Toward a Theory of the Informal Economy

Economic and political institutions and entry into formal and informal entrepreneurship

“…Our findings are timely, since they respond to recent calls by some management scholars for greater attention to the informal economy (Godfrey, 2011;Webb et al, 2009). Although a subject of interest for development economists, management scholars have only recently started to explore this topic.…”

“…If the two models were unrelated, we would be able to estimate them separately. However, there are good theoretical grounds to expect that registered and unregistered entrepreneurial entries are partial substitutes (although not full substitutes) of one another (Godfrey, 2011). This means that it is possible to gain a more efficient estimator by estimating the two equations jointly (Zellner, 1962).…”

“…However, management scholars have only recently started to explore this topic (Godfrey, 2011;Webb et al, 2009). Therefore, although there exists a significant body of sociological, ethnographic, institutional, and comparative economic research on the informal economy (e.g., De Soto, 2002;Djankov et al, 2003;Williams, 2006Williams, , 2008, relatively little is known about the processes underlying value creation and economic dynamism in this context (Estrin & Mickiewicz, 2012).…”

“…Because of this, individuals who might not have started new businesses in the first place were forced to do so in the absence of alternative means of making a living. This is only speculation, however, and more research with appropriate individual-level data and designs is required to address the substitutioncomplementarity challenge introduced by Godfrey (2011).…”

What Do Science, Technology, and Innovation Mean from Africa?

“…We know that a large section of the African economy is informal (ILO 2009(ILO , 2012Charmes, Gault, and Wunsch-Vincent 2015). A significant amount of innovation activity in the continent, as in the wider Global South, draws from indigenous knowledge, occurs in informal settings, and is largely ignored in innovation, development, and management studies (Kraemer-Mbula and Wamae 2010;Godfrey 2011;Cozzens and Sutz 2012). Therefore, the definition, conceptualization, and meaning of STI from Africa must reflect this fact.…”