Informal Entrepreneurship Research Articles

Understanding internationalisation of informal African firms through a network perspective

Studies of internationalisation have largely overlooked developing countries with high levels of legitimate informal entrepreneurship. Consequently, this article analyses the internationalisation of Informal African Firms (IAFs) from a network perspective. We undertook in-depth case studies of 14 informal smaller firms in two major enterprise clusters in Ghana. Our findings show that half transacted business in five to seven foreign markets, and more than half sold abroad within three years of inception. The study illustrates the different network ties that influence passive and active internationalisation strategies with evidence that these IAFs developed buyer networks through customer referrals and foreign customer walk-ins to the firm. Overall, we provide a comprehensive understanding of the triggers that initiate international business activities by IAFs so contribute to current theorising noting implications for management practices and policymaking on this important but hitherto, under-explored issue.

Fairly assessing unfairness: An exploration of gender disparities in informal entrepreneurship amongst academics in business schools

• First used of the “pair matched” technique to compare female and male academics. • First quantification of a leaky pipeline of informal entrepreneurship for both genders. • Women are less numerous to be involved in informal entrepreneurship. • Most female academics follow a progressive path in their entrepreneurial journey. • Female academics struggle to move to remunerated entrepreneurial engagements. Assessing gender disparities in science commercialisation has been in the centre of the unresolved debates on the inadequacies of the methods used to compare female and male academics. Drawing from the literature on non–IP-based academic entrepreneurship and gender disparities in science, this study used the “pair-matched” technique to isolate 406 female and male academics in business schools (203 of each gender from a sample of 729 academics) who share common characteristics regarding academic position, subdisciplinary affiliation, and experience. The study confirms that a comparison of female and noncomparable male academics could lead to an unfair judgement of female academics’ performance. However, the results show that even compared to comparable men, women are less involved in remunerated consultations, generate a smaller proportion of their revenue from consultations and are less engaged in the creation of consultancy companies. In addition, the study allows us to quantify a leaky pipeline of both genders involved in informal academic entrepreneurship and to identify four paths, from progressive to nonprogressive. Most female academics follow a progressive entrepreneurial path but often struggle to move from nonremunerated to remunerated entrepreneurial engagements. The study concludes with implications for university administrators on knowledge transfer and gender inequality.

Determinants of informal entrepreneurship in Africa

Determinants of informal entrepreneurship in Africa

An Integrative Framework for Formal and Informal Entrepreneurship Research in Africa

An Integrative Framework for Formal and Informal Entrepreneurship Research in Africa

Determinants of informal entrepreneurship in Africa

This study investigates the determinants of informal entrepreneurship in Africa. Using a cross-section of 21,954 firms from 47 African countries, the study estimates several multivariate models to examine the factors that are associated with the decision of firms to register at the start of their operation and the length of time to remain unregistered. The findings show that entrepreneurship in the informal sector is complex and context-bound as contextual factors unique to Africa, such as, corruption, political instability, crime rate, infrastructure (electricity and transportation), and access to land and finance, influence the entrepreneur's decision to register their firm at the start of its operation. The length of time firms remain unregistered is shown to be positively correlated to access to finance and infrastructural availability and negatively related to crime and political instability. These results vary based on the size of the business with larger businesses being impacted less by these variables.

Developing women's business skills and entrepreneurial sustainability through informal entrepreneurship education

The role of women in business and how they contribute to national development cannot be overemphasised. There is a need to understand the role of informal education in enhancing the capacity of female managers and sustaining national growth. Hence, this study aims to establish the effect of informal entrepreneurial education on businesswomen management skills and entrepreneurial sustainability. The survey research design was employed in the study. 385 small and medium enterprises owners who are women were sampled. The regression analysis was employed in the study. The findings reveal that informal entrepreneurial education is a positive and significant driver of businesswomen’s management skills and entrepreneurial sustainability. it is recommended that SMEs owners, especially women, should aggressively increase their daily lives' learning capabilities. These will increase their capacity to improve their operations and discover new ways of doing things that will better enterprises' performance in the long run. Keywords: Entrepreneurship; informal education; Skills; sustainability; women.

Covid-19 Pandemic: Financial Impact and Intention to Stay in Current Business of Sabah Tamu Operators

In Sabah, Malaysia, a traditional market known as Tamu (means meeting) acts as a hub for local business activity, especially indigenous people. This paper presents an exploratory study whose goal is to investigate the Covid-19 pandemic financial impact and intention to stay in the current business of Tamu operators. Using purposive and snowballing sampling, survey data were collected from 125 Tamu business operators in Sabah. Among the respondents, 61.6 percent indicated Tamu business as their primary income and main entrepreneurial platform. The Covid-19 pandemic Movement Control Order (MCO) enforcement resulted in the Tamu entrepreneurs experiencing 34.2 percent decrease in weekly sales revenue and a 25.7 percent reduction in weekly gross profit. Furthermore, the overall mean score for the Tamu operators' intention to remain in the Tamu business is high at 4.37 based on 5-point likert scale. Thus, the Sabah Tamu operators are more likely to sustain their Tamu business despite the adverse financial impact of the Covid-19 MCO enforcement. This study outcome may guide the relevant government agencies to mitigate the financial impact by formulating and implementing appropriate policies and support programs specifically targeted for the Tamu business operators, who are mostly informal entrepreneurs.

Informal Entrepreneurship Education: Overview of the Russian Field

This article analyzes the informal sector of entrepreneurial education — free “open” educational projects at the federal level in the context of broader trends in the development of education and society, including education’s ‘unbundling’. The search for information was carried out using the Internet, as a result 45 initiatives were discovered. The results show that the sector of entrepreneurship education is broad, but there are a large number of areas for improvement, in which universities can play an important role. In particular, this concerns elaborating and implementing a system for evaluating educational results, organizing monitoring of the effectiveness of such initiatives, including the analysis of success stories. In addition, a separate task is to expand the set of targeted programs for specific audiences (for example, unemployed), as well as to improve the content of such initiatives more deeply according to the specifics of the relevant target groups (for example, young mothers or older people).

PENERAPAN MANAJEMEN SUMBER DAYA MANUSIA PADA UMKM KONVEKSI BORDIR DI KECAMATAN GEBOG KABUPATEN KUDUS

This study aims to describe the application of human resource management in embroidery convection SMEs in the Gebog District, Kudus Regency, which includes: labor procurement, employee development, career development, work performance assessment, compensation and occupational safety and health. The embroidery convection business which is the object of research is 125 businesses operating in Pedurenan and Karangmalang villages. The data analysis technique used in this research is descriptive analysis.
 The population in this study are Formal and Informal Entrepreneurs in the context of Embroidery Convection SMEs in Gebog District, Kudus Regency. The sample used in this study was as many as 125 people. Of the six variables used to describe Human Resource Management at Embroidery Convection SMEs in Gebog District, Kudus Regency, there is only 1 variable that is in the fairly good category, namely: career development. While the other five variables, namely manpower procurement, employee development, performance appraisal, compensation and occupational safety and health, are in the Good category.

Informal entrepreneurship and women's empowerment – the case of street vendors in urban Colombia

PurposeInternational development organizations promote access to resources through self-employment as one of the main strategies to achieve women's empowerment. However, many self-employees are more similar to informal workers than to successful entrepreneurs affecting women's control over resources and their empowerment process. This article analyzes the relationship between informal entrepreneurship and female empowerment in the context of an emerging economy.Design/methodology/approachThe authors surveyed a sample of 295 female street vendors in Bogotá – Colombia. Contingency and correlational analysis is performed.FindingsEvidence is found about the expansion of women's capacity to make decisions about resource allocation and time managing because of informal entrepreneurship. Nevertheless, these decisions are not strategic nor given in a context with several options. Several structural constraints to the exercise of agency limit empowerment to an individual process dependent on circumstances instead of a collective process resulting in changes in women's social conditions.Research limitations/implicationsThis research allows for a better understanding of the potentialities and opportunities these entrepreneurships offer to women and what strategies could be implemented to take advantage of them.Practical implicationsDespite their characteristics, informal entrepreneurship has potentialities to improve female empowerment especially when factors beyond economic rationality, such as personal, familial and sociocultural, are considered.Originality/valueThe authors discuss the category of informal entrepreneurship in emerging economies and evaluate the success of this type of entrepreneurship with a gender point of view by incorporating empowerment as measure.

Formal and informal entrepreneurship: a cross-country policy perspective

This paper distinguishes between formal and informal entrepreneurship. It theorises that each are influenced by very different combinations of macro-economic factors and strongly moderated by country income levels. Empirically, we show the ease of starting a business and high-quality governance, exert a powerful influence on formal, but not informal entrepreneurship. The latter is influenced by self-employment rates in low-income countries and by female labour force participation in high-income countries. Policy-makers seeking to improve economic welfare through enhancing entrepreneurship therefore have to choose the ‘type’ of entrepreneurship on which to focus and then select appropriate policies. By providing a novel grouping of these policies, we are able to assist them in making these choices.

Two-sided Institutional Impacts and Informal Entrepreneurship Motivation in Nigeria

Institutions are developed to direct individuals’ behaviours in ways that lead to their fulfilment. However, either by deliberate human design or other factors, institutions can also either impact positively or negatively on individuals with entrepreneurial ambition. This characterisation is typical of Nigeria’s institutions because of their often two-sided impacts on the individual. This article uses interview data from a qualitative study to demonstrate how ambiguity, as reflected in the often conflicting effects of institutional arrangements in Nigeria influence the decision to engage in informal entrepreneurship. In particular, the finding that both the enforcement and the absence of enforcement of formal laws potentially cause informality, presents a challenge that seriously implicate policy formulation and point to the need for more targeted research.

Time to change lanes: How pro‐market reforms affect informal ventures' formalization speed

AbstractResearch SummaryWe argue that pro‐market reforms encourage informal ventures to obtain formal registration quickly by altering the relative costs and benefits of joining the formal sector. We furthermore contend that this reform effect is shaped by several contextual factors such that venture embeddedness and market position increase the costs of leaving the informal sector, weakening the effect of pro‐market reforms. Although foreign competition may make the formal sector more competitive and dampen the effect of pro‐market reforms, larger informal economy may induce informal ventures to stay put. Results based on a sample of multicountry ventures support our arguments, suggesting that pro‐market reforms can speed up informal ventures' formalization processes.Managerial SummaryWe analyze the relationship between pro‐market reforms and informal ventures' formalization speed. We find that pro‐market reforms compel informal entrepreneurs to seek the benefits and to move to the formal sector quickly. Also, more embedded ventures and ventures with larger market positions are less responsive to pro‐market reforms as these ventures incur higher costs in leaving the informal sector. Since strong foreign competition makes the formal sector less attractive for nondominant entities, informal ventures may find pro‐market reforms less attractive in countries with heightened foreign competition. Ventures in countries with more intense foreign competition are less susceptible to the effect of pro‐market reforms. Overall, while pro‐market reforms provide ample incentives to formalize, informal ventures are not uniformly incentivized to do so given these contingences.

Determinant of Formal Entrepreneurship and Entrepreneur Transition During Covid-19 Pandemic

Entrepreneurship in East Java is dominated by informal entrepreneurs. To increase productivity and absorption of formal workers, a transition from informal entrepreneurs to formal entrepreneurs is needed. Using Sakernas August 2020 data, this study aims to analyze the determinants of formal entrepreneurship in East Java. In addition, using Sakernas panel data in August 2019 and 2020, we investigate the entrepreneurial transition in one year. The results of the binomial logistic regression show that male gender, higher education level, entrepreneurial skills, and use of digital technology such as the internet have a greater tendency to become formal entrepreneurs in East Java. Similarly, formal entrepreneurs who use the digital technology have less chance of turning into informal entrepreneurs during the Covid-19 pandemic.

Entrepreneurial Income and Wellbeing: Women’s Informal Entrepreneurship in a Developing Context

This study examines the impact of women’s entrepreneurial income on wellbeing. Women entrepreneurs (N = 504) from district Mardan, Khyber Pakhtunkhwa, Pakistan participated in the study. ANOVAs and multiple regressions were used to analyze the impact of predictors on the dependent variables (i.e., per capita income, education, health, entertainment, social, household, and other miscellaneous expenditures, investment, savings, and charity). The findings indicated that women’s informal entrepreneurship has a significant role in family, economic, and societal wellbeing. The results contribute to the understanding of women’s entrepreneurial income on individual and family wellbeing. Women’s informal entrepreneurship plays an important role, particularly in the developing world, consistent with the multiplier effect of women entrepreneurs’’ wellbeing. Measures were suggested to empower such women informal, home-based entrepreneurs in view of the United Nations’ Sustainable Development Goals.

Operating in quicksand: dark sides of informal entrepreneurship in extreme poverty contexts

Literature on informal economy largely debated on the positive role of informal entrepreneurs toward poverty alleviation in developing countries. However, such contexts are characterized by extreme poverty conditions with institutional voids and resource constraints that affect the entrepreneurial operations. While scholars documented why informality persists in developing countries, and what lead informal entrepreneurs to avoid the transition to formal economy, we currently miss the mechanisms by which informal entrepreneurs can effectively operate in contexts of extreme poverty. Our paper addresses this gap through a qualitative research based on 58 informal entrepreneurs in Uganda and Ghana. We discovered that informal entrepreneurs operate through practices of embeddedness in community to get necessary resources and creating informal institutions to fill institutional voids. However, such entrepreneurial practices generate also dark side effects, which also reinforce each other in a cross-bracing mechanism. We then theorized such dynamic of a cross-braced interplay between community embeddedness and informal institutions revealing how informal entrepreneurs are trapped in operating in a ‘quicksand’, which is the main cause of persistence in poverty condition. With our paper, we contribute to the literature on informal entrepreneurship in extreme-poor contexts, and especially we extend literature on the entrepreneurial processes which lead entrepreneurs to persist in informality. Future research and limitations are offered as well.

Informal Entrepreneurship: An Integrative Literature Review

Informal entrepreneurship (IE) represents the process of opportunity recognition and exploitation in the informal economy, i.e. outside of formal institutional boundaries (laws, regulations), yet within informal institutional boundaries (norms, beliefs). This includes entrepreneurial activities that, while not complying with formal laws and regulations, remain legitimate for many entrepreneur’s stakeholders, including customers, suppliers, and employees. In this paper we review the stream of literature on IE, drawing on the multilevel causal mechanism framework. We employ a systematic and integrative literature review to synthesize the existing literature, identifying situational, action-formation, and transformational causal mechanism on three different levels (micro, meso, macro) for the puzzling phenomenon of IE. The multilevel mechanism framework generates new perspectives on IE. To advance theory in this field further, we propose some directions for future research on IE.

Towards the Transition of Informal Sectors to the Formal Economy

Due to its growing importance and presence in the global economy researchers have attempted to demystify informal entrepreneurship, its motivations, processes, and outcomes. Recent scholarship, however, has focused on identifying how to transition informal actors into the formal sector. Nonetheless, extant literature is inconclusive in providing guidance on how informal entrepreneurs can best traverse a path to formality. To bridge previous gaps in the literature, we leverage the institutional entrepreneurship framework, the cultural entrepreneurship process, and the resource-based view to identify microprocesses entrepreneurs in the informal sector can employ to transition to formality and achieve legitimization. We postulate that informal economy sectors that are experiencing growth meet the enabling conditions to warrant an institutional change. By using stories and symbols in a consistent way, that emphasizes alignment with formal norms and beliefs, informal entities in transition can construct an identity that is legitimate and accepted by formal institutions. Importantly, in the face of their resource-constrained nature, we argue that digital technologies can potentiate informal entities’ successful transition to formality. Our paper offers several contributions to advancing informal entrepreneurship research by answering calls regarding the process for informal ventures to construct and achieve legitimacy. Moreover, we offer guidance to settle the institutional plurality dilemma that plagues an informal entity’s transition towards formality. Third, we recognize how digitalization transforms the nature and structure of entrepreneurial agency and actions in the context of the informal sector. Overall, we underline the specific microprocesses that precede the integration of digital technologies to foster institutional change and formalization of informal sectors.

The Impact of Intergovernmental Organizations on Entrepreneurship

Intergovernmental organizations (IGOs) aim to promote stability, development, and security for member states and their citizens via supranational institutional influences. However, their role and their impact on individuals has been questioned due to political, social, and economic uncertainties and the high detachment of the supranational IGO level and the individual level. For example, it is not clear how IGOs impact entrepreneurs and their strategic decisions to formalize entrepreneurial activities or remain informal. Thus, we study the impact of IGOs on entrepreneurial decision making, by considering the supranational institutional level, the national institutional ecology, and individual decision making. Through a study of 68 countries, their entrepreneurial environment, and their connection to IGOs, we find that IGOs generally cultivate a positive environment for entrepreneurship. Moreover, IGOs encourage different strategic decisions, i.e., encouraging formal entrepreneurship while discouraging informal entrepreneurship. We argue that a key mechanism of these impacts is the strength of the institutional ecology of member states and find that national institutional environments mediate the relationship between IGOs and entrepreneurship, further reducing informal and enhancing formal entrepreneurship. We combine international relations, institutional theory, and strategic entrepreneurship and interconnect supranational institutions, national institutional ecologies, and the individual’s entrepreneurial decision-making.

Entrepreneurial identity and strategic response in the informal economy

While entrepreneurs generally confront many challenges in running their businesses, those in the informal economy must do so outside the boundaries and support of formal institutions. The nuances of the informal economy means that entrepreneurs operating in such environments may have to rely on different mechanisms in dealing with adversity than their formal counterparts. Applying the lens of entrepreneurial bricolage, this article sheds light on how entrepreneurs respond to contexts of adversity in the informal economy. As a result of our exploratory research of informal entrepreneurs in Ghana, we find that their response is closely associated with their entrepreneurial identity. We discuss the theoretical and practical implications of these findings. Keywords: Entrepreneurship, entrepreneurial identity, informal economy, exploratory research design, Ghana.