The Hidden Enterprise Culture of Moscow: Entrepreneurship and Off-the-Books Working Practices

Abstract

Even though entrepreneurs are commonly depicted as risk-takers, little evaluation has occurred of whether they weigh up the costs of being caught and the level of punishments, and engage in off-the-books working practices. The aim of this paper is to evaluate the degree to which entrepreneurs engage in such off-the-books work. Reporting a survey conducted in Moscow during late 2005 and early 2006 of 81 entrepreneurs (defined here as individuals starting-up an enterprise in the past three years), just 3.7 per cent are found to operate on a wholly legitimate basis. The remaining 96.3 per cent have not registered their business, have no license to trade and conduct all of their trade on an off-the books basis. The outcome is a call to move beyond the wholesome and virtuous ideal-type of legitimate super heroes that pervades textbook depictions of entrepreneurs and towards a fuller understanding of the lived realities of entrepreneurship.

Keywords: entrepreneurship, informal economy, informal entrepreneurship, Moscow, enterprise development, venture creation, Eastern Europe

JEL Classification: O17, H26, H31, K42, R20