IDEAS home Printed from https://ideas.repec.org/a/eee/jbvent/v39y2024i4s0883902624000260.html
   My bibliography  Save this article

A framework for investigating new firm entry: The (limited) overlap between informal-formal and necessity-opportunity entrepreneurship

Author

Listed:
  • Estrin, Saul
  • Guerrero, Maribel
  • Mickiewicz, Tomasz

Abstract

We analyse entrepreneurial entry along the dimensions of informal-formal and necessity-opportunity entrepreneurship, distinguishing between them yet considering them jointly. While the dominant view in the literature conflates necessity with informal entry, and opportunity with formal entry, we hypothesise that informal entrepreneurship may be attractive to higher-income individuals as a testing ground for entrepreneurial ideas. We also explain why higher-income individuals may undertake necessity entrepreneurship. We utilise individual Global Entrepreneurship Monitor (GEM) data from Chile (2019–2021), which identifies informal-formal and necessity-opportunity entrepreneurial entry modes, to test hypotheses on the role of individuals´ income in the four types of entrepreneurial entry. We also consider changes in entrepreneurial entry during a crisis and a non-crisis periods. Our results confirm that the patterns in the data are consistent with hypotheses derived from our proposed theoretical framework.

Suggested Citation

  • Estrin, Saul & Guerrero, Maribel & Mickiewicz, Tomasz, 2024. "A framework for investigating new firm entry: The (limited) overlap between informal-formal and necessity-opportunity entrepreneurship," Journal of Business Venturing, Elsevier, vol. 39(4).
    • Handle: RePEc:eee:jbvent:v:39:y:2024:i:4:s0883902624000260
    DOI: 10.1016/j.jbusvent.2024.106404
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0883902624000260
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.jbusvent.2024.106404?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or search for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Rafael La Porta & Andrei Shleifer, 2014. "Informality and Development," Journal of Economic Perspectives, American Economic Association, vol. 28(3), pages 109-126, Summer.
    2. Garry D. Bruton & Shaker A. Zahra & Andrew H. Van de Ven & Michael A. Hitt, 2022. "Indigenous Theory Uses, Abuses, and Future," Journal of Management Studies, Wiley Blackwell, vol. 59(4), pages 1057-1073, June.
    3. Colin C. Williams & Sara Nadin, 2010. "The Commonality And Character Of Off-The-Books Entrepreneurship: A Comparison Of Deprived And Affluent Urban Neighborhoods," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 15(03), pages 345-358.
    4. Cassar, Gavin, 2006. "Entrepreneur opportunity costs and intended venture growth," Journal of Business Venturing, Elsevier, vol. 21(5), pages 610-632, September.
    5. Marco Caliendo & Alexander Kritikos, 2010. "Start-ups by the unemployed: characteristics, survival and direct employment effects," Small Business Economics, Springer, vol. 35(1), pages 71-92, July.
    6. Blanchflower, David G & Oswald, Andrew J, 1998. "What Makes an Entrepreneur?," Journal of Labor Economics, University of Chicago Press, vol. 16(1), pages 26-60, January.
    7. Colin C. Williams & Sara Nadin, 2011. "Evaluating entrepreneurs in the shadow economy: economic or social entrepreneurship?," International Journal of Management and Enterprise Development, Inderscience Enterprises Ltd, vol. 11(1), pages 20-33.
    8. Thomas Epper & Ernst Fehr & Helga Fehr-Duda & Claus Thustrup Kreiner & David Dreyer Lassen & Søren Leth-Petersen & Gregers Nytoft Rasmussen, 2020. "Time Discounting and Wealth Inequality," American Economic Review, American Economic Association, vol. 110(4), pages 1177-1205, April.
    9. Banerjee, Abhijit V & Newman, Andrew F, 1993. "Occupational Choice and the Process of Development," Journal of Political Economy, University of Chicago Press, vol. 101(2), pages 274-298, April.
    10. Simeon Djankov & Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer, 2002. "The Regulation of Entry," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 117(1), pages 1-37.
    11. Roy Thurik, 2014. "Entrepreneurship and the business cycle," IZA World of Labor, Institute of Labor Economics (IZA), pages 1-90, October.
    12. Maribel Guerrero & Tomasz Mickiewicz & Fei Qin, 2024. "Entrepreneurial growth aspirations during the COVID-19 pandemic: the role of ICT infrastructure quality versus policy response," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 36(1-2), pages 55-75, January.
    13. Jaimovich, Dany & Toledo, Felipe, 2021. "The grievances of a failed reform: Chilean land reform and conflict with indigenous communities," MPRA Paper 109136, University Library of Munich, Germany.
    14. Parker,Simon C., 2018. "The Economics of Entrepreneurship," Cambridge Books, Cambridge University Press, number 9781316621714, November.
    15. Feige, Edgar L., 1990. "Defining and estimating underground and informal economies: The new institutional economics approach," World Development, Elsevier, vol. 18(7), pages 989-1002, July.
    16. Nick Williams & Tim Vorley, 2015. "The impact of institutional change on entrepreneurship in a crisis-hit economy: the case of Greece," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 27(1-2), pages 28-49, January.
    17. Julia Korosteleva & Tomasz Mickiewicz, 2011. "Start-Up Financing in the Age of Globalization," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 47(3), pages 23-49, May.
    18. Carla Bustamante & Carlos Poblete & José Ernesto Amorós, 2020. "Entrepreneurial intentions in the context of a natural disaster," International Journal of Emerging Markets, Emerald Group Publishing Limited, vol. 17(5), pages 1198-1217, December.
    19. Zoltan Acs, 2008. "How is Entrepreneurship Good for Economic Growth?," Chapters, in: Entrepreneurship, Growth and Public Policy, chapter 21, pages 291-301, Edward Elgar Publishing.
    20. William Gartner & Casey Frid & John Alexander, 2012. "Financing the emerging firm," Small Business Economics, Springer, vol. 39(3), pages 745-761, October.
    21. Fredström, Ashkan & Peltonen, Juhana & Wincent, Joakim, 2021. "A country-level institutional perspective on entrepreneurship productivity: The effects of informal economy and regulation," Journal of Business Venturing, Elsevier, vol. 36(5).
    22. Robert E. Lucas Jr., 1978. "On the Size Distribution of Business Firms," Bell Journal of Economics, The RAND Corporation, vol. 9(2), pages 508-523, Autumn.
    23. Norman V. Loayza, 2016. "Informality in the Process of Development and Growth," The World Economy, Wiley Blackwell, vol. 39(12), pages 1856-1916, December.
    24. Fairlie, Robert W. & Lofstrom, Magnus, 2013. "Immigration and Entrepreneurship," IZA Discussion Papers 7669, Institute of Labor Economics (IZA).
    25. Scott Shane, 2000. "Prior Knowledge and the Discovery of Entrepreneurial Opportunities," Organization Science, INFORMS, vol. 11(4), pages 448-469, August.
    26. Rajneesh Narula, 2020. "Policy opportunities and challenges from the COVID-19 pandemic for economies with large informal sectors," Journal of International Business Policy, Palgrave Macmillan, vol. 3(3), pages 302-310, September.
    27. Tonia Warnecke, 2013. "Entrepreneurship and Gender: An Institutional Perspective," Journal of Economic Issues, Taylor & Francis Journals, vol. 47(2), pages 455-464.
    28. Jeffrey M Wooldridge, 2010. "Econometric Analysis of Cross Section and Panel Data," MIT Press Books, The MIT Press, edition 2, volume 1, number 0262232588, December.
    29. Macpherson, Wayne G. & Tretiakov, Alexei & Mika, Jason P. & Felzensztein, Christian, 2021. "Indigenous entrepreneurship: Insights from Chile and New Zealand," Journal of Business Research, Elsevier, vol. 127(C), pages 77-84.
    30. Falco, Paolo & Haywood, Luke, 2016. "Entrepreneurship versus joblessness: Explaining the rise in self-employment," EconStor Open Access Articles and Book Chapters, ZBW - Leibniz Information Centre for Economics, vol. 118, pages 245-265.
    31. Paul Reynolds & Niels Bosma & Erkko Autio & Steve Hunt & Natalie De Bono & Isabel Servais & Paloma Lopez-Garcia & Nancy Chin, 2005. "Global Entrepreneurship Monitor: Data Collection Design and Implementation 1998–2003," Small Business Economics, Springer, vol. 24(3), pages 205-231, February.
    32. Nicola Pless, 2012. "Social Entrepreneurship in Theory and Practice—An Introduction," Journal of Business Ethics, Springer, vol. 111(3), pages 317-320, December.
    33. Ana Cristina O. Siqueira & Justin W. Webb & Garry D. Bruton, 2016. "Informal Entrepreneurship and Industry Conditions," Entrepreneurship Theory and Practice, , vol. 40(1), pages 177-200, January.
    34. Ault, Joshua K. & Spicer, Andrew, 2022. "The formal institutional context of informal entrepreneurship: A cross-national, configurational-based perspective," Research Policy, Elsevier, vol. 51(9).
    35. Per Davidsson, 2016. "Entrepreneurship as a Research Domain," International Studies in Entrepreneurship, in: Researching Entrepreneurship, edition 2, chapter 2, pages 21-40, Springer.
    36. Susana C. Santos & António Caetano & Paola Spagnoli & Sílvia Fernandes Costa & Xaver Neumeyer, 2017. "Predictors of entrepreneurial activity before and during the European economic crisis," International Entrepreneurship and Management Journal, Springer, vol. 13(4), pages 1263-1288, December.
    37. Robert W. Fairlie, 2013. "Entrepreneurship, Economic Conditions, and the Great Recession," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 22(2), pages 207-231, June.
    38. Wennekers, Sander & Thurik, Roy, 1999. "Linking Entrepreneurship and Economic Growth," Small Business Economics, Springer, vol. 13(1), pages 27-55, August.
    39. Thomas Lindner & Jonas Puck & Alain Verbeke, 2020. "Misconceptions about multicollinearity in international business research: Identification, consequences, and remedies," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 51(3), pages 283-298, April.
    40. Joern Block & Karsten Kohn & Danny Miller & Katrin Ullrich, 2015. "Necessity entrepreneurship and competitive strategy," Small Business Economics, Springer, vol. 44(1), pages 37-54, January.
    41. Friederike Welter & Ted Baker & David B. Audretsch & William B. Gartner, 2017. "Everyday Entrepreneurship—A Call for Entrepreneurship Research to Embrace Entrepreneurial Diversity," Entrepreneurship Theory and Practice, , vol. 41(3), pages 311-321, May.
    42. Sutter, Christopher & Webb, Justin & Kistruck, Geoff & Ketchen, David J. & Ireland, R. Duane, 2017. "Transitioning entrepreneurs from informal to formal markets," Journal of Business Venturing, Elsevier, vol. 32(4), pages 420-442.
    43. Colin C. Williams & Sara Nadin, 2010. "Entrepreneurship And The Informal Economy: An Overview," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 15(04), pages 361-378.
    44. Anderson, Robert B. & Dana, Leo Paul & Dana, Teresa E., 2006. "Indigenous land rights, entrepreneurship, and economic development in Canada: "Opting-in" to the global economy," Journal of World Business, Elsevier, vol. 41(1), pages 45-55, February.
    45. Colin C. Williams, 2011. "Entrepreneurship, the informal economy and rural communities," Journal of Enterprising Communities: People and Places in the Global Economy, Emerald Group Publishing Limited, vol. 5(2), pages 145-157, May.
    46. Joan-Lluís Capelleras & Ignacio Contin-Pilart & Martin Larraza-Kintana & Victor Martin-Sanchez, 2019. "Entrepreneurs’ human capital and growth aspirations: the moderating role of regional entrepreneurial culture," Small Business Economics, Springer, vol. 52(1), pages 3-25, January.
    47. Per Davidsson, 2016. "Researching Entrepreneurship," International Studies in Entrepreneurship, Springer, edition 2, number 978-3-319-26692-3, March.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    2. Marco Vivarelli, 2013. "Is entrepreneurship necessarily good? Microeconomic evidence from developed and developing countries," Industrial and Corporate Change, Oxford University Press and the Associazione ICC, vol. 22(6), pages 1453-1495, December.
    3. Vivarelli, Marco, 2012. "Drivers of entrepreneurship and post-entry performance : microeconomic evidence from advanced and developing countries," Policy Research Working Paper Series 6245, The World Bank.
    4. Francesco Quatraro & Marco Vivarelli, 2015. "Drivers of Entrepreneurship and Post-entry Performance of Newborn Firms in Developing Countries," The World Bank Research Observer, World Bank, vol. 30(2), pages 277-305.
    5. Niklas Elert, 2014. "What determines entry? Evidence from Sweden," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 53(1), pages 55-92, August.
    6. Francesco Quatraro & Marco Vivarelli, 2013. "Entry and Post-Entry Dynamics in Developing Countries," GREDEG Working Papers 2013-20, Groupe de REcherche en Droit, Economie, Gestion (GREDEG CNRS), Université Côte d'Azur, France.
    7. Ross Levine & Yona Rubinstein, 2018. "Selection into Entrepreneurship and Self-Employment," NBER Working Papers 25350, National Bureau of Economic Research, Inc.
    8. Quatraro, Francesco & Vivarelli, Marco, 2013. "Entrepreneurship In A Developing Country Context," Department of Economics and Statistics Cognetti de Martiis LEI & BRICK - Laboratory of Economics of Innovation "Franco Momigliano", Bureau of Research in Innovation, Complexity and Knowledge, Collegio 201314, University of Turin.
    9. Kleinhempel, Johannes & Klasing, Mariko & Beugelsdijk, Sjoerd, 2022. "Cultural Roots of Entrepreneurship," MPRA Paper 115942, University Library of Munich, Germany.
    10. Jafari-Sadeghi, Vahid, 2020. "The motivational factors of business venturing: Opportunity versus necessity? A gendered perspective on European countries," Journal of Business Research, Elsevier, vol. 113(C), pages 279-289.
    11. Pekka Stenholm & Zoltán J. Ács & Robert Wuebker, 2015. "Exploring country-level institutional arrangements on the rate and type of entrepreneurial activity," Chapters, in: Global Entrepreneurship, Institutions and Incentives, chapter 20, pages 387-404, Edward Elgar Publishing.
    12. Kleinhempel, Johannes & Estrin, Saul, 2024. "Realizing expectations?," MPRA Paper 120863, University Library of Munich, Germany.
    13. Boudreaux, Christopher & Caudill, Steven, 2019. "Entrepreneurship, Institutions, and Economic Growth: Does the Level of Development Matter?," MPRA Paper 94244, University Library of Munich, Germany.
    14. Christopher J. Boudreaux & Boris Nikolaev, 2019. "Capital is not enough: opportunity entrepreneurship and formal institutions," Small Business Economics, Springer, vol. 53(3), pages 709-738, October.
    15. Fredström, Ashkan & Peltonen, Juhana & Wincent, Joakim, 2021. "A country-level institutional perspective on entrepreneurship productivity: The effects of informal economy and regulation," Journal of Business Venturing, Elsevier, vol. 36(5).
    16. Fang, Hanqing & Chrisman, James J. & Memili, Esra & Wang, Minglin, 2020. "Foreign venture presence and domestic entrepreneurship: A macro level study," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 68(C).
    17. Marco Vivarelli, 2012. "Entrepreneurship and Post-Entry Performance: the Microeconomic Evidence," DISCE - Quaderni del Dipartimento di Scienze Economiche e Sociali dises1286, Università Cattolica del Sacro Cuore, Dipartimenti e Istituti di Scienze Economiche (DISCE).
    18. Joan-Lluís Capelleras & Ignacio Contin-Pilart & Martin Larraza-Kintana & Victor Martin-Sanchez, 2019. "Entrepreneurs’ human capital and growth aspirations: the moderating role of regional entrepreneurial culture," Small Business Economics, Springer, vol. 52(1), pages 3-25, January.
    19. David B. Audretsch & Maksim Belitski & Farzana Chowdhury & Sameeksha Desai, 2022. "Necessity or opportunity? Government size, tax policy, corruption, and implications for entrepreneurship," Small Business Economics, Springer, vol. 58(4), pages 2025-2042, April.

    More about this item

    Keywords

    Informal entrepreneurship; Opportunity; Necessity; Income; Crisis; Global entrepreneurship monitor; Chile;
    All these keywords.

    JEL classification:

    • J50 - Labor and Demographic Economics - - Labor-Management Relations, Trade Unions, and Collective Bargaining - - - General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jbvent:v:39:y:2024:i:4:s0883902624000260. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/jbusvent .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.