Tackling Entrepreneurship in the Informal Economy: Evaluating the Policy Options

Journal of Entrepreneurship and Public Policy, Vol. 1, No. 2, 2012, pp. 111-124.

15 Pages Posted: 21 Dec 2015

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Sara Nadin

University of Liverpool

Date Written: 2012

Abstract

Purpose

Although there is emerging an understanding that many entrepreneurs conduct some or all of their transactions off-the-books, there has so far been little attempt to consider what can and should be done about entrepreneurship in the informal economy. The aim of this paper is to bridge this gap.

Design/methodology/approach

Following a review of what is known about the prevalence and nature of informal entrepreneurship, this paper evaluates what can and should be done about informal entrepreneurs by analyzing the various policy options and their implications.

Findings

Evaluating the possible policy approaches of doing nothing, eradication, de-regulation and facilitating formalisation, the finding is that doing nothing leaves intact the existing negative impacts on formal and informal businesses, customers and governments, whilst eradicating informal entrepreneurship results in governments stamping out precisely the entrepreneurship and enterprise culture that they wish to nurture, and de-regulation results in a levelling down rather than up of working conditions. Only facilitating the formalisation of informal entrepreneurship is found to be a viable policy approach. How this might be achieved is then considered.

Research limitations/implications

More research is required on the hurdles informal entrepreneurs witness when seeking to legitimize their business ventures in different populations before it can be known whether specific policy measures to facilitate formalisation are appropriate.

Practical Implications

This paper evaluates various public policy options for tackling informal entrepreneurship and their impacts.

Originality/value of paper

This is one of the first evaluations of the policy options available for tackling informal entrepreneurship.

Keywords: informal sector, underground economy, enterprise culture, entrepreneurs, shadow economy, undeclared work

JEL Classification: H26, J46, K42, O17

Suggested Citation

Williams, Colin and Nadin, Sara, Tackling Entrepreneurship in the Informal Economy: Evaluating the Policy Options (2012). Journal of Entrepreneurship and Public Policy, Vol. 1, No. 2, 2012, pp. 111-124., Available at SSRN: https://ssrn.com/abstract=2706173

Colin Williams (Contact Author)

University of Sheffield - School of Management ( email )

15 Conduit Road
Sheffield, S10 1FL
United Kingdom

HOME PAGE: http://https://www.sheffield.ac.uk/management/staff/williams/index

Sara Nadin

University of Liverpool ( email )

Chatham Street
Liverpool, L69 7ZH
United Kingdom

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