Tackling entrepreneurship in the informal economy: evaluating the policy options
| Pages | 111-124 |
| DOI | https://doi.org/10.1108/20452101211261408 |
| Published date | 05 October 2012 |
| Date | 05 October 2012 |
| Author | Colin C. Williams,Sara J. Nadin |
| Subject Matter | Strategy |
Tackling entrepreneurship
in the informal economy:
evaluating the policy options
Colin C. Williams and Sara J. Nadin
School of Management, University of Sheffield, Sheffield
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 purpose 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 infor mal
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 – 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, Entrepreneurialism, Public policy
Paper type Research p aper
1. Introduction
Over the past decade, a small but growing sub-set of the entrepreneursh ip literature
has begun to explore the relationship between entrepreneurship and the informal
economy. This has identified that many entrepreneurs start-up trading wholly or
partially off-the-books, and that many continue to do so once their venture has become
more established (Antonopoulos and Mitra, 2009; Llanes and Barbour, 2007; Small
Business Council, 2004; Williams, 2006a, 2009a). So far, however, there has been little
attempt to consider what can and should be done about such entrepreneurship in the
informal economy. The aim of this paper is to start to fill that gap.
In the first section, therefore, a brief review is provided of what is known about
the relationship between entrepreneurship and the informal economy in ter ms of the
prevalence of entrepreneurship in the informal economy, the nature of informal
entrepreneurship, the characteristics of informal entrepreneurs and their motives.
The second section then evaluates the various policy options available for tackling
informal entrepreneurship along with their implications. The final section then draws
The current issue and full text archive of this journal is available at
www.emeraldinsight.com/2045-2101.htm
Journal of Entrepreneurship and
Public Policy
Vol. 1 No.2, 2012
pp. 111-124
rEmeraldGroup Publishing Limited
2045-2101
DOI 10.1108/20452101211261408
111
Entrepreneurship
in the informal
economy
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