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The effect of institutional asymmetry on informal entrepreneurship

Author

Listed:
  • Gianluca Zanella
  • Cory R.A. Hallam
  • Teja Guda

Abstract

Scientific literature represents the informal economy in two opposite ways, either as a sector characterised by low wages and productivity, and as a provider of livelihood for billions of people around the world. Macroeconomic theories and studies provide contrasting explanations of this complex phenomenon. Using institutional theory, we develop a microeconomic approach from an individual perspective to understand the social dynamics that can explain the choice of informal entrepreneurship. Drawing from a rich tradition of cognitive models and institutional theories, this study provides evidence of the differential effect of institutional asymmetry on nascent entrepreneurs through attitudes and subjective norms. Social pressure exerts a critical role in differentiating the entrepreneurial process between formal and informal nascent entrepreneurs. The theoretical and practical implications are discussed.

Suggested Citation

  • Gianluca Zanella & Cory R.A. Hallam & Teja Guda, 2024. "The effect of institutional asymmetry on informal entrepreneurship," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 53(4), pages 472-502.
    • Handle: RePEc:ids:ijesbu:v:53:y:2024:i:4:p:472-502
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