The effect of institutional asymmetry on informal entrepreneurship

Gianluca Zanella, Cory R.A. Hallam and Teja Guda

International Journal of Entrepreneurship and Small Business, 2024, vol. 53, issue 4, 472-502

Abstract: Scientific literature represents the informal economy in two opposite ways, either as a sector characterised by low wages and productivity, and as a provider of livelihood for billions of people around the world. Macroeconomic theories and studies provide contrasting explanations of this complex phenomenon. Using institutional theory, we develop a microeconomic approach from an individual perspective to understand the social dynamics that can explain the choice of informal entrepreneurship. Drawing from a rich tradition of cognitive models and institutional theories, this study provides evidence of the differential effect of institutional asymmetry on nascent entrepreneurs through attitudes and subjective norms. Social pressure exerts a critical role in differentiating the entrepreneurial process between formal and informal nascent entrepreneurs. The theoretical and practical implications are discussed.

Keywords: informal entrepreneurship; Bolivia; institutional asymmetry; social pressure; emerging economies; pervasive informal economy. (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:ids:ijesbu:v:53:y:2024:i:4:p:472-502

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