Informal Entrepreneurship and Industry Conditions

Abstract

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.

Tackling enterprise in the informal economy: an introductory overview

“…This scholarship has analysed not only its magnitude, including the prevalence of enterprise in the informal economy (Autio and Fu, 2015; and the determinants of its variable prevalence (Dau and Cuervo-Cazurra, 2014;Siqueira et al, 2014;Thai and Turkina, 2014), but also its characteristics, including who participates (Thai and Turkina, 2014;Williams, 2007;Williams and Martinez-Perez, 2014;Williams and Nadin, 2010b;Round, 2007, 2008;Williams and Youssef, 2014) and their motivations for doing so, such as whether they are necessity-and/or opportunity-driven (Adom, 2014;Adom and Williams, 2012;Maloney, 2004;Perry et al, 2007;Williams and Gurtoo, 2011). Until now however, and despite the growing understanding of the magnitude, characteristics and rationales underpinning informal entrepreneurship, relatively little attention has been paid to tackling enterprise in the informal economy.…”

Explaining the Undeclared Economy in Bulgaria: an Institutional Asymmetry Perspective

“…For Castells and Portes (1989: 15), such endeavour is 'a specific form of income generating production… unregulated by the institutions of society in a legal and social environment in which similar activities are regulated' . Although this defines the undeclared economy through the lens of both the formal ('legal') and informal ('social') institutions in a society, this definition fails to recognise firstly, that the undeclared economy, even if unregulated by formal institutions, is regulated by the rules of informal institutions and secondly, that such work can be considered 'legitimate' from the stance of informal institutions even if 'illegal' from the viewpoint of formal institutions (Siqueira et al 2014, Webb et al 2009). In consequence, and reflecting the consensus in the literature, we here define the undeclared economy as socially legitimate paid work that is legal in all respects other than it is not declared to the authorities for tax, social security or labour law purposes (European Commission 2007, OECD 2012, Williams 2014a.…”

<b>Microempresário informal: determinantes da evasão fiscal na previdência social

“…O custo de estar atuando informalmente perpassa por taxas de juros relativamente altas no acesso aos microcréditos, além de não receber os mesmos benefícios fiscais como empresas regulares, uma vez que a maioria não paga impostos (Soto, 2000). Pelo crescimento e importância do setor, ultimamente tem havido crescente literatura sobre as empresas e os empresários que operam no setor informal (Williams & Martinez, 2014;Webb, Ireland & Ketchen, 2014;Thai & Turkina, 2014;Siqueira, Webb & Bruton, 2014;Radchenko, 2014;Dau & Cuervo-Cazurra, 2014).…”