Informal entrepreneurship and institutional theory: explaining the varying degrees of (in)formalization of entrepreneurs in Pakistan

2016

IJESB

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This paper introduces this special issue by providing an overview of the various policy options and approaches available for tackling enterprise in the informal economy. It firstly reviews four possible hypothetical policy options, namely doing nothing, eradicating informal sector enterprise, moving formal enterprises into the informal economy, or formalizing enterprise in the informal economy. Displaying that formalizing informal sector enterprise is the most viable and most commonly adopted approach, it then reviews the two approaches of using either direct 2 controls, which increase the costs of operating informally and/or the benefits of operating formally, or indirect controls that seek greater self-regulation. Following this, the ways in which these approaches can be combined is then reviewed. The outcome is a comprehensive introductory overview and conceptual framework for contextualizing the arguments of the papers in this special issue.

Section: "Soft" Indirect Controls Approachmentioning

confidence: 99%

Tackling enterprise in the informal economy: an introductory overview

2016

IJESB

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“…To understand the tools used to achieve this, it is first necessary to recognize that there exists an institutional asymmetry between the laws, codes and regulations of formal institutions and the norms, beliefs and values of informal institutions (Efendic, Pugh and Adnett 2011a,b;Helmke and Levitsky 2004;North 1990;Webb et al 2009 activities being seen as socially legitimate in terms of the norms, values and beliefs of entrepreneurs (Williams and Shahid 2015). To tackle undeclared work therefore, there is a need to reduce this asymmetry between the formal and informal institutions.…”

Section: Indirect Controls Approachmentioning

confidence: 99%

Tackling the Propensity towards Undeclared Work: Some Policy Lessons from Croatia

South East European Journal of Economics and Business

Franić

2015

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The aim of this paper is to evaluate contrasting policy approaches towards undeclared work. To do so, evidence is reported from 1,000 face-to-face interviews conducted in Croatia during 2013. Logistic regression analysis reveals no association between participation in undeclared work and the perceived level of penalties and risk of detection, but a strong association between participation in undeclared work and the level of tax morality. It thus confirms recent calls for the conventional direct controls approach, which seeks to deter engagement in undeclared work by increasing the penalties and risk of detection, to be replaced by an indirect controls approach which seeks to improve tax morality so as to encourage greater self-regulation and a culture of commitment to compliance. The implications for theory and policy are then discussed.

“…This was first recognised in emerging economies (Cross, 2000;Cross and Morales, 2007;De Soto, 1989, 2001ILO, 2002a;Khan and Quaddus, 2015;Williams, 2015c;Williams and Shahid, 2014;Williams and Gurtoo, 2013). As the ILO (2002) find, in sub-Saharan Africa 70 per cent of those operating in the informal sector are doing so on a self-employed basis, 62 per cent in North Africa, 60 per cent in Latin America and 59 per cent in Asia.…”

Section: Informal Sector Entrepreneurship and Marginalized Populationsmentioning

confidence: 99%

“…This emergent sub-field of 'informal sector entrepreneurship' has so far analysed the magnitude of entrepreneurship in the informal sector (Autio and Fu, 2014;Williams, 2013), the extent to which entrepreneurs operate in the informal sector (De Castro et al, 2014;Williams and Shahid, 2014) and their reasons for doing so (Adom, 2014;Chen, 2012;Hudson et al, 2012;Williams, 2009;Williams et al, 2010). Until now however, there has been little investigation of which entrepreneurs display a greater propensity to participate in the informal sector.…”

Section: Introductionmentioning

confidence: 99%

Beyond the marginalisation thesis: evaluating participation in informal sector entrepreneurship

Horodnic

2016

IJESB

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This paper evaluates which entrepreneurs participate in the informal sector. Until now, the dominant view has been that entrepreneurs from marginalized groups benefiting least from the formal sector are more likely to do so. To evaluate this marginalization thesis, we report a 2013 survey of 11 Central and East European countries involving 707 face-to-face interviews with entrepreneurs about their participation in the informal sector. Using logistic regression analysis, the finding is that the marginalization thesis applies when examining characteristics such as the household financial circumstances and age of entrepreneurs engaged in the informal sector. However, when gender variations are analysed, the thesis is negatively confirmed. Meanwhile, no association is found when analysing characteristics such as the educational level, social class and area inhabited. The outcome is a call to move beyond the marginalization thesis and towards a more nuanced understanding of which entrepreneurs participate in the informal sector.