Entrepreneurship in the Informal Economy: A Product of Too Much or Too Little State Intervention?

Entrepreneurship and Innovation, 2014, Vol 15, No 4, November 2014, pp 227–237

11 Pages Posted: 27 Dec 2015

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Alvaro Martinez

University of Sheffield

Date Written: 2014

Abstract

Over the past decade or so, two competing theoretical perspectives have arisen that explain participation in informal entrepreneurship as resulting from either too little or too much state intervention. To evaluate these competing explanations critically, the authors report on a 2012 UK survey of 595 small business owners. Twenty per cent of these owners said that they had traded informally when starting up their ventures, and the authors examine and evaluate their reasons for doing so. It was found that 41% of the entrepreneurs attributed their off-the-books trading to too little state intervention (for example, a lack of government advice and support), 35% to too much intervention (burdensome red tape, high taxes, etc) and 24% to a mix of both factors. However, a multivariate analysis displays significant socio-demographic, firm-level and regional variations in the reasons. The outcome is a call to move towards more nuanced contextbound explanations of entrepreneurship in the informal economy.

Keywords: informal sector, informal entrepreneurship, enterprise culture, enterprise creation, informal economy, shadow economy, entrepreneurship

JEL Classification: H26, J46, J48, K34, K42, O17, P2, P3

Suggested Citation

Williams, Colin and Martinez, Alvaro, Entrepreneurship in the Informal Economy: A Product of Too Much or Too Little State Intervention? (2014). Entrepreneurship and Innovation, 2014, Vol 15, No 4, November 2014, pp 227–237, Available at SSRN: https://ssrn.com/abstract=2708461

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

Alvaro Martinez

University of Sheffield ( email )

17 Mappin Street
Sheffield, Sheffield S1 4DT
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
25
Abstract Views
325
PlumX Metrics