Informal Sector Enterprises Research Articles

Mobile money, stockouts and informal microenterprise performance: evidence from sub-Saharan Africa

PurposeThe extensive use of mobile money (MM) has been widely recognized as a digital engine of socioeconomic development in sub-Saharan Africa (SSA). This paper aims to focus on the effects of MM use and stockouts on informal microenterprise performance and investigate whether MM use mitigates the relationship between stockouts and firm performance.Design/methodology/approachThis study utilizes firm-level data from the latest World Bank Informal Sector Enterprise Surveys across six SSA countries. We employ instrumental variable-adjusted and propensity score-weighted regressions to investigate the buffering effect of MM use.FindingsWe find a significantly positive effect of MM use and a significantly negative impact of stockouts on informal microenterprise performance. Importantly, we establish that MM use attenuates the negative impact of stockouts on firm performance. We further document that the attenuating effect of MM use is more profound for firms using MM for transactions with supply chain partners, located in communities with high MM use rates, and operating in the retail industry.Practical implicationsOur research generates important managerial and policy implications. Future policies should capitalize on MM to foster an effective financial ecosystem in which informal microenterprises can survive and grow, thereby deepening their contributions to sustainable development.Originality/valueWhereas the business benefits of MM among small, medium and large firms are well-documented, the role of MM use on informal microenterprise performance is less understood. This study fills the research gap in the literature by focusing on the influence of MM use on the relationships between informal microenterprise operations and performance.

IMPACT OF SOCIAL CAPITAL ON PERFORMANCE OF INFORMAL SECTOR FIRMS: EMPIRICAL STUDY USING INDIAN FIRM DATA

Informal sector enterprises are the businesses that do not registered under the government and therefore not entitled for taxations. Social capital refers to the human networks and relationships people often maintain on their development. Three main types of informal businesses considered in this study are manufacturing, reselling and provision of services. They play a significant role in contributing to the global economy especially in developing countries. The study aimed to examine the impact of social capital on informal businesses. The study further explores the mediating effects of Covid pandemic and female ownership on the informal business performance. Secondary data for the study was obtained from World Bank Enterprise Survey website and the dataset was selected in the Indian context as India is one of the leading countries in South Asia where informal businesses have closer proportion of national economy. Dependent variable, informal business performance was measured in terms of profit and total sales, whereas the independent variable, social capital was measured using a self-developed scale by the author. Multiple regression, instrumental variable regression and censored regression (tobit) models have been used in analysis. The STATA version 11.1 is used as the statistical tool. The regression results show a strong positive relationship among the social capital and informal business performance, while the mediating effect of the global pandemic and female ownership on informal business performance were not significant.

Gender, Management Style, and the Flexibility of Informal Sector Enterprises in The Period of Covid-19: The Case of Agri-Food Microenterprises in Mali

As in any organization, microenterprises owe their survival to their ability to adapt to changes in their environments. Informal microenterprises in Mali, particularly those run by women, also have to deal with the economic upheaval caused by the Covid-19 pandemic. This research is exploratory and aims to understand the adaptation of informal microenterprises run by women in a crisis context. To do so, a multiple case analysis is conducted. The results reveal the flexibility factors of the actions undertaken by informal women entrepreneurs to face the Covid-19 crisis. The perseverance of these women and their management style based on relational skills, as well as their mastery of the culinary arts linked to their role of "expert of the kitchen" in Malian society allowed their business to adapt to the context of the crisis. In addition to these individual characteristics and socio-cultural factors, women entrepreneurs adopted strategies such as adjusting working hours and diversifying into new activities. This research contributes to the literature by highlighting the combined effect of individual factors, gender-related socio-cultural factors, and management style on microenterprise flexibility in times of crisis.

Food insecurity and health outcome nexus: empirical evidence from the informal sector enterprises in Bangladesh

BackgroundFood insecurity indicates the difficulty of constantly obtaining adequate food because of limited economic resources. Food insecurity challenges the desired health outcomes. Although extensive literature has examined the associations between food security and health, low-wage informal sector workers have been less frequently addressed in this topic. The present study has focused on food insecurity among the workers working in the informal sector enterprises who experienced entrenched disadvantage during COVID-19 and examines the relationship between food insecurity and health status as measured by self-reported physical and mental health conditions.MethodsThis study has utilized cross-sectional data collected from workers working in informal manufacturing and business enterprises in Dhaka city of Bangladesh. The Food Insecurity Experience Scale (FIES) with eight items is used to screen for food insecurity, and the Short Form 12v2 (SF12v2) scale with 12 questions, and validated for use with Bengali respondents, is used to measure the health status of the informal workers. A health production function has been constructed where the health status (both physical and mental) of workers is associated with food insecurity and other socio-economic and health care factors. Empirical analyses of the study have included descriptive statistics, mean score comparisons, and multivariate regression analyses to identify the predictive factors of the physical and mental health status of the workers.ResultsA moderate to severe food insecurity is found to be responsible for the poor health status (both physical and mental) of the selected working group population. Moreover, age over 40 years, having a large family, dissatisfaction with the work place, and the prevalence of occupational health risks are linked to lower physical health, while dissatisfaction with the work place and the incidence of severe diseases contribute to poor mental health status along with food insecurity.ConclusionsExtending social and economic protection towards health coverage and basic consumption is suggested as an immediate action to save lives and ensure productivity of the informal workers. Besides, an increase in income and ensuring decent working conditions are also recommended for the health, safety and satisfaction of workers working in informal sector enterprises.

The Impact of Covid 19 Prevention Measures on Workers in the Informal Economy in Senegal

The informal sector, or informal economy, is a real employment niche and a godsend for young people facing the harsh reality of unemployment and underemployment. However, in senegal, with the covid-19 crisis, this sector, known for its vulnerability, has been further weakened by certain government measures to combat the covid-19 pandemic (introduction of a curfew, closure of schools, markets and other places of business, ban on inter-city transport, etc.). This article, therefore, proposes to analyse the impact of these measures on informal sector enterprises and workers in senegal, particularly in dakar. The results we have obtained, thanks to an exclusively qualitative methodology, show that the application of such measures during the covid revealed an accentuated precariousness of informal work. In addition to having favoured the decline in turnover of informal enterprises, which are also confronted with the problem of indebtedness, they have contributed significantly to the unemployment of employees and other self-employed workers in this sector.

Macroeconomic Policies and their Impact on Poverty Alleviation in Pakistan

The paper provides a consistent time-series of poverty estimates for the period 1963- 64 to 1992-93 for both the rural as well as the urban areas, examines the influence of macroeconomic policies on the poverty levels, analyses the impact of Structural Adjustment Programmes on the levels of poverty, and suggests a strategy for poverty alleviation in Pakistan. The paper explores in particular the influence on poverty of such factors as economic growth, agricultural growth, terms of trade for the agriculture sector, industrial production, rate of inflation, employment, wages, remittances, and the tax structure. While the paper cautions that on account of the limited number of observations the results of the study should be interpreted cautiously, the study does suggest that the growth above a threshold level of about 5 percent, increase in employment, and remittances are the most important variables explaining the change in poverty over time. The paper also comes to the conclusion that the policies pursued under the Structural Adjustment Programme have tended to increase the poverty levels mainly because of decline in growth rates, withdrawal of subsidies on agricultural inputs and consumption, decline in employment, increase in indirect taxes, and decline in public expenditure on social services. The paper also outlines a strategy for poverty eradication and argues that besides the safety nets, the employment programmes, as well as promotion of informal sector enterprises, are essential.

Subcontracting and enterprise development in India's informal manufacturing sector

PurposeSubcontracting is a crucial cause behind the simultaneous existence of formal and informal entrepreneurship in India. This article aims to provide an over-time comparative analysis between the subcontracted and the non-subcontracted enterprises within the informal sector. Further, it also brings to fore the contribution of subcontracting towards ensuring sustainability of the informal enterprises.Design/methodology/approachBy constructing a panel data from two rounds of NSS Unincorporated Enterprise Survey Data (2010 and 2015), and employing a PSM-DID method, considering labour productivity and net retained earnings as two critical indicators of growth and development of the informal sector firms, this study has made some broad claims regarding the differences in immediate and long run performances between the subcontracted and non-subcontracted informal sector enterprises in India.FindingsThis study finds that subcontracted enterprises have not only been performing at a much lower level than the non-subcontracted enterprises, they are also growing much slowly than their counterparts. However, it has been observed that for the establishments, who are capital abundant and also have a larger production capacity, subcontracting is showing the prospect for deriving sustainable gains.Originality/valueThis article contributes to the existing literature in the following two ways. Firstly, it provides an over-time comparative analysis between the subcontracted and the non-subcontracted enterprises within the informal sector. Secondly, it brings to fore the contribution of subcontracting towards ensuring sustainability of the informal enterprises.

Social services provision and stakeholder engagement in the Nigerian informal sector: A systemic concept for transformation and business sustainability

AbstractThe informal business sector has made enormous contributions to Nigeria's economic growth and development, but this sector is not given the necessary attention to transforming these businesses toward sustainability. This study explores the depth of informal business sector practices in Nigeria. It underscores the inputs of stakeholders in the transformation of businesses in the Nigerian informal sector to increase tax remittances and employment generation for job security in the Nigerian economy. Also, it underpins value chain performances to transform the informal sector and rescue it from liquidation through voluntary company arrangements, administration, merger, takeover, and acquisition schemes. The study adopts a conceptual review. The research relies on extant literature relating to the antecedence of informal business sector activities in Nigeria. It relies on reports from tertiary data sources such as academic articles, books, newspapers, the Internet, and website sources. It further explores the views of researchers, covering the informal sector development and the support of the provisions of the social services in Nigeria. There is the absence of a model for the transformation and sustainability of the informal sector enterprises in Nigeria. This study recommends a model approach to address informal sector enterprises' issues and challenges necessary to transform the businesses into a formal status while supporting their sustainability and resilience.

Determinants of innovation and interactive learning in informal manufacturing enterprises in India

Abstract In the context of globalization, the informal sector enterprises are also exposed to international competition; and therefore, they need to remain productive and competitive. In this regard, innovation is an obvious strategic choice at the firm level. Drawing from the data gathered through an extensive field survey in NCT-Delhi, India, this study observes that innovation activities in the informal enterprises take place mostly through non-research-and-development routes and rely more on interactive learning and learning by doing. The econometric analysis shows that formal interactions through subcontracting and membership in the industrial associations along with informal interactions with other firms, buyer–supplier interactions, and social capital are having positive and significant influence on product, process, and marketing innovation. However, this study reveals that formal interactions play a vital role in introducing marketing innovations. Further, the results show the essential role of in-house training, entrepreneurial expertise, and information communication technology usage at the firm level. Thus, the paper provides empirical evidence reiterating the importance of integrating informal manufacturing enterprises and their learning processes as the key components of the innovation system in India.

Determinants of manufacturing firms’ Research and Development investments: evidence from Kenya

PurposeThis study investigates effects of firm-level, sector-level and business environment factors on manufacturing firms’ Research and Development (R&D) investment decisions in Kenya.Design/methodology/approachPanel Probit regression model is employed to analyse effects of the explanatory variables on manufacturing firms R&D investment decisions.FindingsAccess to external finance, lower informal sector competition, exports market participation, larger firm size and firms in high technology subsectors increase probabilities of undertaking R&D investment decisions.Research limitations/implicationsThe findings underscore the need to consider institutional framework, aimed at easing business environment constraints related to access to finance, export promotion and competition from informal sector enterprises. Future research should consider cross-country analysis within the Sub-Saharan African (SSA) region to understand implications of institutional contexts that prove to be a challenge to address in a study based within a single country.Practical implicationsPolicymakers need to consider addressing business environment constraints that impede R&D investments by private sector enterprises in developing countries. Formal private sector firms should design R&D investment strategies and lobby for policy interventions targeted at business environment constraints.Originality/valueThis study considers effects of variables underexplored in existing literature, notably competition from informal sector firms, R&D-intensity technological classification and an objective measure of access to finance. The study also utilises a panel survey data, which was underexplored in prior studies within SSA economies.

Social Displacement of Rural Labour in Pandemic Times: Data from Indian States

The present contribution is the twelfth part of the Social Change Indicators series. Over the past four issues, we have deliberated on the social and economic challenges arising out of the COVID-19 pandemic and lockdowns. The topics that were covered previously have included aspects of vulnerable households across social classes, poverty and migration, living conditions for social distancing and social protection networks. In this issue, we examine the displacement of rural labour in various states of India. We examine aspects, such as the labour force participation rate in rural India, according to the usual status, age group of 15–59 years, the unemployment rate in rural India, according to the usual status, age group of 15–59 years, the percentage distribution of workers in the usual status by broad status in employment in rural India, and the percentage of workers engaged in informal sector enterprises among workers in usual status engaged in the agriculture sector.

Co-location of Formal and Informal Manufacturing and Firm’s Performance: Evidence from India

This study analyses the impact of co-location between formal and informal manufacturing sectors on plant-level productivity. We employ a unique data obtained by merging plant-level data from Annual Survey of Industries (ASI 2011–2012) and Survey of Unorganised Manufacturing and Repairing Enterprises provided by National Sample Survey Office (NSSO 67th round). We find that formal and informal manufacturing plants gain from localisation. Further, co-location with informal enterprises has a positive impact on productivity of formal sector plants; however, we observe insignificant impact of co-location on informal sector enterprises. Additionally, we find evidence that informal sector enterprises benefit from industrially diversified regions. JEL Codes: D24, R12, R3

PENGARUH MODAL KERJA, PERILAKU KEWIRAUSAHAAN DAN KETERAMPILAN ADMINISTRASI TERHADAP PERKEMBANGAN USAHA PARA PEDAGANG DI PASAR BARU KOTA KUNINGAN

Tujuan penelitian ini adalah sebagai berikut: (1) untuk mengetahui pengaruh modal kerja secara simultan, perilaku dan keterampilan kewirausahaan untuk mengelola administrasi pengembangan sektor informal di Pasar Baru Kuningan; (2) untuk mengetahui pengaruh modal kerja terhadap perkembangan sektor informal di Pasar Baru Kuningan; (3) untuk mengetahui pengaruh perilaku kewirausahaan terhadap sektor informal di Pasar Baru Kuningan; (4) untuk mengetahui pengaruhnya terhadap pengembangan keterampilan untuk mengelola administrasi usaha sektor informal di Pasar Baru - Kuningan. Metode yang digunakan dalam penelitian ini adalah metode kuantitatif jenis survei. Hipotesis penelitian ini adalah modal kerja, perilaku kewirausahaan dan keterampilan untuk mengelola administrasi pengaruh secara bersamaan untuk pengembangan usaha sektor informal, Hasil penelitian adalah: modal kerja, perilaku kewirausahaan dan keterampilan untuk mengelola administrasi bersama-sama mempengaruhi secara bersamaan untuk pengembangan usaha sektor informal di Pasar Baru-Kuningan. Modal kerja memiliki dampak positif dan signifikan terhadap perkembangan usaha sektor informal di Pasar Baru-Kuningan. Ini berarti bahwa kehadiran modal kerja tambahan juga akan meningkatkan pengembangan bisnis di sektor informal Pasar Baru - Kabupaten Kuningan.

EVALUATING THE IMPACT OF INFORMAL SECTOR COMPETITORS ON THE PERFORMANCE OF FORMAL ENTERPRISES: EVIDENCE FROM BOSNIA AND HERZEGOVINA

It is widely assumed that informal sector enterprises have a harmful impact on the performance of formal enterprises. This paper aims to provide an evidence-based evaluation of whether this is the case. To do so, it reports World Bank Enterprise Survey (WBES) data collected from 360 formal enterprises in Bosnia and Herzegovina in 2019. The finding is that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower sales growth, employment growth or productivity growth. Indeed, such enterprises witness significantly higher sales growth than those who do not view informal sector competitors as a severe obstacle. The theoretical and policy implications are discussed.

Determinants of growth for the informal sector micro-enterprises: an empirical study in India

Informal sector enterprises constitute about 50 per cent of informal sector employment. If these enterprises can grow then poverty can be impacted substantially. Microcredit was visualized as a support to help micro-enterprises generate income and impact poverty. Studies across the globe suggest that the impact created by microcredit is not substantial. This mixed-method, two-phase study aims to identify the reason for lack of impact. Findings of the first phase exploratory study suggest that there are a few determinants of growth which are as critical as credit for growth. These determinants are market location, value chain, gender of the entrepreneur, investment, cluster, and entrepreneurship of the entrepreneur. In Phase 2 these determinants are confirmed through multinomial regression of data from a larger sample size in a different location. Credit is the control variable. All determinants except entrepreneurship are statistically significant in explaining the role of these determinants in the growth of micro-enterprises. These findings can inform policy about the components of enabling conditions for micro-enterprises.

Gender and the Performance of Informal Sector Enterprises

The objective of the study was to examine whether female and maleled informal businesses differ in terms of performance. Using a simple random sampling, 250 paper questionnaires were distributed by hand to small and micro enterprises, out of which 90 responses were gathered from owners and managers of informal enterprises. The Upper Echelon Theory (UET) serves as the main theory that underpins this study. Mann-Whitney test was employed to test the study's hypotheses. The findings of the study revealed that there was a significantly equal relationship between gender and profit. Sales and gender performance however indicated a non-significant relationship. Female-led enterprises had a significantly higher employees' growth than male-led enterprises. Overall, female outperformed male in the informal sector based on employees' growth which is an indication of female's lenient, empathetic and good leadership style than male.

Women in the Informal Sector of the North Eastern States and India

In India as well as in the rest of the world, the formal sector has been unable to absorb the increasing number of women job seekers (especially those with lower educational level or skills). This has made the women to seek employment in the informal sector of the economy. As a result, with time and as population increases, one may observe an increase in the number of women in the informal sector like in manufacturing and trade. Based on that, the present study aims to examine the female ownership of the informal sector enterprises in India and in particular in the North Eastern States (NES) and the changes throughout time. The data used for the study were taken from the 67th and 73rdNational Sample Survey Office (NSSO) rounds. By using descriptive statistics like percentages and averages, the study found wide differences in terms of the percentage of female/male/transgender owned enterprises from the total number of informal sector enterprises (proprietary and partnership ownership) among the North Eastern States (NES) as well as other states/UTs of the country. The study also shown that there has been a lower share of female compared to male owned informal sector enterprises across various states and UTs in India. It was also observed that there has been a lesser increase in female owned enterprises (both in total and average) during the period of study both among the NES and the other states and UTs. Similarly, the percentage increase during the period has also been lower in case of female than male owned informal sector enterprises.

Drivers of Savings Account Ownership Status: A Cross-Sectional Analysis from Ghana

In view of the evidence that poor savings can inhibit investment decision by borrowers of surplus funds, and that countries with well-established and efficiently utilised financial services have considerably less poverty, the study examines factors influence saving account ownership in Ghana using econometric approach. We used empirical evidence with data sourced from informal market traders in selected major market centres in Ghana. Using probit regression analysis, the results suggest that financial educations, number of income-generating ventures engaged in by the market trader are major predictors of savings account ownership status. Other predictors include demographic characteristics such as gender, age, marital status and number of dependents. It is, therefore, recommended that banks and financial institutions should intensify financial education strategies to boost savings mobilization. Government’s policy intervention should be directed towards informal sector enterprise development to the crowd in revenue in order to motivate decisions to save. Also, the National Board for Small Scale and informal Businesses in Ghana should intensify education on how to sustain diverse income generation ventures to fetch income from multiple sources in order to encourage behavioural intentions to save.

EXPLAINING VARIATIONS IN THE COMMONALITY OF INFORMAL SECTOR COMPETITION ACROSS LATIN AMERICAN AND THE CARIBBEAN COUNTRIES

To advance understanding of the relationship between entrepreneurship and the informal sector, the aim of this paper is to evaluate and explain variations in the extent to which formal enterprises witness competition from unregistered or informal enterprises across Latin American and Caribbean countries. Reporting World Bank Enterprise Survey (WBES) data on 31 Latin American and Caribbean countries, this reveals that two-thirds (65.5 percent) of formal enterprises witness competition from informal sector enterprise. To explain the cross-country variations, four competing theories are evaluated, which variously view the prevalence of the informal sector to be determined by either: economic under-development (modernization theory); high taxes and state over-interference (neo-liberal theory); too little state intervention (political economy theory), or an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions (institutional theory). A probit regression analysis confirms the modernization, political economy and institutional theories, but not the neo-liberal theory. Beyond economic under-development, therefore, it is too little state intervention and whether the laws and regulations developed by governments are in symmetry with the norms, values and beliefs of entrepreneurs. The paper concludes by discussing the theoretical and policy implications of these findings.

Factors leading to unsafe behavior in the twenty first century workplace: a review

Work-related injuries, diseases and fatalities have received considerable attention by researchers and have led to a greater awareness about incident causation in the workplace. Most accidents and injuries emanating from workplaces are attributed to workers’ unsafe behaviors, which are also a reflection of system deficiency and hazardous work-environment. The purpose of this review was to investigate the factors contributing to workers’ unsafe behaviors. A review of 70 major empirical studies on unsafe behaviors was conducted within occupational safety and health research, and thereafter clustered into eight job domains namely: construction, healthcare, informal sector enterprises, manufacturing, mining, energy, agriculture, and multi-dimensional context. The results across these domains were reported and compared, along with their consequences and solutions. The study found that lack of adequate knowledge on safety and health, violation of safety rules, work pressure, stress and non-use of protective equipment were the main factors of unsafe behaviors. Several major solutions to these behaviors were highlighted for consideration by practitioners and policy developers. The outcomes from this review will assist safety managers in understanding how to motivate employees/workers to engage in proper safety practices.