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Entrepreneurial activity in the informal economy: a missing piece of the entrepreneurship jigsaw puzzle

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  • Friederike Welter
  • David Smallbone
  • Anna Pobol

Abstract

This paper takes stock of the current debate around the informal sector and informal entrepreneurship. Informal entrepreneurship represents a worldwide characteristic of entrepreneurial activity, the main distinguishing feature of which is that it is operating outside the law. Since what is legal can vary considerably between countries, studies of entrepreneurship which exclude informal activity must be considered partial. Moreover, it can be argued that the distinction between formal and informal is not black and white but rather shades of grey. Although informal economic activity is often more prominent in developing countries and transition economies, it is by no means confined to them. There are parts of the UK, for example, where local economies are dependent upon informal employment and for many goods and services. More generally, much of the home-based economic activities, such as cleaning, painting and decorating and other services, are typically provided, at least partially, in the informal sector. As a consequence, it is difficult to argue against including informal activity as part of the study of entrepreneurship, and particularly where the entrepreneurial potential of an economy is being assessed.

Suggested Citation

  • Friederike Welter & David Smallbone & Anna Pobol, 2015. "Entrepreneurial activity in the informal economy: a missing piece of the entrepreneurship jigsaw puzzle," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 27(5-6), pages 292-306, June.
  • Handle: RePEc:taf:entreg:v:27:y:2015:i:5-6:p:292-306
    DOI: 10.1080/08985626.2015.1041259
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    References listed on IDEAS

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    1. John Bennett & Saul Estrin, 2007. "Informality as a Stepping Stone: Entrepreneurial Entry in a Developing Economy," CEDI Discussion Paper Series 07-11, Centre for Economic Development and Institutions(CEDI), Brunel University.
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    Cited by:

    1. Colin C Williams, 2021. "Tackling Undeclared Self-Employment in South-East Europe: from Deterrents to Preventative Policy Measures," Economic Alternatives, University of National and World Economy, Sofia, Bulgaria, issue 2, pages 280-298, July.
    2. Sam Njinyah & Simplice A. Asongu, 2022. "The relationship between firms that start operating as unregistered and firms’ innovation: the moderating effect of access to finance," Working Papers 22/099, European Xtramile Centre of African Studies (EXCAS).
    3. Cavotta, Valeria & Dalpiaz, Elena, 2022. "Good apples in spoiled barrels: A temporal model of firm formalization in a field characterized by widespread informality," Journal of Business Venturing, Elsevier, vol. 37(2).
    4. Sam Z. Njinyah & Simplice A. Asongu, 2023. "Unregistered Firms, Financial Access and Innovation," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 32(2), pages 307-346, July.
    5. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    6. Omodero Cordelia Onyinyechi, 2019. "The Financial and Economic Implications of Underground Economy: The Nigerian Perspective," Academic Journal of Interdisciplinary Studies, Sciendo, vol. 8(2), pages 155-167, July.
    7. Colin C. Williams & Brunilda Kosta, 2019. "Evaluating Institutional Theories Of Informal Sector Entrepreneurship: Some Lessons From Albania," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(02), pages 1-17, June.
    8. Colin C. Williams & Slavko Bezeredi, 2018. "An Institutional Theory Of Informal Entrepreneurship: Some Lessons From Fyr Macedonia," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(03), pages 1-22, September.
    9. Eunice Maria M. N. Dos Santos & João J. Ferreira, 2017. "Analyzing Informal Entrepreneurship: A Bibliometric Survey," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 22(04), pages 1-20, December.
    10. Friederike Welter & Ted Baker, 2021. "Moving Contexts Onto New Roads: Clues From Other Disciplines," Entrepreneurship Theory and Practice, , vol. 45(5), pages 1154-1175, September.
    11. Colin C. Williams & Abbi M. Kedir, 2019. "Explaining cross-country variations in the prevalence of informal sector competitors: lessons from the World Bank Enterprise Survey," International Entrepreneurship and Management Journal, Springer, vol. 15(3), pages 677-696, September.
    12. Colin C. Williams & Alvaro Martinez–Perez & Abbi M. Kedir, 2017. "Informal Entrepreneurship in Developing Economies: The Impacts of Starting up Unregistered on firm Performance," Entrepreneurship Theory and Practice, , vol. 41(5), pages 773-799, September.
    13. Cordelia Onyinyechi Omodero, 2019. "The Financial and Economic Implications of Underground Economy: The Nigerian Perspective," Academic Journal of Interdisciplinary Studies, Richtmann Publishing Ltd, vol. 8, July.
    14. Jay Joseph & John E. Katsos & Mariam Daher, 2021. "Local Business, Local Peace? Intergroup and Economic Dynamics," Journal of Business Ethics, Springer, vol. 173(4), pages 835-854, November.
    15. Serge Francis Simen, 2018. "Dynamique de l'entrepreneuriat informel au Sénégal : caractéristiques et particularités," Post-Print halshs-01782037, HAL.
    16. Sana Ullah & Colin C. Williams & Babur Wasim Arif, 2019. "The Impacts Of Informality On Enterprise Innovation, Survival And Performance: Some Evidence From Pakistan," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 24(03), pages 1-19, September.
    17. Colin C WILLIAMS & Slavko BEZEREDI, 2018. "Explaining informal entrepreneurship in South-East Europe: a tax morale approach," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 9, pages 47-68, December.
    18. Colin C. Williams & Abbi Kedir, 2018. "Explaining Cross-National Variations In The Prevalence Of Informal Sector Entrepreneurship: Lessons From A Survey Of 142 Countries," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(01), pages 1-22, March.
    19. Williams, Trenton Alma & Zhao, Eric Yanfei & Sonenshein, Scott & Ucbasaran, Deniz & George, Gerard, 2021. "Breaking boundaries to creatively generate value: The role of resourcefulness in entrepreneurship," Journal of Business Venturing, Elsevier, vol. 36(5).
    20. 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.
    21. Colin C. Williams & Slavko Bezeredi, 2021. "Explaining informal entrepreneurship in Croatia: a social actor approach," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 42(3), pages 348-368.
    22. Mpendulo Harold Thulare & Inocent Moyo & Sifiso Xulu, 2021. "Systematic Review of Informal Urban Economies," Sustainability, MDPI, vol. 13(20), pages 1-18, October.
    23. Lee A. Swanson & Vincent Bruni-Bossio, 2019. "A Righteous Undocumented Economy," Journal of Business Ethics, Springer, vol. 160(1), pages 225-237, November.
    24. Williams Colin C. & Gashi Ardiana, 2022. "Formal Institutional Failings and Informal Employment: Evidence from the Western Balkans," South East European Journal of Economics and Business, Sciendo, vol. 17(2), pages 83-95, December.
    25. Colin C. Williams & Besnik Krasniqi, 2018. "Explaining Informal Sector Entrepreneurship In Kosovo: An Institutionalist Perspective," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 23(02), pages 1-20, June.

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