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Evaluating The Impact Of Informal Sector Competitors On The Performance Of Formal Enterprises: Evidence From Bosnia And Herzegovina

Author

Listed:
  • COLIN C. WILLIAMS

    (Sheffield University Management School (SUMS), University of Sheffield, Conduit Road, Sheffield S10 1FL, UK)

  • BRUNILDA KOSTA

    (Management Department, Faculty of Economics, University of Tirana, Arben Broci Road, 1000 Tirana, Albania)

Abstract

It is widely assumed that informal sector enterprises have a harmful impact on the performance of formal enterprises. This paper aims to provide an evidence-based evaluation of whether this is the case. To do so, it reports World Bank Enterprise Survey (WBES) data collected from 360 formal enterprises in Bosnia and Herzegovina in 2019. The finding is that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower sales growth, employment growth or productivity growth. Indeed, such enterprises witness significantly higher sales growth than those who do not view informal sector competitors as a severe obstacle. The theoretical and policy implications are discussed.

Suggested Citation

  • Colin C. Williams & Brunilda Kosta, 2020. "Evaluating The Impact Of Informal Sector Competitors On The Performance Of Formal Enterprises: Evidence From Bosnia And Herzegovina," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 25(02), pages 1-15, June.
    • Handle: RePEc:wsi:jdexxx:v:25:y:2020:i:02:n:s1084946720500144
    DOI: 10.1142/S1084946720500144
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    Citations

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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. Colin C. Williams, 2023. "A Modern Guide to the Informal Economy," Books, Edward Elgar Publishing, number 18668.
    3. Mohammad Amin, 2023. "Does competition from informal firms hurt job creation by formal manufacturing SMEs in developing and emerging countries? Evidence using firm-level survey data," Small Business Economics, Springer, vol. 60(4), pages 1659-1681, April.
    4. Rajeev K. Goel & James W. Saunoris, 2022. "Push from the shadows: Does the shadow economy facilitate market exit of firms?," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 43(7), pages 2955-2966, October.
    5. Zhao, Nan & Liu, Xiaojie & Zhang, Zizhe, 2022. "Does competition from the informal sector affect firms’ energy intensity? Evidence from China," Structural Change and Economic Dynamics, Elsevier, vol. 62(C), pages 130-142.

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