Entrepreneurship in the Informal Sector : An Institutional Perspective

"How many businesses start-ups conduct some or all of their trade 'off-the-books'? And how many enterprises continue to do some of their work off-the-books once they are more established? What should be done about them? Should governments adopt ever more punitive measures to eradicate them? Or should we recognise this hidden enterprise culture and attempt to harness it? If so, how can this be done? What measures can be taken to ensure that businesses start-up in a proper manner? And what can be done to help those enterprises and entrepreneurs currently working off-the-books to legitimise their businesses? The aim of this book is to advance a new way of answering these questions. Drawing inspiration from institutional theory, informal sector entrepreneurship is explained as resulting from the asymmetry between the codified laws and regulations of a society's formal institutions and the norms, values and beliefs that comprise a society's informal institutions. The argument is that if the norms, values and beliefs of entrepreneurs (i.e., their individual morality) were wholly aligned with the codified laws and regulations (i.e., state morality), there would be no informal sector entrepreneurship. However, because the individual morality of entrepreneurs differs from state morality, such as due to their lack of trust in government and the rule of law, the result is the prevalence of informal sector entrepreneurship. The greater the degree of institutional asymmetry, the higher is the propensity to engage in informal sector entrepreneurship. This book provides evidence to show that this is the case both at the individual- and country-level and then discusses how this can be overcome. ."--Provided by publisher Cover 1 Title 4 Copyright 5 Contents 6 List of Tables and Figures 8 Acknowledgements 10 1 Introduction 12 PART I Theorising Entrepreneurship in the Informal Sector 30 2 An Institutionalist Perspective 32 3 Determinants of Institutional Asymmetry 56 PART II Informal Sector Entrepreneurship in Global Perspective 80 4 Prevalence of Informal Entrepreneurship 82 5 Impacts of Informal Entrepreneurship 110 6 Reasons for Informal Entrepreneurship 142 PART III Tackling Informal Sector Entrepreneurship 160 7 Policy Options and Approaches 162 8 Hard Direct Policy Measures 186 9 Soft Indirect Policy Measures 216 10 Conclusions 232 Index 242