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Facilitating the formalisation of entrepreneurs in the informal economy

Author

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  • Colin Williams
  • Sara J. Nadin

Abstract

Purpose - – Although it has been recognised that many entrepreneurs operate in the informal economy, little is so far known about their reasons for doing so. The purpose of this paper is to begin to unravel entrepreneurs’ rationales for trading in the informal economy in order to consider what policy measures need to be adopted to facilitate their formalisation. Design/methodology/approach - – To do this, the results of an empirical survey are reported conducted in Ukraine during 2006/2007 with 331 individuals who had started-up or owned/managed an enterprise. Findings - – Revealing that the rationales for entrepreneurs operating in the informal economy markedly differ according to whether they are wholly or partially informal entrepreneurs operating temporarily or permanently in the informal economy, the result is a call for a move beyond a “one-size-fits-all” policy approach and towards a variegated public policy approach whereby policy measures are tailored to tackling the different types of informal entrepreneurship, each of which operate informally for varying reasons. Research limitations/implications - – No evidence yet exists of whether the rationales for engaging in each type of informal entrepreneurship, and the consequent policy measures that need to be used to formalise each type, are more widely valid. Further research to evaluate this is required. Originality/value - – This is the first paper to start to move beyond a “one size fits all” policy approach when considering how to facilitate the formalisation of entrepreneurs in the informal economy.

Suggested Citation

  • Colin Williams & Sara J. Nadin, 2014. "Facilitating the formalisation of entrepreneurs in the informal economy," Journal of Entrepreneurship and Public Policy, Emerald Group Publishing Limited, vol. 3(1), pages 33-48, April.
  • Handle: RePEc:eme:jepppp:v:3:y:2014:i:1:p:33-48
    DOI: 10.1108/JEPP-05-2012-0027
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    Citations

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    Cited by:

    1. Cavotta, Valeria & Dalpiaz, Elena, 2022. "Good apples in spoiled barrels: A temporal model of firm formalization in a field characterized by widespread informality," Journal of Business Venturing, Elsevier, vol. 37(2).
    2. Aziz N. Berdiev & James W. Saunoris, 2018. "Corruption and Entrepreneurship: Cross‐Country Evidence from Formal and Informal Sectors," Southern Economic Journal, John Wiley & Sons, vol. 84(3), pages 831-848, January.
    3. Salmon Mugoda & Stephen Esaku & Rose Kibuka Nakimu & Edward Bbaale & Robert Read, 2020. "The portrait of Uganda’s informal sector: What main obstacles do the sector face?," Cogent Economics & Finance, Taylor & Francis Journals, vol. 8(1), pages 1843255-184, January.
    4. Esther Salvi & Frank-Martin Belz & Sophie Bacq, 2023. "Informal Entrepreneurship: An Integrative Review and Future Research Agenda," Entrepreneurship Theory and Practice, , vol. 47(2), pages 265-303, March.
    5. Aziz N. Berdiev & James W. Saunoris, 2020. "Cross‐Country Evidence Of Corruption Spillovers To Formal And Informal Entrepreneurship," Contemporary Economic Policy, Western Economic Association International, vol. 38(1), pages 48-66, January.
    6. Charlene A. Dadzie, 2021. "Reimagining the Global South: Consumer welfare and public policy insights from the United States' Gulf Coast," Journal of Consumer Affairs, Wiley Blackwell, vol. 55(3), pages 1178-1199, September.
    7. Janis N. Kluge & Alexander Libman, 2018. "Sticks or Carrots? Comparing Effectiveness of Government Informal Economy Policies in Russia," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 60(4), pages 605-637, December.
    8. Constance Gunhidzirai & Pius T Tanga, 2017. "Informal Entrepreneurship as a Poverty Alleviation Mechanism in Zimbabwe: Challenges and Prospects," Journal of Economics and Behavioral Studies, AMH International, vol. 9(4), pages 132-143.
    9. Aziz N. Berdiev & James W. Saunoris & Friedrich Schneider, 2018. "Give Me Liberty, or I Will Produce Underground: Effects of Economic Freedom on the Shadow Economy," Southern Economic Journal, John Wiley & Sons, vol. 85(2), pages 537-562, October.
    10. Eunice Maria M. N. Dos Santos & João J. Ferreira, 2017. "Analyzing Informal Entrepreneurship: A Bibliometric Survey," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-20, December.
    11. Yugank Goyal & Klaus Heine, 2021. "Why do informal markets remain informal: the role of tacit knowledge in an Indian footwear cluster," Journal of Evolutionary Economics, Springer, vol. 31(2), pages 639-659, April.
    12. Shova Thapa Karki & Mirela Xheneti & Adrian Madden, 2021. "To Formalize or Not to Formalize: Women Entrepreneurs’ Sensemaking of Business Registration in the Context of Nepal," Journal of Business Ethics, Springer, vol. 173(4), pages 687-708, November.
    13. Colin C. Williams & Youssef Youssef, 2014. "Combating Informal Employment in Latin America: A Critical Evaluation of the Neo-Liberal Policy Approach," Research in World Economy, Research in World Economy, Sciedu Press, vol. 5(2), pages 1-13, September.

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