Harnessing the Hidden Enterprise Culture: the Street UK Community Development Finance Initiative

Entrepreneurship and the Informal Economy: An Overview

“…Indeed, a recent OECD report suggests that out of a global working population of some 3 billion, around two-thirds (1.8 billion) work in the informal sector (Jütting and Laiglesia, 2009). This finding is reinforced by many other smaller-scale studies in both advanced economies, post-socialist societies and the third world that use either indirect proxy indicators of its extensiveness (Bajada and Schneider, 2005;Schneider and Enste, 2000) or direct survey methods (Chowdury, 2006;Fernandez-Kelly and Shefner, 2006;Guha-Khasnobis and Kanbur, 2006;Guha-Khasnobis et al, 2006;Renooy et al, 2004;Williams, 2004Williams, , 2005Williams, , 2006aWilliams, , 2007aWilliams, , 2009cWilliams and Nadin, 2010;Williams and Round, 2007, 2008, 2010.…”

“…Informal entrepreneurship, in sum, is here defined as involving somebody actively engaged in starting a business or is the owner/manager of a business that is less than 42 months old who participates in the paid production and sale of goods and services that are legitimate in all respects besides the fact that they are unregistered by, or hidden from the state for tax and/or benefit purposes (Williams, 2006a(Williams, , 2007a. For these entrepreneurs, therefore, the only illicit aspect of their activity is that some or all of the monetary transactions they undertake are not declared to the authorities when they should be declared.…”

“…In sub-Saharan Africa, for example, some 70 percent of informal workers are self-employed, 62 percent in North Africa, 60 percent in Latin America and 59 percent in Asia (ILO, 2002b). The outcome is that the informal economy today is read less as exploitative waged labor conducted under "sweatshop-like" conditions and more as a "hidden enterprise culture" (Williams, 2006a(Williams, , 2007d(Williams, , 2010Williams and Windebank, 2006). As the ILO (2002a), for example, states, the informal economy represents "an incubator for business potential and … transitional base for accessibility and graduation to the formal economy" and the informal self-employed display "real business acumen, creativity, dynamism and innovation."…”

“…This re-reading of the informal economy as a hidden enterprise culture first emerged in a third (majority) world context (Bennett and Estrin, 2007;Browne, 2004;Cross, 2000;Cross and Morales, 2007;De Soto, 1989ILO, 2002a;Ilahiane and Sherry, 2008). However, since the turn of the millennium, this re-representation of the informal economy has also spread to both post-Soviet economies (Chavdarova, 2005;Rehn and Taalas, 2004;Roberts and Tholen, 1999;Williams, 2008aWilliams, , 2009aWilliams and Round, 2007) as well as the western world (Edgcomb and Thetford, 2004;Evans et al, 2006;Katungi et al, 2006;Lazaridis and Koumandraki, 2003;Renooy et al, 2004;Small Business Council, 2004;Snyder, 2004;Williams, 2006aWilliams, ,b, 2007cWilliams, , 2008aWilliams, , 2009a.…”

“…Another common assumption is that it is marginalized populations, such as those excluded from the formal labor market, who engage in informal entrepreneurship (Evans et al, 2006;Katungi et al, 2006;Llanes and Barbour, 2007;Small Business Council, 2004;Williams, 2006a). Although those informal entrepreneurs in the lowest-income quartile of the population are more likely to have no formal occupation and engage in lower-paid forms of off-the-books entrepreneurial endeavors, this does not mean that most informal entrepreneurs are unemployed.…”