Informal Entrepreneurship in Developing Economies: The Impacts of Starting Up Unregistered on Firm Performance

Entrepreneurship Theory and Practice, DOI: 10.1111/etap.12238

27 Pages Posted: 20 Aug 2016

See all articles by Colin Williams

Colin Williams

University of Sheffield - School of Management

Alvaro Martinez

University of Sheffield

Abbi Kedir

University of Leicester - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: August 11, 2016

Abstract

To advance understanding of the entrepreneurship process in developing economies, this article evaluates whether registered enterprises that initially avoid the cost of registration, and focus their resources on overcoming other liabilities of newness, lay a stronger foundation for subsequent growth. Analyzing World Bank Enterprise Survey data across 127 countries, and controlling for other firm performance determinants, registered enterprises that started up unregistered and spent longer operating unregistered are revealed to have significantly higher subsequent annual sales, employment, and productivity growth rates compared with those that registered from the outset. The theoretical and policy implications are then discussed.

Keywords: entrepreneurship, informal economy, informal sector, development economics, economic development, shadow economy

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

Suggested Citation

Williams, Colin and Martinez, Alvaro and Kedir, Abbi, Informal Entrepreneurship in Developing Economies: The Impacts of Starting Up Unregistered on Firm Performance (August 11, 2016). Entrepreneurship Theory and Practice, DOI: 10.1111/etap.12238, Available at SSRN: https://ssrn.com/abstract=2821454

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

Abbi Kedir

University of Leicester - Department of Economics ( email )

Department of Economics
Leicester LE1 7RH, Leicestershire LE1 7RH
United Kingdom

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