Informal Entrepreneurship and Industry Conditions

24 Pages Posted: 25 Jan 2016

See all articles by Ana Cristina O. Siqueira

Ana Cristina O. Siqueira

Duquesne University - Palumbo Donahue School of Business

Justin W. Webb

Oklahoma State University - Stillwater

Garry D. Bruton

Texas Christian University - M.J. Neeley School of Business

Date Written: January 2016

Abstract

Scholars have argued that informality is driven by the degree to which it is expensive or difficult to operate in the formal economy. In contrast, we argue that firms choose to be informal or formal partly driven by industry conditions. We examine informal firms that are not registered with a governmental authority. Based on a large data set of Brazilian businesses, we find that firm informality is positively associated with dynamism, yet negatively associated with munificence and concentration. Our findings suggest that informality is a decision driven by both cost of registering and risk reduction for entrepreneurs depending on industry conditions.

Suggested Citation

Siqueira, Ana Cristina O. and Webb, Justin W. and Bruton, Garry, Informal Entrepreneurship and Industry Conditions (January 2016). Entrepreneurship Theory and Practice, Vol. 40, Issue 1, pp. 177-200, 2016. Available at SSRN: https://ssrn.com/abstract=2720663 or http://dx.doi.org/10.1111/etap.12115

Ana Cristina O. Siqueira (Contact Author)

Duquesne University - Palumbo Donahue School of Business ( email )

600 Forbes Ave.
Pittsburgh, PA 15282
United States

Justin W. Webb

Oklahoma State University - Stillwater ( email )

Stillwater, OK 74078-0555
United States

Garry Bruton

Texas Christian University - M.J. Neeley School of Business ( email )

Department of Management
Fort Worth, TX 76129
United States
817-257-7421 (Phone)
817-257-7227 (Fax)

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