Informal Entrepreneurship in Developing Economies: The Impacts of Starting up Unregistered on firm Performance

Colin Williams, Alvaro Martinez–Perez and Abbi Kedir

Entrepreneurship Theory and Practice, 2017, vol. 41, issue 5, 773-799

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.

Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:sae:entthe:v:41:y:2017:i:5:p:773-799

DOI: 10.1111/etap.12238

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