An Exploratory Perspective on How Crime and Informality Affect BRICS Industry Performance

There is a prevailing view that crime and informality negatively affect performance. Brazil, Russia, India, China, and South Africa (BRICS) are known for above average crime and informality, but a decade of stellar economic performance defies that view. Information and Communication Technologies (ICTs) play an instrumental role in this regard. The combination of these factors represents an unexplained conundrum that we address in this exploratory research. We use the Technology, Organization, and Environment (TOE) framework and multiple regression analysis to investigate the effects of crime, informality, and ICTs in BRICS. We believe two primary factors provide plausible explanations: 1. ICTs have the ability to neutralize the negative effects of crime on performance; and 2. when crime and informality are culturally accepted, they become part of doing business in a corrupt environment where weak legal infrastructures exist. We find that the number of years of informal firm operation, registered firms, and the percent of firms identifying crime, theft, and disorder as a major constraint are significant predictors of industry performance.