Informal sector entrepreneurship, individual entrepreneurial orientation and the emergence of entrepreneurial leadership

Abstract

The informal economy plays an integral role in addressing the socio-economic issues facing many nations around the world. Informal sector entrepreneurship activities contribute 10–20% of the GDP in developed economies and up to 60% in developing economies. In South Africa, the informal sector accounts for 15–17% of total employment and about 5.2% of the country’s GDP. Yet, very little attention is given to how informal sector entrepreneurship shapes individual entrepreneurial orientation and the emergence of entrepreneurial leadership, and vice versa. The lack of attention to the notions of individual entrepreneurial orientation and the emergence of entrepreneurial leadership from the informal sector is worrisome given that a significant number of now successful entrepreneurs in African contexts began their business operations within the informal sector. This article presents a multilevel analysis of the emergence of entrepreneurial leadership in the informal sector of South Africa. We draw from “rags to riches” inspirational accounts and social identity theory to develop an integrative framework on the emergence of entrepreneurial leadership in the informal sector. Short case studies of successful entrepreneurial leaders who emerged from the informal sector are presented for illustrative purposes. This paper aims to provide valuable insights into one of the understudied but rapidly growing entrepreneurial contexts, informal sector entrepreneurship, and how this context shapes individual entrepreneurial orientation and the emergence of entrepreneurial leadership. This exposes a previously hidden territory for new insights and further studies on how to advance entrepreneurship development research and praxis.