Women entrepreneurs in the informal economy: Is formalization the only solution for business sustainability?

Shyama Ramani (), Ajay Thutupalli, Tamas Medovarski (), Sutapa Chattopadhyay () and Veena Ravichandran ()
Additional contact information
Tamas Medovarski: STI4Change
Sutapa Chattopadhyay: UNU-MERIT
Veena Ravichandran: IDRC

No 2013-018, MERIT Working Papers from United Nations University - Maastricht Economic and Social Research Institute on Innovation and Technology (MERIT)

Abstract: The existing marketing, strategy and economics literature have little to offer by way of recommendations to promote entrepreneurship in the informal economy, except to advocate that multinationals, local firms, state and public agencies should work together to bring the informal economy into the fold of the formal economy. In contrast, this paper argues that the business sustainability of women entrepreneurs in the informal economy depends upon their engagements or business partnerships with other women (and men) and women-focussed intermediaries. More than formalization, women entrepreneurs need 'spaces' for dialogue with other women (and men) to learn and build business capabilities. Both the State and firms wanting to penetrate the informal economy can create such spaces through partnerships with NGOs and women-focussed organizations. While formalization of entrepreneurial activity is favourable under some circumstances, it can be detrimental under others - necessitating a case by case evaluation rather than a general rule. In order to ensure the business sustainability of women's ventures in the informal economy, any sort of formalization must occur through a gradual process accompanied by intermediaries. These results are formulated through the compilation and analysis of the existing literature and the study of six detailed case studies of women entrepreneurs from developing countries validated by extensive interviews. The results are then used to propose a closed model of linkages between formal and informal economies which has novel organizational implications for firms competing to establish consumer bases and business partnerships in the Base of Pyramid (BoP) markets of developing countries.

Keywords: Informal economy; entrepreneurship; gender; business sustainability (search for similar items in EconPapers)
JEL-codes: B54 E26 L26 (search for similar items in EconPapers)
Date: 2013
New Economics Papers: this item is included in nep-cse, nep-cwa, nep-ent and nep-iue
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:unm:unumer:2013018

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