Understanding Entrepreneurship in the Informal Economy: Theories, Justifications and Motivations

This thesis embarks on a unique journey to comprehend the micro determinants of entrepreneurship in the informal economy. It does so by initially delving into the diverse theoretical perspectives that have shaped the study of informal entrepreneurship. It then takes a distinctive approach by offering fresh insights through empirical analysis of informal entrepreneurs at the micro level. This includes understanding how they rationalize their informal entrepreneurial ventures and what keeps them driven in their informal entrepreneurial activities. The thesis is structured around three essays that aim to answer the overarching question: “How can a more positive approach to informal entrepreneurship studies enrich entrepreneurship theory and practice, and how do entrepreneurs rationalize their entrepreneurial actions in informal entrepreneurship?”.
Essay 1 focuses on reviewing previous literature on the informal economy and deducing a definition for the phenomenon from extant literature, concentrating on theoretical dimensions used in studying the informal economy. Essay 2 investigates, at the micro level, how these informal entrepreneurs engage, justify, and continue in their illegal entrepreneurial pursuits, which provide certain benefits to themselves and the local community while also causing considerable harm to the environment, the local communities where they operate, and the entrepreneurs themselves. The third essay argues for a more nuanced and contextualized approach to studying entrepreneurs in the informal economy. It argues that institutional contexts play a crucial role in the dynamics of entrepreneurship in the informal economy.
As a collective, this thesis enriches our understanding and appreciation of the decision-making processes of entrepreneurs in the informal economy and underscores the pivotal role of contexts in this process. It calls on us as researchers to give more weight to field realities as the bedrock for theory building and extension. The thesis also empowers us as researchers to produce problem-focused and solution-seeking research, which is crucial for enhancing the formulation and implementation of effective policies. Understanding the actors in the informal economy, whether they are oil thieves endangering themselves and the local communities or unemployed university graduates striving for survival through their informal economic activities, is of paramount importance. The critical question is why? Why do they behave as they do? Unravelling the underlying causes becomes challenging when we do not put the issues in the proper contexts. More effective solutions emerge when we contextualize the challenges. This thesis, therefore, sets the stage for future research and policy formulation in the field of informal entrepreneurship.