EVALUATING THE IMPACT OF INFORMAL SECTOR COMPETITORS ON THE PERFORMANCE OF FORMAL ENTERPRISES: EVIDENCE FROM BOSNIA AND HERZEGOVINA

Colin Williams and Brunilda Kosta
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Brunilda Kosta: Management Department, Faculty of Economics, University of Tirana, Arben Broci Road, 1000 Tirana, Albania

Journal of Developmental Entrepreneurship (JDE), 2020, vol. 25, issue 02, 1-15

Abstract: It is widely assumed that informal sector enterprises have a harmful impact on the performance of formal enterprises. This paper aims to provide an evidence-based evaluation of whether this is the case. To do so, it reports World Bank Enterprise Survey (WBES) data collected from 360 formal enterprises in Bosnia and Herzegovina in 2019. The finding is that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower sales growth, employment growth or productivity growth. Indeed, such enterprises witness significantly higher sales growth than those who do not view informal sector competitors as a severe obstacle. The theoretical and policy implications are discussed.

Keywords: Entrepreneurship; informal sector; firm performance; Bosnia and Herzegovina (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S1084946720500144

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