Evaluating the Impact of Informal Sector Competitors on the Performance of Formal Enterprises: Evidence From Bosnia and Herzegovina

Williams, Colin C.; Kosta, Brunilda

doi:10.1142/s1084946720500144

Cited by 15 publications

(9 citation statements)

References 64 publications

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“…12 The political climate/leadership in a state might also be tied to uncertainty and that can impact the decision to exit (O'Brien & Folta, 2009). 13 Perhaps the closet study to the present work is by Williams and Kosta (2020) who examine the perceptions about the informal sector threat on the performance (not exit) of firms in Bosnia and Herzegovina. They do not find any negative impacts of informal sector threat on performance, while we find no adverse impacts on market exit.…”

Section: Endnotesmentioning

confidence: 93%

“…A qualitative distinction between H1 and H2 is that exit via H1 would be driven more by localized (shadow) competition, while H2 would involve broader effects of shadow competition. A recent paper by Williams and Kosta (2020), using the World Bank Enterprise Surveys data and focusing on Bosnia and Herzegovina, considers the impact of the survey question about whether formal sector firms perceive informal competition as a threat to their operations. The authors find that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower performance (lower sales growth, employment growth, or productivity growth).…”

Section: The Modelmentioning

confidence: 99%

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Push from the shadows: Does the shadow economy facilitate market exit of firms?

Goel

Saunoris

2022

Manage Decis Econ

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This paper examines whether the presence of the shadow or underground economy facilitates the exit of firms from the markets they operate in. The shadow economy can induce exits when underground firms are formidable low‐cost competitors, but the shadow economy can delay or cancel exits when underground suppliers enable formal sector firms to lower costs and become more competitive. Using data across US states and using two alternative dimensions of exits, the results show that the presence of the underground sector makes market exit less likely. Another contribution of the paper lies in consideration of political explanations for firms' exit.

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Section: Endnotesmentioning

confidence: 93%

Section: The Modelmentioning

confidence: 99%

Push from the shadows: Does the shadow economy facilitate market exit of firms?

Goel

Saunoris

2022

Manage Decis Econ

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“…As for Links Mhula et al (2014), the interaction between actors in rural areas in South Africa leads formal companies to develop innovations whose characteristics are similar to informal innovations. For Wiliams and Kosta (2020), formal companies that do not perceive informal competition as an obstacle significantly increase their market shares than those that see this competition as an obstacle. Informal competition thus becomes a factor in boosting the innovation efforts of formal companies in order to cope with the rise of the informal sector.…”

Section: Informality and Innovation Capacity In Smesmentioning

confidence: 99%

Formality, innovation and entrepreneurial business performance in francophone Sub-Saharan Africa

Ndzana,

Mvogo

2023

JSBED

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PurposeRecent work in the economics of innovation in developing countries increasingly considers the formality of business as a determining factor of economic development. However, current knowledge on how formality determines both innovation and business performance remains mixed. This article examines this relationship by analyzing, on the one hand, the role of formality on innovation and, on the other hand, the moderating effect of formality on the relationship between innovation and the performance of business in francophone Sub-Saharan Africa.Design/methodology/approachBased on a sample of 1,369 Cameroonian and Senegalese small and medium-sized enterprises (SMEs) from the International Development Research Center (IDRC), the Crepon Duguet et Maraise (CDM) technique was used to reduce the endogeneity bias inherent in this type of analysis.FindingsThe results show that formal companies have a better capacity for innovation. In addition, formality positively moderates the relationship between innovation and the performance of businesses in the case of product and commercial innovations. On the other hand, it negatively moderates the relationship between innovation and the performance for process and organizational innovations.Practical implicationsThese results show that the advantages of formalization widely relayed by national public institutions and international organizations can present a risk for business if the expected gains are not accompanied by innovations.Originality/valueThis paper contributes to research by taking into account the heterogeneity of firms because it is one of the first to study formality as a moderator in the relationship between innovation and firm performance in Sub-Saharan African economies.

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“…Another group of scholars again viewing participants in informal entrepreneurship as voluntarily doing so are a group of neo-institutionalist scholars (Godfrey, 2015;Godfrey and Dyer, 2015;Webb et al, 2009Webb et al, , 2013Webb et al, , 2020Williams, 2017;Williams and Kosta, 2019;Williams and Krasniqi, 2019;Williams et al, 2017a). For these scholars, institutions are the rules of the game that govern behavior.…”

Section: Willing Participants In Informal Entrepreneurship: Neo-insti...mentioning

confidence: 99%

Evaluating Entrepreneurs’ Motives for Participating in the Informal Sector in Europe

Williams

2021

J. Dev. Entrepreneurship

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Informal entrepreneurs have been viewed variously as reluctant participants in such endeavors doing so out of economic necessity because of their exclusion from formal work and welfare (structuralist theory), or as willing entrepreneurs who voluntarily exit the formal economy either as a rational economic decision (neo-liberal theory) or as social actors who do not agree with the formal rules and regulations of the state (neo-institutional theory). The aim of this paper is to evaluate these competing theorizations of entrepreneurs’ motives for participating in the informal sector. Reporting evidence from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries, the finding is that five percent are reluctant participants, twenty percent are willing participants doing so as a rational economic decision, 21 percent are willing participants doing so because of their disagreement with the rules and 54 percent do so for a mixture of these motives. A logistic regression analysis reveals who is more likely to engage in informal entrepreneurship and who is significantly more likely to do so for each motive. The theoretical and policy implications are then discussed.

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Evaluating the Impact of Informal Sector Competitors on the Performance of Formal Enterprises: Evidence From Bosnia and Herzegovina

Cited by 15 publications

References 64 publications

Push from the shadows: Does the shadow economy facilitate market exit of firms?

Push from the shadows: Does the shadow economy facilitate market exit of firms?

Formality, innovation and entrepreneurial business performance in francophone Sub-Saharan Africa

Evaluating Entrepreneurs’ Motives for Participating in the Informal Sector in Europe

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