Examining The Determinants Of The Level Of Informalization Of Micro-Enterprises In A Developmental Urban Context

Joseph Omoloba and Christophe Estay ()
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Joseph Omoloba: LIRSA - Laboratoire interdisciplinaire de recherche en sciences de l'action - CNAM - Conservatoire National des Arts et Métiers [CNAM]
Christophe Estay: École Grégoire-Ferrandi (Paris)

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Abstract: This study aims to identify the key determinants of the level of informalization of micro-enterprises in Nigeria. We seek to understand the motives of entrepreneurs doing business in different segments of the informal sector and to clarify further the relationship between formal and informal economic activity. To fill the research gap, we developed a theoretical framework that focuses on a decision matrix regarding the level of informality. The quantitative approach involved a sample of 120 entrepreneurs operating in the Nigerian informal economy. Our results show that institutional constraints significantly affect the decision to engage in the informal sector. The institutional constraint is related to ambiguity in tax assessment and business registration policies and procedures, including the mismanagement of those in power. We conclude that the presence of informal firms is not always as harmful as it sometimes is considered to be.

Keywords: Informal sector; social exclusion; institutional voids; informality; micro-enterprise (search for similar items in EconPapers)
Date: 2023-03
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Published in Journal of Developmental Entrepreneurship, 2023, 28 (1), ⟨10.1142/S1084946723500061⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-04097312

DOI: 10.1142/S1084946723500061

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