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An Institutional Theory Of Informal Entrepreneurship: Some Lessons From Fyr Macedonia

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  • COLIN C. WILLIAMS

    (Sheffield University Management School, University of Sheffield, Conduit Road, Sheffield S10 1FL, UK)

  • SLAVKO BEZEREDI

    (Institute of Public Finance, Zagreb, Croatia)

Abstract

In recent years, a new institutionalist theory has emerged to explain the prevalence of informal sector entrepreneurship. This argues that formal institutional failures lead to the emergence of an asymmetry between the formal rules (laws and regulations) and the norms, values and beliefs of entrepreneurs regarding the acceptability of participating in the informal sector, which in turn leads to the prevalence of informal entrepreneurship. The aim of this paper is to evaluate this social actor approach by reporting evidence from 453 face-to-face interviews with a nationally representative sample of entrepreneurs in FYR Macedonia. This reveals not only a significant association between participation in the informal economy and the non-alignment of entrepreneurs’ views with the formal rules, but specific formal institutional failings that are significantly associated with the acceptability of informal entrepreneurship, namely poor quality public services, a lack of tax fairness, corruption and instability in the formal institutions. The theoretical and policy implications are then discussed.

Suggested Citation

  • Colin C. Williams & Slavko Bezeredi, 2018. "An Institutional Theory Of Informal Entrepreneurship: Some Lessons From Fyr Macedonia," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(03), pages 1-22, September.
    • Handle: RePEc:wsi:jdexxx:v:23:y:2018:i:03:n:s108494671850019x
    DOI: 10.1142/S108494671850019X
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