Informal sector entrepreneurship, individual entrepreneurial orientation and the emergence of entrepreneurial leadership

Abstract

The informal economy plays an integral role in addressing the socioeconomic issues facing many nations around the world. Informal sector entrepreneurship activities contribute 10-20% of the GDP in developed economies and up to 60% in developing economies. In South Africa, the informal sector accounts for 15-17% of total employment and about 5.2% of the country's GDP. Yet, very little attention is given to how informal sector entrepreneurship shapes individual entrepreneurial orientation and the emergence of entrepreneurial leadership, and vice versa. The lack of attention to the notions of individual entrepreneurial orientation and the emergence of entrepreneurial leadership from the informal sector is worrisome given that a significant number of now successful entrepreneurs in African contexts began their business operations within the informal sector. This article presents a multilevel analysis of the emergence of entrepreneurial leadership in the informal sector of South Africa. We draw from "rags to riches" inspirational accounts and social identity theory to develop an integrative framework on the emergence of entrepreneurial leadership in the informal sector. Short case studies of successful entrepreneurial leaders who emerged from the informal sector are presented for illustrative purposes. This paper aims to provide valuable insights into one of the understudied but rapidly growing entrepreneurial contexts, informal sector entrepreneurship, and how this context shapes individual entrepreneurial orientation and the emergence of entrepreneurial leadership. This exposes a previously hidden territory for new insights and further studies on how to advance entrepreneurship development research and praxis.

Competitive Advantages of the Relationship between Entrepreneurial Competencies and Economic Sustainability Performance

“…Many entrepreneurs take advantage of the informal market opportunities to sustain and increase their working capital [11], wherein the informal sector is viewed as a source of dynamism and entrepreneurial creativity distinguished by resilience, adaptability, job development, and economic growth [8]. As such, informal small businesses have an essential role to solve socioeconomic issues that lurk in many countries across the globe, particularly in developing countries [12]. At the start-up stage, more than two thirds of small businesses in the world were established in the informal sector [13].…”

“…Access to working capital and entrepreneurial competencies are integral for small business activities [27] to significantly improve their economic performance [29] in most developing economies, and especially in the Sub-Saharan African region [5]. The literature depicts that not much attention is given to informal businesses in most African countries, particularly on how informal business entrepreneurship changes entrepreneurial behavior, including entrepreneurial competencies and access to their working capital on small business performance [12,14,24]. Precisely, the phenomenon of entrepreneurial small business economic performance from informal entrepreneurship area has garnered relatively little attention, especially in the Sub-Saharan African context and particularly in Senegal.…”

The Moderating Impact of Organizational Identity Strength between Strategic Improvisation and Organizational Memory and Their Effects on Competitive Advantage

“…This phenomenon is even more prevalent in microenterprises that make profits and solve socio-economic problems related to poverty [87]. As for economic growth, previous studies believe that microenterprises can contribute to low-cost employment [88] and wealth generation in the nations' economic system, especially in developing countries [89,90]. Our findings suggest that companies short in resources or capability-limited like microenterprises could also cultivate their own CA.…”

“…Sustainable development is a complex issue involving multidisciplines. In the management field, some studies have been done to address issues on how firms can contribute to reduce poverty [87,89], balancing economic growth and the environment, eliminating inequality [88,90], and so on. This paper contributes to achieving SDG 8 and 12.…”

Responding to COVID-19: Insights from African firms

“…Some firms will avoid risk, whereas other firms will become more risk-seeking. In a recent study of informal entrepreneurship in South Africa, Musara and Nieuwenhuizen (2020) argue that the propensity of informal sector entrepreneurs to take risk is a key characteristic of entrepreneurial leadership behavior. In this respect, the behavioral theory of the firm (Cyert & March, 1963) posits that firms performing under their aspirations will be more inclined to seek risk and engage in "problematic" search to find novel solutions that may allow them to manage the uncertainty.…”