Factors Influencing the Registration Decision in the Informal Economy

Informal Entrepreneurship in Developing Economies: The Impacts of Starting up Unregistered on firm Performance

“…If enterprises delaying registration serve discrete and separate "bottom of the pyramid" markets with low-quality products using little capital (La Porta & Schleifer, 2014), then the external customer segments and broader relationships with suppliers and investors are unlikely to be transferable if they register. Indeed, it is precisely these unregistered enterprises operating in separate markets which find the costs of registration in terms of searching for and switching to a new network too costly (Demenet et al, 2015;Lyon, 2000;Rivera-Santos & Rufin, 2010;Webb et al, 2009), particularly with regard to suppliers and investors (Skousen & Mahoney, 2015), which perhaps helps explain the low proportion of unregistered enterprises transitioning to registration in developing economies (La Porta & Schleifer).…”

“…in the developing world mean that the benefits of registration are insufficient to enable those registered from the outset to outweigh the benefits achieved by delaying registration (Scott & Haskei, 2015). Possible benefits of registration might include access to credit markets, property rights, training from formal institutions (for which informal institutions cannot act as an efficient substitute), belonging to business associations, contracts with large firms, and the ability to become more capital-intensive (Fajnzylber et al, 2011;Skousen & Mahoney, 2015). In many developing countries, however, registration appears from the results of this study to provide additional costs but insufficient benefits to outweigh the benefits gained by delaying registration.…”

The Roots of Informal Responses to Regulatory Change: Non‐compliant Small Firms and the National Living Wage

“…The influence of accountants and other professional accomplices helps to explain why non‐compliant entrepreneurs in mature economies are ‘willing to incur the legal risk and how they are able to grow ventures outside of formal institutions’ (Webb, Ireland and Ketchen, : 8). It appears that these professionals are instrumental in helping managers to decide the ‘optimal’ degree of formality and navigate the intricacies of formal institutions (Skousen and Mahoney, ).…”

Evaluating the Effects of the Informal Sector on the Growth of Formal Sector Enterprises: Lessons From Italy

“…Perhaps greater emphasis now is required on improving the benefits of formality (Horodnic and Williams, 2019;Scott and Haskei, 2015). This could include providing formal enterprises with access to credit, training, marketing support (e.g., trade fairs), business advice and support, belonging to business associations, and new market opportunities such as contracts with large firms and public sector procurement contracts (Fajnzylber et al, 2009;Skousen and Mahoney, 2015;. There is also a need to improve the quality of governance, decrease public sector corruption and increase the level of government intervention, such as social protection, which have been shown to reduce unregistered and informal enterprises (Autio and Fu, 2015;Dau and Cuervo-Cazzurra, 2014;Klapper et al, 2007;Thai and Turkina, 2014).…”