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Impact of sourcing from the informal economy on the export likelihood and performance of emerging economy firms

Author

Listed:
  • Octavio Escobar

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

  • Olivier Lamotte

    (Métis Lab EM Normandie - EM Normandie - École de Management de Normandie)

  • Ana Colovic

    (NEOMA - Neoma Business School)

  • Pierre-Xavier Meschi

    (CERGAM - Centre d'Études et de Recherche en Gestion d'Aix-Marseille - AMU - Aix Marseille Université - UTLN - Université de Toulon, AMU IAE - Institut d'Administration des Entreprises (IAE) - Aix-en-Provence - AMU - Aix Marseille Université)

Abstract

Building on the institutional economics perspective, we study how local firms in an emerging economy exploit institutional voids by sourcing inputs from industries with a large informal economy. We argue that this allows them to build a cost-related competitive advantage and leverage it both to export and to enhance export performance. The empirical study uses a unique dataset compiled by the Mexican authorities covering manufacturing plants between 2005 and 2012. Our results indicate that firms operating in industries that procure from industries with an extensive informal economy are more likely to export and to have better export performance.

Suggested Citation

  • Octavio Escobar & Olivier Lamotte & Ana Colovic & Pierre-Xavier Meschi, 2021. "Impact of sourcing from the informal economy on the export likelihood and performance of emerging economy firms," Post-Print hal-03544408, HAL.
    • Handle: RePEc:hal:journl:hal-03544408
    DOI: 10.1093/icc/dtab068
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    Cited by:

    1. Colovic, Ana & Misganaw, Bisrat A. & Assefa, Dawit Z., 2022. "Liability of informality and firm participation in global value chains," Journal of World Business, Elsevier, vol. 57(1).

    More about this item

    JEL classification:

    • F14 - International Economics - - Trade - - - Empirical Studies of Trade

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