Effect of corruption and crime on growth-oriented informal firms

Walter Heredia (), Antonio Lecuna (), Jorge Heredia (), Cristian Geldes () and Alejandro Flores ()
Additional contact information
Walter Heredia: Universidad del Desarrollo
Antonio Lecuna: Fort Lewis College
Jorge Heredia: Universidad del Pacífico
Cristian Geldes: Universidad Alberto Hurtado
Alejandro Flores: Universidad del Pacífico

International Entrepreneurship and Management Journal, 2023, vol. 19, issue 4, No 19, 2065-2091

Abstract: Abstract Traditionally, informal firms have been perceived to be unproductive, lacking skills, and static by necessity, while low institutional quality has been shown to increase their prevalence. However, this research draws on institutional theory to explain the effect of corruption and crime on growth-oriented informal firms that emerge due to opportunities and make decisions voluntarily rather than out of necessity. We construct a logistic regression model using a unique representative dataset of informal firms from the 2019 Zambia Informal Sector Business Survey (ISBS). We find that growth-oriented informal firms pay bribes to remain unregistered (i.e., engage in corruption) and that crime decreases the number of these firms. Our research suggests that policymakers consider the particularities of growth-oriented informal firms when designing policies for entrepreneurs. Growth-oriented informal firms are more likely to consider formalization if they perceive the benefits of formality, and policymakers should be aware that crime could push these firms to subsistence or surveillance, thereby increasing inequality among all firms. Furthermore, researchers should explore the development process of these growth-oriented informal firms, managers in legal firms should consider collaborating with these firms, and the government should support such collaboration.

Keywords: Informal entrepreneurship; Corruption; Crime; Informal firms; Growth oriented (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11365-023-00884-z Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:intemj:v:19:y:2023:i:4:d:10.1007_s11365-023-00884-z

Ordering information: This journal article can be ordered from
http://www.springer. ... urship/journal/11365

DOI: 10.1007/s11365-023-00884-z

Access Statistics for this article

International Entrepreneurship and Management Journal is currently edited by Salvador Roig

More articles in International Entrepreneurship and Management Journal from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().