The Contextual Dimensions of Informal Economy and Entrepreneurship

Abstract

This study investigates the global dynamics of the informal economy and the need for the coexistence of both the informal and formal economy. Developing and developed countries are beset with various forms of social and economic problems, such as unemployment, poverty levels, informal jobs, and global issues. Informal Entrepreneurship remains a focal means to reduce unemployment and create jobs in many economies. Using the institutional theory, the informal economy and entrepreneurship dynamics were investigated using a qualitative approach and secondary data from the International Labour Organization and Women in Informal Employment: Globalizing and Organizing datasets. The findings depict the need to ensure that both the informal and the formal economy coexist well rather than merging them due to their interwoven nature. This calls for adopting a system and holistic perspective for studying facets of informal-formal entrepreneurship in different contexts. Informal economy and informal entrepreneurship are essential for the reduction of global unemployment and the development of innovation in the value chain in their contexts. Globally, the informal economy and informal entrepreneurship provide safety nets, a source of livelihood, and pay informal levies that contribute to economic growth and development. The study shows how informal entrepreneurship contributes to the business environment. The contextual evidence from the literature justifies the necessity for informal entrepreneurship and the economy due to the interplay of poor market conditions, institutional voids, entrepreneurial behavior, and local business dynamics.