A framework for investigating new firm entry: the (limited) overlap between informal-formal and necessity-opportunity entrepreneurship

Saul Estrin, Maribel Guerrero and Tomasz Mickiewicz

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We analyse entrepreneurial entry along the dimensions of informal-formal and necessity-opportunity entrepreneurship, distinguishing between them yet considering them jointly. While the dominant view in the literature conflates necessity with informal entry, and opportunity with formal entry, we hypothesise that informal entrepreneurship may be attractive to higher-income individuals as a testing ground for entrepreneurial ideas. We also explain why higher-income individuals may undertake necessity entrepreneurship. We utilise individual Global Entrepreneurship Monitor (GEM) data from Chile (2019-2021), which identifies informal-formal and necessity-opportunity entrepreneurial entry modes, to test hypotheses on the role of individuals´ income in the four types of entrepreneurial entry. We also consider changes in entrepreneurial entry during a crisis and a non-crisis periods. Our results confirm that the patterns in the data are consistent with hypotheses derived from our proposed theoretical framework.

Keywords: informal entrepreneurship; opportunity; necessity; income; crisis; global entrepreneurship; monitor; Chile (search for similar items in EconPapers)
JEL-codes: J50 (search for similar items in EconPapers)
Date: 2024-07-01
New Economics Papers: this item is included in nep-iue and nep-sbm
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Citations: View citations in EconPapers (1)

Published in Journal of Business Venturing, 1, July, 2024, 39(4). ISSN: 0883-9026

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Journal Article: A framework for investigating new firm entry: The (limited) overlap between informal-formal and necessity-opportunity entrepreneurship (2024)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:122663

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