Williams, C.C. orcid.org/0000-0002-3610-1933 and Kedir, A.M. orcid.org/0000-0002-0728-8807 (2019) Explaining cross-country variations in the prevalence of informal sector competitors: lessons from the World Bank Enterprise Survey. International Entrepreneurship and Management Journal, 15. pp. 677-696. ISSN 1554-7191
Abstract
To advance understanding of informal sector entrepreneurship, the aim of this paper is to evaluate and explain the cross-country variations in the prevalence of informal sector competitors. To do so, World Bank Enterprise Survey (WBES) data is reported from 142 countries. This reveals that 27% of formal enterprises view competition from the informal sector as a major constraint on their operations, although this varies from 72% of formal enterprises in Chad to no formal enterprises in El Salvador. To explain these cross-country variations, four competing theories are evaluated which variously view informal sector entrepreneurship and enterprise to be more prevalent when there is either: economic under-development (modernisation theory); high taxes and state over-interference (neo-liberal theory); too little state intervention (political economy theory), or an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions (institutional theory). A multilevel probit regression analysis confirms the modernisation and institutional theories, but not the neo-liberal and political theories. Beyond economic under-development, therefore, it is not too much or too little state intervention that is associated with the prevalence of informal sector competition but rather, whether the laws and regulations developed by governments are in symmetry with the norms, values and beliefs of entrepreneurs. The paper concludes by discussing the theoretical and policy implications of these findings.
Metadata
Item Type: | Article |
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Authors/Creators: |
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Copyright, Publisher and Additional Information: | © 2018 Springer Science+Business Media, LLC, part of Springer Nature. |
Keywords: | Entrepreneurship; Informal economy; Shadow economy; Economic development; Development economics; Developing economies |
Dates: |
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Institution: | The University of Sheffield |
Academic Units: | The University of Sheffield > Faculty of Social Sciences (Sheffield) > Management School (Sheffield) |
Depositing User: | Symplectic Sheffield |
Date Deposited: | 15 Oct 2018 09:34 |
Last Modified: | 17 Apr 2024 13:21 |
Status: | Published |
Publisher: | Springer Verlag |
Refereed: | Yes |
Identification Number: | 10.1007/s11365-018-0527-2 |
Open Archives Initiative ID (OAI ID): | oai:eprints.whiterose.ac.uk:137110 |