Business Registration and Firm Performance: Some Lessons From India

Abstract

The aim of this paper is to evaluate the impacts on future firm performance of a firm deciding to register from the outset of its operations. Until now, the assumption has been that starting up registered is linked to higher future firm performance. Reporting World Bank Enterprise Survey (WBES) data collected in 2014 on 9,281 formal enterprises in India, and controlling for other determinants of firm performance as well as the endogeneity of the registration decision, the finding is that formal enterprises that start up unregistered and spend longer unregistered have significantly higher subsequent annual sales and employment growth rates compared with those registered from the outset. When the number of years spent unregistered is included, there are also productivity gains from delaying registration. The tentative explanation is that in this weak institutional environment, the advantages of registering from the outset are outweighed by the benefits of deferring registration. Evaluating the policy implications, the argument is that there is a need to shift away from the conventional eradication approach toward unregistered startups based on the assumption they are unproductive, and toward a more facilitating approach that improves the benefits of being registered and tackles the systemic formal institutional deficiencies that lead entrepreneurs to delay their decision to register.

The Need for Copyright Licensing and Privacy Issues in Education : Start-Up Process in Business Establishment

“…Registering one's business gives the business owner both legal and psychological satisfaction and social acceptance in the business environment (Williams and Kedir, 2016).…”

“…Registering one's business gives the business owner both legal and psychological satisfaction and social acceptance in the business environment (Williams and Kedir, 2016). Since inception, Copyright has been one of the legitimate routes to originality and the most common type of Intellectual Property (IP); which is the result of copyright (oxford dictionary).…”

The Impacts of Informality on Enterprise Innovation, Survival and Performance: Some Evidence From Pakistan

“…To try to correct this, there have been recent analyses of more extensive datasets. Analyzing the performance of unregistered start-ups compared with enterprises registered from the outset, various studies of both individual countries (e.g., India, South Africa) and cross-nationally find that non-registration at start-up leads to higher levels of subsequent firm performance (Williams and Bezeredi, 2018;Williams and Kedir, 2016, 2017a,b, 2018a. This is claimed to be because enterprises that initially avoid the cost of registration and focus their resources on overcoming other liabilities of newness, lay a stronger foundation for subsequent growth than those registered from the outset (Williams et al, 2017).…”

Explaining Cross-National Variations in the Prevalence of Informal Sector Entrepreneurship: Lessons From a Survey of 142 Countries

“…Recent years have seen the emergence of a burgeoning literature on informal entrepreneurship (Aidis et al, 2006;Bureau and Fendt, 2011;Coletto and Bisschop, 2017;Kus, 2014;Mróz, 2012;Ram et al, 2017;Webb et al, 2009Webb et al, , 2013Williams, 2018). This literature has sought to understand not only the prevalence of informal entrepreneurship (Autio and Fu, 2015;Williams andKedir, 2016, 2017) and the determinants of its variable prevalence (Dau and Cuervo-Cazurra, 2014;Siqueira et al, 2016), but also who participates (Thai and Turkina, 2014;Williams and Martinez-Perez, 2014) and their motives, including whether they are necessity-and/or opportunity-driven (Adom and Williams, 2012;Maloney, 2004;Perry and Maloney, 2007). In this section the literature on the prevalence of informal entrepreneurship is reviewed first followed by the previous literature that has sought to explain the varying prevalence of informal sector entrepreneurship across different countries.…”