You Say Illegal, I Say Legitimate: Entrepreneurship in the Informal Economy

Webb, Justin W.; Tihanyi, László; Ireland, R. Duane; Sirmon, David G.

doi:10.5465/amr.2009.40632826

Cited by 846 publications

(896 citation statements)

References 61 publications

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“…First, it ignores the cumulated purchasing power and consumption aspirations of large groups of people. Second, it fails to take into account the invisible, but not necessarily illegal, sources of income (Webb, et al, 2009) in developing economies (Prahalad and Hart, 2002). This apparent weakness constitutes a further research gap which we intend to examine in this paper:…”

Section: Usamentioning

confidence: 97%

“…India is not the only country to face this problem: Thailand's informal economy reportedly stood at an even much higher 52.6% (Schneider, 2002). While the share of the informal economy in developed countries is estimated to range R. Tiwari and C. Herstatt TIM/TUHH -Working Paper 67 (January 2012) Page 13 of 42 at about 17% of official GDP, in developing economies this share is estimated to lie on average at around 40% (Schneider, 2002, Webb et al, 2009). …”

Section: Usamentioning

confidence: 99%

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India - A Lead Market for Frugal Innovations? Extending the Lead Market Theory to Emerging Economies

Tiwari

Herstatt

2012

SSRN Journal

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India has emerged as a vibrant and versatile source for cost effective, "disruptive innovations" of various varieties. Price-sensitive consumers in a large and growing market keep inducing firms to apply "frugal engineering" for creating affordable products and services without compromising excessively on quality. Because, as The Economist asserts: "Frugal does not mean second-rate". Such innovations are characterized by high affordability, robustness, and "good enough" quality in a volume-driven market. Resource constraints motivate firms and entrepreneurs to think out-of-thebox. The trick lies in creating solutions that are able to circumvent given environmental constraints in a cost effective way. India's large and enormously young population faced with limited budgets, but well-endowed with high aspirations, provides an ideal experiment ground for many firms. Solutions created for the Indian market are often suitable for other developing countries in Asia, Africa and Latin America that frequently face similar socio-economic conditions. In some instances they succeed even in developed country markets by enabling significant cost reductions. This emergence as a hub for "frugal innovations" possibly suggests a "lead market" role for India.On the other hand, lead markets, as understood today, are characterized by high per capita income, great customer sophistication and high quality infrastructure. Such assumptions imply that lead markets, almost by default, can only exist in economically developed countries because only they can finance the development effort. Using two anchor-cases of product innovations aimed at pricesensitive segments in India we generate preliminary evidence to challenge some of the core assumptions of the "lead market" theory and propose that lead markets can emerge in developing countries too because market attractiveness (e.g. volume of demand, export possibilities) and technological capabilities are able to offset many other deficiencies. The supposed absence of customer sophistication is channelized into a challenge for supplier-side sophistication to design cost effective, "good enough" solutions ("low-cost, thin-margin") that can meet the aspirations of consumers in a highly competitive market. In order to master this challenge companies need access to a competent and sufficiently large technical base with first-hand knowledge of the ground situation of targeted customer groups ("social capital").

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Section: Usamentioning

confidence: 97%

Section: Usamentioning

confidence: 99%

India - A Lead Market for Frugal Innovations? Extending the Lead Market Theory to Emerging Economies

Tiwari

Herstatt

2012

SSRN Journal

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“…When this gap is large, the prevalence of unregistered employment will be higher (cf. Kistruck et al 2015;Webb et al 2009). The greater the degree of asymmetry between formal and informal institutions, the more prevalent will be unregistered employment (cf.…”

Section: Explaining Unregistered Employment: Theoretical Framing Andmentioning

confidence: 99%

Explaining individual- and country-level variations in unregistered employment using a multi-level model: evidence from 35 Eurasian countries

Krasniqi

Williams

2017

South East European Journal of Economics and Business

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The aim of this paper is to evaluate the individual- and country-level variations in unregistered employment. To analyse whether it is marginalised groups who are more likely to engage in unregistered employment and explain the country-level variations, a 2010 Life in Transition Survey (LiTS) involving 38,864 interviews in 35 Eurasian countries is reported. Multilevel logistic regression analysis reveals that younger age groups, the divorced, and those with fewer years in education, are more likely to be unregistered employed. On a country-level, meanwhile, the prevalence of unregistered employment is strongly associated with tax morale; the greater the asymmetry between informal and formal institutions, the greater is the prevalence of unregistered employment. It is also higher when GDP per capita as well as social distribution and state intervention (subsidies and transfers, social contribution expenditure, health expenditure) are lower. The paper concludes by discussing the theoretical and policy implications.

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“…Following advances in institutional theory in relation to the study of broader informal economic practices, it can be argued that all societies have both codified laws and regulations (i.e., formal institutions) that define the legal rules of the game [14,15,58], as well as informal institutions, which are the 'socially shared rules, usually unwritten, that are created, communicated and enforced outside of officially sanctioned channels' [27, p.727]. When there is asymmetry between these codified laws and regulations (formal institutions) and the socially shared unwritten rules (informal institutions), the result is the emergence of practices based on unwritten socially shared rules which are 'illegitimate' in terms of the formal written rules.…”

Section: Explaining the Informal Patient Payments: An Institutional Amentioning

confidence: 99%

Rethinking informal payments by patients in Europe: An institutional approach

Williams

Horodnic

2017

Health Policy

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You Say Illegal, I Say Legitimate: Entrepreneurship in the Informal Economy

Cited by 846 publications

References 61 publications

India - A Lead Market for Frugal Innovations? Extending the Lead Market Theory to Emerging Economies

India - A Lead Market for Frugal Innovations? Extending the Lead Market Theory to Emerging Economies

Explaining individual- and country-level variations in unregistered employment using a multi-level model: evidence from 35 Eurasian countries

Rethinking informal payments by patients in Europe: An institutional approach

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