Finance, informal competition, and expectations: A firm-level analysis

Brancati, Emanuele; Di Maio, Michele; Rahman, Aminur

doi:10.1016/j.worlddev.2023.106408

World Development

2024

DOI: 10.1016/j.worlddev.2023.106408

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Finance, informal competition, and expectations: A firm-level analysis

Emanuele Brancati,

Michele Di Maio,

Aminur Rahman

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2024

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Cited by 4 publications

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National culture of secrecy and firms’ access to credit

Bertrand,

Klein,

Pasiouras

2024

Journal of Banking & Finance

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National culture of secrecy and firms’ access to credit

Bertrand,

Klein,

Pasiouras

2024

Journal of Banking & Finance

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How does the weather and climate change affect firm performance in low-income countries? Evidence from Uganda

Mawejje

2024

Sustainable Futures

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The effects of informal competition on firms’ innovation in Greece

Vlachos

2024

IJDI

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Purpose Several empirical studies indicate that the existence of a large informal sector is a major obstacle to firms’ choices of innovation strategies. This paper aims to address this issue and investigates the effect of the informal sector on the innovation of formal firms in Greece. Design/methodology/approach Using the World Bank’s Enterprise Survey data, the impact of informal competition on formal firms’ innovation in Greece is investigated by testing whether formal firms use innovation as a tool to protect and sustain their competitive advantage vis-à-vis informal firms and whether overall and informal competition has an inverted-U relationship with the innovation of formal firms. The effects of bribing and other variables drawn from the empirical literature are also controlled for. Findings The findings fill a gap in the literature regarding the effects of the informal sector on formal economic activity in Greece, by indicating that the informal sector puts pressure on formal firms to innovate, in order to differentiate their product or service and enhance their productivity and by offering learnings to help policymakers to promote innovation in Greece. Originality/value The originality of this study is that it investigates the impact of informal competition on formal firms’ innovation in Greece, a developed economy with a large informal sector. It does so by focusing on the effects that formal firms’ informal practices have on their competitors’ innovation activities, and the role of informal competition in creating and sustaining a competitive advantage in Greece.

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Finance, informal competition, and expectations: A firm-level analysis

Cited by 4 publications

References 24 publications

National culture of secrecy and firms’ access to credit

National culture of secrecy and firms’ access to credit

How does the weather and climate change affect firm performance in low-income countries? Evidence from Uganda

The effects of informal competition on firms’ innovation in Greece

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