Is Informal Sector Entrepreneurship Necessity- or Opportunity-driven? Some Lessons from Urban Brazil

Abstract

The aim of this paper is to evaluate critically the widely-held assumption that entrepreneurs operating in the informal sector in developing nations are largely necessity-driven entrepreneurs, pushed into this entrepreneurial endeavour as a survival strategy in the absence of alternatives. Reporting an extensive 2003 survey conducted in Brazilian urban areas of informal sector entrepreneurs operating small businesses with less then five employees, the finding is that under half of the surveyed entrepreneurs are driven out of necessity into entrepreneurial endeavour in the informal economy. The outcome is a call to recognize the prevalence of opportunity-drivers amongst entrepreneurs operating in the informal economy and to reposition informal sector entrepreneurs more centre-stage in discussions of entrepreneurship and enterprise development.

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

“…however, with the exception of a qualitative study by de Castro, Khavul, and Bruton (2014) in the dominican Republic, no studies have examined the characteristics of entrepreneurs displaying differing degrees of (in)formalization. Moreover, although numerous studies have sought to explain the participation of entrepreneurs in the informal economy (Chen 2012;hudson et al 2012;Williams 2013;Williams, Round, and Rodgers 2013), either by discussing whether they are necessity-and/or opportunity-driven (adom 2014;Williams 2008Williams , 2009aWilliams , 2010Williams and Round 2009;Williams and Youssef 2014), or by adopting institutional theory to explain the prevalence of informal entrepreneurship (Webb et al 2009(Webb et al , 2013Webb, Ireland, and Ketchen 2014;Welter and Smallbone 2011;Williams and Vorley 2014), no studies have so far sought to explain the differing degrees of informalization of entrepreneurs. The intention in this article, therefore, is to both enumerate and explain the varying levels of formalization of entrepreneurs as well as the characteristics of entrepreneurs displaying varying degrees of formalization.…”

Labour and social protection institutions: Recent trends and impact on development

“…Th e evidence -again from Brazil -suggests that labour inspection and trade union participation can improve compliance with minimum wages. Th e case for improving inspection and enforcement is strengthened by recent evidence that over half of Brazil's informal small-scale urban entrepreneurs are opportunity driven (Williams and Youssef, 2014).…”

Growth aspirations of young informal micro-entrepreneurs in Nairobi, Kenya: A case study of the jua kali manufacturing sector

“…Necessity motives, also called push motives, are predominant in developing countries where lack of jobs is an ongoing challenge Amin, 2010;Williams & Youssef, 2014;Herrington & Kelley, 2012). Standing in contrast to the necessity-driven group are those entrepreneurs who report mostly pull motives, such as autonomy, income and wealth, recognition and status, and challenge .…”

“…It is commonly assumed that entrepreneurs operating in the informal sector are driven by necessity, given the precarious conditions of informal work (Williams & Youssef, 2014). However, several studies suggest informal entrepreneurs are not universally necessity-driven and that opportunity motives are also prevalent among this group (Achua & Lussier, 2014;Adom & Williams, 2012;Williams & Youssef, 2014). The Global…”

“…Source: Author (2016), reconceptualization of Davidsson's (1989) model Entrepreneurial motives. Jua kali entrepreneurs, by definition, operate in Kenya's informal sector, and it is widely believed that informal entrepreneurs are predominantly necessity-driven (Williams & Youssef, 2014). However, almost all of our knowledge on informal firms comes from studies of productivity and firm dynamics, rather than individual motives.…”