Research on entrepreneurship in the informal economy: Framing a research agenda
TL;DR: In this paper, the authors draw from diverse disciplines to frame research concerning entrepreneurship in the informal economy around three separate theories: institutional theory, motivation-related theories from a sociological perspective, and resource allocation theory.
About: This article is published in Journal of Business Venturing.The article was published on 2013-09-01. It has received 412 citations till now. The article focuses on the topics: Informal sector & Entrepreneurship.
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TL;DR: In this paper, the authors examined the relationship between formal institutions, social networks, and new venture growth and found that weak and inefficient formal institutions are associated with a larger number of structural holes in entrepreneurial social networks.
Abstract: What is the interrelationship among formal institutions, social networks, and new venture growth? Drawing on the theory of institutional polycentrism and social network theory, we examine this question using data on 637 entrepreneurs from four different countries. We find the confluence of weak and inefficient formal institutions to be associated with a larger number of structural holes in entrepreneurial social networks. While the effect of this institutional order on the revenue growth of new ventures is negative, a network's structural holes have a positive effect on revenue growth. Furthermore, the positive effect of structural holes on revenue growth is stronger in an environment with a more adverse institutional order (i.e., weaker and more inefficient institutions). The contributions and implications of these findings are discussed.
331 citations
Journal Article•
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TL;DR: In this article, the authors present a set of reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles, but full text can be found on the Internet Archive.
Abstract: This publication contains reprint articles for which IEEE does not hold copyright. Full text is not available on IEEE Xplore for these articles.
308 citations
TL;DR: For example, the authors in this article propose that the greatest challenge to business in Africa stems from the persistence of institutional voids, understood as the absence of market-supporting institutions, specialized intermediaries, contractenforcing mechanisms, and efficient transportation and communication networks.
Abstract: Africa is beginning to capture the imagination of entrepreneurs, corporate executives, and scholars as an emerging market of new growth opportunities. Over 15 years, the continent has experienced an average growth rate of 5% (World Economic Forum, 2015: v). Out of its 54 countries, 26 have achieved middleincome status, while the proportion of those living in extreme poverty has fallen from 51% in 2005 to 42% in 2014 (African Development Bank, 2014a: 49). Although there are regional differences, the primary drivers of growth have been rapidly emerging consumer markets, regional economic integration, investment in infrastructure, technological leap-frogging, and the opening up of new markets, especially in the service sector. African economies also face commensurate challenges. Across the continent, economies remain largely agrarian, underpinned by resource-driven growth and still dominated by the informal sector. But what is it about the context that makes Africa such fertile territory for management scholarship? Disciplines Management Sciences and Quantitative Methods This journal article is available at ScholarlyCommons: https://repository.upenn.edu/mgmt_papers/185 Bringing Africa In: Promising Directions for Management Research Gerard George, Singapore Management University Christopher Corbishley, Imperial College London Jane N. O. Khayesi, University of Essex Martine R. Haas, University of Pennsylvania Laszlo Tihanyi, Texas A&M University Published in Academy of Management Journal, 2016 April, 59 (2), 377-393. http://doi.org/10.5465/amj.2016.4002 Africa is beginning to capture the imagination of entrepreneurs, corporate executives, and scholars as an emerging market of new growth opportunities. Over 15 years, the continent has experienced an average growth rate of 5% (World Economic Forum, 2015: v). Out of its 54 countries, 26 have achieved middleincome status, while the proportion of those living in extreme poverty has fallen from 51% in 2005 to 42% in 2014 (African Development Bank, 2014a: 49). Although there are regional differences, the primary drivers of growth have been rapidly emerging consumer markets, regional economic integration, investment in infrastructure, technological leap-frogging, and the opening up of new markets, especially in the service sector. African economies also face commensurate challenges. Across the continent, economies remain largely agrarian, underpinned by resource-driven growth and still dominated by the informal sector. But what is it about the context that makes Africa such fertile territory for management scholarship? The greatest challenge to business in Africa stems from the persistence of institutional voids, understood as the absence of market-supporting institutions, specialized intermediaries, contractenforcing mechanisms, and efficient transportation and communication networks (Khanna & Palepu, 2013). In order to be successful, the private sector that generates 90% of employment, two-thirds of investment, and 70% of economic output on the continent needs to cope with the challenges presented by undeveloped market institutions and missing infrastructure (African Development Bank, 2013: 34). Nevertheless, several new trends in recent years have been changing the ways business is done in Africa. The rapid expansion of information and communication networks—specifically, mobile technology—has provided tremendous new opportunities. By 2025, half of the people on the continent will have Internet access, connecting them to services in health care, education, finance, retail, and government (McKinsey Global Institute, 2010). Instead of playing catch-up, entrepreneurs in Africa are “hacking” existing infrastructure gaps through technology, connecting Africans to new goods and services (e.g., mobile applications for activities ranging from private security in Ghana and monitoring patients in Zimbabwe to cattle herding in Kenya and connecting dirty laundry to itinerant washerwomen in Uganda). Inventive approaches to delivering new sources of value creation go hand in hand with Africa’s surprising demographics, where over half of the continent’s 1.1 billion population are currently under the age of 25. This unprecedented population growth will lead to a projected increase in the workforce of nearly 450 million between 2010 and 2035. The diversity of the African context is captured in Table 1, which outlines some of the human, economic, and institutional development indicators in a select set of countries. TABLE 1: Human, Economic, and Institutional Development in Ten Countries from Africa’s Five Regions Region and Country Populationa GDP per capitaa GDP per capita growth (%)a Openness (trade)a Human dev. (rank)b Econ. freedom (rank)c Political rightsd Civil libertiesd Corruption (rank)e
306 citations
TL;DR: In this paper, a review examines 77 leading academic journals over the period 1990 to 2017 and identifies over 200 articles on entrepreneurship and poverty alleviation, focusing on three different underlying perspectives: alleviation through entrepreneurship as remediation (actions that address immediate resource concerns), reform (actions leading to substantive institutional changes), and revolution (actions changing the underlying capitalist-based assumptions of business).
287 citations
TL;DR: In this paper, the authors analyzed macro-level determinants of national rates of formal versus informal entrepreneurship and provided empirically-testable, higher-order determinants: economic opportunities, quality of governance, macrolevel resources and abilities, performance-based culture and socially supportive culture.
279 citations
Cites background from "Research on entrepreneurship in the..."
...Webb et al. (2012) maintain that informal entrepreneurship occurs within informal institutional boundaries for large societal groups despite being outside of formal institutional boundaries....
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Book•
01 Jan 1990TL;DR: Douglass C. North as discussed by the authors developed an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time.
Abstract: Continuing his groundbreaking analysis of economic structures, Douglass North develops an analytical framework for explaining the ways in which institutions and institutional change affect the performance of economies, both at a given time and over time. Institutions exist, he argues, due to the uncertainties involved in human interaction; they are the constraints devised to structure that interaction. Yet, institutions vary widely in their consequences for economic performance; some economies develop institutions that produce growth and development, while others develop institutions that produce stagnation. North first explores the nature of institutions and explains the role of transaction and production costs in their development. The second part of the book deals with institutional change. Institutions create the incentive structure in an economy, and organisations will be created to take advantage of the opportunities provided within a given institutional framework. North argues that the kinds of skills and knowledge fostered by the structure of an economy will shape the direction of change and gradually alter the institutional framework. He then explains how institutional development may lead to a path-dependent pattern of development. In the final part of the book, North explains the implications of this analysis for economic theory and economic history. He indicates how institutional analysis must be incorporated into neo-classical theory and explores the potential for the construction of a dynamic theory of long-term economic change. Douglass C. North is Director of the Center of Political Economy and Professor of Economics and History at Washington University in St. Louis. He is a past president of the Economic History Association and Western Economics Association and a Fellow, American Academy of Arts and Sciences. He has written over sixty articles for a variety of journals and is the author of The Rise of the Western World: A New Economic History (CUP, 1973, with R.P. Thomas) and Structure and Change in Economic History (Norton, 1981). Professor North is included in Great Economists Since Keynes edited by M. Blaug (CUP, 1988 paperback ed.)
27,080 citations
Posted Content•
TL;DR: In this article, the authors examine the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time.
Abstract: Examines the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time. Institutions are separate from organizations, which are assemblages of people directed to strategically operating within institutional constraints. Institutions affect the economy by influencing, together with technology, transaction and production costs. They do this by reducing uncertainty in human interaction, albeit not always efficiently. Entrepreneurs accomplish incremental changes in institutions by perceiving opportunities to do better through altering the institutional framework of political and economic organizations. Importantly, the ability to perceive these opportunities depends on both the completeness of information and the mental constructs used to process that information. Thus, institutions and entrepreneurs stand in a symbiotic relationship where each gives feedback to the other. Neoclassical economics suggests that inefficient institutions ought to be rapidly replaced. This symbiotic relationship helps explain why this theoretical consequence is often not observed: while this relationship allows growth, it also allows inefficient institutions to persist. The author identifies changes in relative prices and prevailing ideas as the source of institutional alterations. Transaction costs, however, may keep relative price changes from being fully exploited. Transaction costs are influenced by institutions and institutional development is accordingly path-dependent. (CAR)
26,011 citations
TL;DR: This article synthesize the large but diverse literature on organizational legitimacy, highlighting similarities and disparities among the leading strategic and institutional approaches, and identify three primary forms of legitimacy: pragmatic, based on audience self-interest; moral, based upon normative approval; and cognitive, according to comprehensibility and taken-for-grantedness.
Abstract: This article synthesizes the large but diverse literature on organizational legitimacy, highlighting similarities and disparities among the leading strategic and institutional approaches. The analysis identifies three primary forms of legitimacy: pragmatic, based on audience self-interest; moral, based on normative approval: and cognitive, based on comprehensibility and taken-for-grantedness. The article then examines strategies for gaining, maintaining, and repairing legitimacy of each type, suggesting both the promises and the pitfalls of such instrumental manipulations.
13,229 citations
TL;DR: In this article, the authors draw upon previous research conducted in the different social science disciplines and applied fields of business to create a conceptual framework for the field of entrepreneurship, and predict a set of outcomes not explained or predicted by conceptual frameworks already in existence in other fields.
Abstract: To date, the phenomenon of entrepreneurship has lacked a conceptual framework. In this note we draw upon previous research conducted in the different social science disciplines and applied fields of business to create a conceptual framework for the field. With this framework we explain a set of empirical phenomena and predict a set of outcomes not explained or predicted by conceptual frameworks already in existence in other fields.
11,161 citations