Scholars have argued that informality is driven by the degree to which it is expensive or difficult to operate in the formal economy. In contrast, we argue that firms choose to be informal or formal partly driven by industry conditions. We examine informal firms that are not registered with a governmental authority. Based on a large data set of Brazilian businesses, we find that firm informality is positively associated with dynamism, yet negatively associated with munificence and concentration. Our findings suggest that informality is a decision driven by both cost of registering and risk reduction for entrepreneurs depending on industry conditions.

We develop a new perspective on capital structure differences between for-profit social and commercial enterprises by combining imprinting and social entrepreneurship theory. Using a longitudinal matched sample, we find that for-profit social enterprises have 40% to 13% lower leverage and up to four times greater leverage stability over time than commercial enterprises. Our results suggest that these differences in capital structure derive from the process of prosocial organizing, which goes beyond the primary focus on financial preferences. Thus, for-profit social enterprises-and similar hybrid organizations, such as B corporations-may require theories adjusted to their context.

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This study of Brazilian immigrants in the United States examines the extent to which the human capital and the family social capital theories explain the probability of owning a business. This study incorporates into the analytical models a variable that controls for the presence of a market niche and tests for the net effects of human and family social capital. Analyses of U.S. 2000 Census data find that high school graduates are more likely to own their own business and that a college education exerts a significantly larger effect than that of a high school education on the probability of owning a business. Additionally, the presence of a co-habiting spouse, treated as an indicator of family social capital, enhances the probability that immigrants will own their own establishment. The results support the human capital and the family social capital theories. The study discusses implications for theory and future research.

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