptocurrency as products of the shadow digital economy leads to the lack of joint and more effective international cooperation in combatting financial cyber-crime, as well as international criminal syndicates engaged in the sale of illegal products. The authors give arguments about the relevance of this phenomenon to the realities of the Russian Federation, offer their own scientific definition of the shadow digital economy and give appropriate recommendations to combat this phenomenon.

Shadow Digital Economy

The article is devoted to the shadow digital economy as part of the shadow economy. The authors believe that, unlike the traditional shadow economy, the digital shadow economy is aimed not only at making a profit, but also at getting access to valuable digital, financial resources and/or databases. This topic is poorly studied in Russia, while foreign research centers have already started a serious analysis of statistical data on the digital shadow economy for commercial purposes. Most of the sources of this study are foreign publications, which indicates the international nature of the analyzed phenomenon. The lack of consensus of the world community on the shadow markets and cryptocurrency as products of the shadow digital economy leads to the lack of joint and more effective international cooperation in combatting financial cyber-crime, as well as international criminal syndicates engaged in the sale of illegal products. The authors give arguments about the relevance of this phenomenon to the realities of the Russian Federation, offer their own scientific definition of the shadow digital economy and give appropriate recommendations to combat this phenomenon.

ADOPTION OF MIMIC MODEL FOR ESTIMATION OF DIGITAL SHADOW ECONOMY

This articles analyses a contemporary problem, which has not been thoroughly analysed in scientific literature – Estimation of Digital Shadow Economy through a modified MIMIC model. It is the first pilot research of such type, which allows to reveal the need of deeper data analysis and data collection. Received results show, that three causal factors (internet access, and PC availability for households, non-cash payments, placement of innovative financial instruments on a market) and three indicators (non-cash transfers through internet payment platforms, volume of payments in cryptocurrencies and parcels, which are tax free at the customs) are not enough in order to perform interpretations of economic results. Additionally, the data set should cover longer-term data, however the limitation appears due to relatively short existence of innovative financial products and the lack of information accumulation about necessary data in statistical databases.

Attitudes of European Consumers towards Digital Shadow Economy: Lithuanian and Spanish Cases

Attitudes of European Consumers towards Digital Shadow Economy: Lithuanian and Spanish Cases

The methodology of digital shadow economy estimation

The article introduces a new methodology of digital shadow economy estimation, which is based on the principles of the MIMIC method. This new methodology complements traditional methodologies of shadow economy estimation with such a component as digital shadow economy. Our analysis of the most popular today methods of shadow economic estimation proves that, despite some of its drawbacks, the MIMIC model can be treated as the most comprehensive and appropriate method for such calculations since it takes into account both causal and indicators of shadow economy. As the causal variables here, as applied to digital shadow economy, we use household access to the Internet and IT overall, the volume of non-cash payments and the use of most advanced fi nancial instruments. While as the indicators of the digital shadow economy spread we use: the volume of non-cash payments at online platforms, the frequency of cryptocurrency payments, and the cost of parcels to which customs duties have not been applied. For further empirical verifi cation of the model proposed here, numerical values of both causal variables and indicators would be necessary. Unfortunately, offi cial statistical sources are unable to provide such data in full volume, especially when it comes to cryptocurrencies and other informal payments. Thus, in our further research we plan to not only prove the practical applicability of the offered here model for estimations of digital shadow economy size as well as overall size of shadow economy on the examples of particular countries, but also to accumulate the necessary statistics for such calculations.

CONCEPT, MOTIVES AND CHANNELS OF DIGITAL SHADOW ECONOMY: CONSUMERS’ ATTITUDE

The purpose of this article is to define the concept of digital shadow economy and identify its determinants and channels from consumers’ position. In order to fulfil the defined purpose, the method of snowball sampling was employed. The results of the research revealed that consumers interpret digital shadow economy as an illegal operation in the Internet space, which generates illegal money flows for commodity/service providers or purchasers, and deprives legal traders/service providers from the revenue that could be officially accounted, calculated and declared. E-shops, social networks and websites are the channels, most commonly engaged for acquisition of goods/services in digital space; the categories of goods/services acquired by these channels include clothing and footwear, trips and entertainment, cosmetics and perfume. Purification of the concept of digital shadow economy from consumers’ position allowed to define the concept of digital shadow economy, which is a significant contribution to the evolution of the theory of digital shadow economy, and can enable to develop an instrument for measuring the scopes of digital shadow economy in further research.

THE DEFINITION OF DIGITAL SHADOW ECONOMY

Considering the lack of the scientific studies on the selected topic, the authors of this article raise the aim to set up the definition of digital shadow economy and identify its distinctive features and channels. Thus far, the studies on illegal digital activities have covered ambiguous inter­pretations of digital shadow economy that incorporated both criminal and economic aspects of the activities performed. The results of the empirical research have enabled to formulate the definition of digital shadow economy that refers to illegal activities, such as digital service provision and sales of goods/services online, when operating exceptionally in digital space, the entities violate the existent legal norms and regulations with a pursuit of illegal mutual interest and material benefits. The newly formulated definition of digital shadow economy has served as a corner-stone for identification of the distinctive features and channels of this phenomenon. Hence, the results of the research may make a significant and weighty contribution to the development of the theory of economics and may raise the awareness of what the phenomenon of digital shadow economy implies.

Level and sectors of digital shadow economy: the case of Lithuania

The fast pace of global computerization as well as the spread of online activities prompt the changes in the concept of shadow economy. Through cyberspaces, such as social networking platforms, alternative future currency systems, e-commerce, e-business systems or cyber computer games, real money (or an electronic equivalent of its value) circulates, but in most cases transactions are not accounted and do not generate taxes to the budget of a state. This article is aimed at supplementation of the traditional shadow economy estimation methodology with the indicator of digital shadow economy, and performance of the statistical analysis of the data which would allow to identify the areas with the highest scope of digital shadow economy. At present, the scope of shadow economy in Lithuania is estimated by employing one of the two methodologies – developed by the State Tax Inspectorate and by Lithuanian Free Market Institute. It should be noted that neither of these methodologies includes the elements of digital shadow economy. In theoretical level, no methodologies to cover any indicator of digital shadow economy with its relevant features have been developed so far. By employing the method of expert evaluation (with participation of 184 experts who work in the Department of Control, Lithuanian State Tax Inspectorate), the authors of this article initially estimated the scope of digital shadow economy and identified the areas with the highest scope of digital shadow economy in Lithuania over 2015. The research has revealed that more than a half of the experts have not inspected or identified any subjects illegally operating in e-space. The fact that the scopes of digital shadow economy have not still been estimated indeed burdens the development of any efficient mechanism, which would allow to identify and detect illegal economic activities in e-space.

Evaluation of Digital Shadow Economy Prevention Measures

Abstract Although during the past few years the scopes of shadow economy in Lithuania have slightly decreased, different forms of this phenomenon, in particular digital shadow activities, still generate a significant part of the overall value added. As no constant estimations of the scope of digital shadow economy have been made in Lithuania, alleviation of this problem is based on consequence fighting rather than reason elimination. Digital shadow economy poses a significant challenge for law enforcement agencies concerning its investigation and prevention. Hence, it is purposeful to research both theoretical and practical aspects of digital shadow economy prevention in order to identify the measures that could be used for the efficient reduction of the scope of this phenomenon. The aim of this research is to identify the measures of digital shadow economy prevention and compare the attitudes of governmental institutions and consumers towards the efficiency of these measures. The results of the empirical research showed that both consumers and experts agree that the level of tax morale has to be raised not only by using the measures of self-education but also by introducing long-term educational programmes; second, public authorities should ensure business friendly environment, actively implement the principles of justice and officially acknowledge and announce the concept of digital shadow economy; finally, for more efficient detection of the cases of digital shadow activities, it is necessary to reinforce current labour resources that should be specially trained to be able to disclose revenue hiding and tax evasion schemes, employed in e-trade.

Economic and Demographic Characteristics of the Subjects, Operating in Digital Shadow Economy

Abstract This article is aimed at theoretical and empirical identification of economic and demographic characteristics of the subjects, operating in digital shadow economy. Although, in general sense, the characteristics of the subjects, operating in digital shadow economy, are not extremely different from the ones of the subjects, operating in traditional shadow economy, the expert evaluation has enabled to identify the distinctive features of an illegal digital market seller, who can be represented as a young or middle-aged male with higher education, a professional in his operational field. With reference to the research results, sellers in digital shadow economy include the entities with officially registered activities, who are trying to evade taxation of the revenues earned from the operations in e-space. On the other hand, according to the experts, the amount of the officially accounted revenue earned by these entities may reach up to 300 EUR. Hence, the defined profile of an illegal seller, as of a subject, operating in digital shadow economy, proposes that a seller in digital shadow economy is an intellectually developed person with advanced professional skills, but insufficient financial earnings.

The Concept of Digital Shadow Economy: Consumer's Attitude

Abstract The article covers a new topic in the sphere of digital shadow economy – consumers’ attitudes towards this phenomenon. Increasing transfer of transactions to electronic space determines the growth of the number of illegal digital operators and promotes consumers’ involvement in digital shadow trade. Scientific literature does not contain any universal definition of digital shadow economy. Hence, the variety of terms, interpretations and features relevant to this phenomenon is rather wide, which determines the necessity to define the precise concept of digital shadow economy from the point of view of consumers as active participants in this field. This article is aimed at definition of the concept of digital shadow economy from consumers’ position and identification of the measures would discourage potential consumers from participation in digital shadow economy. To increase the size of the survey sample, the method of “snowball” was engaged. The results of the research have revealed that consumers are inclined to distinguish criminal activities (drugs, prostitution, credential steals, etc.) from illegal economic activities, which also violate established legal norms and regulations. The participants of the survey perceive that the activities of digital shadow economy are performed exceptionally in electronic space without official registration of business and evading tax payment. Participation in digital shadow economy is voluntary and mutually beneficial to both transaction parties (a trader and a consumer). With reference to the results of consumers’ evaluation, definition of digital shadow activities as illegal ones, development of the efficient legal framework, containing clearly established criminal and/or administrative responsibility for a consumer as a party of digital shadow transaction, public announcement and availability of the information on illegal e-traders in e-space, availability of appropriate protection software, more intensive supervision and control, establishment of e-police department and assurance of the sufficient number of supervising officers can be considered the most efficient measures of digital shadow economy prevention.

The Methodologies of Shadow Economy Estimation in the World and in Lithuania: Whether the Criterions Fixing Digital Shadow are Included?

Abstract The article covers an extremely topical but hardly researched problem of digital shadow economy estimation. Thus far, the phenomenon of digital shadow economy has not been universally defined either by scientists or by institutions responsible for the combat with shadow economy. Traditional shadow economy is commonly estimated applying direct and indirect methods possessing their strengths and weaknesses. As a result, final estimations of shadow economies are rather variant. For instance, with reference to Schneider (2014), the scope of shadow economy in Lithuania achieved 27 per cent rate in 2014 whereas the figure estimated by Lithuanian Department of Statistics composed 15 per cent rate. It can be presumed that the divergence of the results has been determined by application of different shadow economy estimation methods. The interviews with the experts of shadow economy have revealed that although the volumes of e-trade and e-transactions are increasing, indicators of digital shadow are not still included in the estimations of shadow economy.

Digital Shadow Economy: a Critical Review of the Literature

One of the biggest problems of the last decade is hardly defined economic activities, objects and subjects in cyber space. Through cyberspaces, such as social networking platforms, e-commerce, e-business systems or cyber computer games, real money circulates but in most cases these transactions are not accounted and do not generate the taxes to the state budget. For this reason, a deeper insight in the phenomenon of digital shadow economy is purposeful. The performed analysis of various scientific sources leads to the conclusion that the previous research on the topic of digital shadow economy is mostly limited with the studies in cybercriminal activities, e-fraud and the motives of the consumers to get involved in digital piracy. However, the complex scientific research in the field of digital shadow economy has not been performed, which determined the aim of this research – to systematize the scientific literature on digital shadow economy and perform the critical analysis of the researched phenomenon. The methods used in the research include systematic and comparative analysis of the scientific literature. The research has enabled to specify the concept of digital shadow economy, identify its forms and activity channels in digital black markets and define the differences between traditional and digital shadow economy. DOI: 10.5901/mjss.2015.v6n6s5p402

The factors of digital shadow consumption

Increasing volumes of e-trade contribute to motivation of consumers to obtain commodities and services in electronic space. At the same time, upsurge of e-trade determines rising scopes of shadow economy in respect of favourable conditions for traders and service providers to operate in e-space evading tax paying. The purpose of the article is to identify the factors of digital shadow consumption. In order to fulfil the defined purpose, the empirical research – survey of consumers (e-trade participants) – was performed. The research of the scientific literature has revealed that thus far the problem of consumers’ participation in digital shadow economy has been basically analysed focusing on the impact of e-payment systems on shadow economy. Nevertheless, the rapid spread of e-services determines the changes in the concept of shadow economy itself. It remains indistinct which features indicate whether economic activities performed in e-space should be accounted or not. Widely exploited e-spaces such as social network platforms, alternative future currencies, e-trade systems, cyber computer games or online gambling terminals generate turnover of real money (or its electronic equivalent), which is not officially accounted.The problem raised in this article is highly topical for Lithuania, where online networks as well as mobile connection systems are comparatively advanced (with reference to the data of Lithuanian Department of Statistics, the number of households possessing a computer and the Internet access made over 65% in 2013). Intense exploitation of advanced IT technologies and online networks is considered as a breeding ground for generation of digital economy, a part of which is presumed to be digital shadow. The results of the research have revealed that the most significant factors of digital shadow consumption include lower prices of products and services in digital black markets, unfavourable economic situation in the country, technological advancement, IT advantages, time saving obtaining a product/service in the local market and lack of opportunities to obtain a desired product in the local market. The majority of the consumers neither verify the status of a trader nor request (or not always request) purchase confirmation documents, which highly contributes to motivation of an illegal trader to maintain e-activities unregistered, this way escaping revenue taxation.