TY - JOUR
T1 - Effect of corruption and crime on growth-oriented informal firms
AU - Heredia, Walter
AU - Lecuna, Antonio
AU - Heredia, Jorge
AU - Geldes, Cristian
AU - Flores, Alejandro
N1 - Publisher Copyright:
© 2023, The Author(s), under exclusive licence to Springer Science+Business Media, LLC, part of Springer Nature.
PY - 2023/12
Y1 - 2023/12
N2 - 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.
AB - 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.
KW - Corruption
KW - Crime
KW - Growth oriented
KW - Informal entrepreneurship
KW - Informal firms
KW - Corrupción
KW - Crimen
KW - Orientado al crecimiento
KW - Emprendimiento informal
KW - Empresas informales
UR - http://www.scopus.com/inward/record.url?scp=85168933191&partnerID=8YFLogxK
UR - https://www.mendeley.com/catalogue/fff1e1ec-60f0-3b78-a220-29f336b93013/
U2 - 10.1007/s11365-023-00884-z
DO - 10.1007/s11365-023-00884-z
M3 - Article in a journal
AN - SCOPUS:85168933191
SN - 1554-7191
VL - 19
SP - 2065
EP - 2091
JO - International Entrepreneurship and Management Journal
JF - International Entrepreneurship and Management Journal
IS - 4
ER -