EVALUATING THE EFFECTS OF THE INFORMAL SECTOR ON THE GROWTH OF FORMAL SECTOR ENTERPRISES: LESSONS FROM ITALY

Brunilda Kosta and Colin Williams
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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 03, 1-13

Abstract: This paper evaluates the effect of unregistered and informal sector business ventures on the growth of formal sector enterprises. The hypotheses tested is that formal sector enterprises that have to compete against unregistered or informal sector business ventures suffer from lower levels of performance, measured by annual sales growth, annual employment growth and annual productivity growth. To evaluate this thesis, data is reported from a World Bank Enterprise Survey (WBES) of 760 enterprises in Italy collected in 2019. The finding is that formal sector enterprises that report competing against unregistered or informal sector business ventures have significantly lower annual sales growth and annual productivity growth than enterprises that do not. The paper concludes by discussing the theoretical and policy implications, along with the limitations of the study and future research required.

Keywords: Entrepreneurship; informal sector; informal economy; informal entrepreneurship; firm performance; Italy (search for similar items in EconPapers)
Date: 2020
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DOI: 10.1142/S1084946720500193

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