What is it about?

In recent years, a new institutionalist theory has emerged to explain the prevalence of informal sector entrepreneurship. This argues that formal institutional failures lead to the emergence of an asymmetry between the formal rules (laws and regulations) and the norms, values and beliefs of entrepreneurs regarding the acceptability of participating in the informal sector, which in turn leads to the prevalence of informal entrepreneurship. The aim of this paper is to evaluate this social actor approachby reporting evidence from 453 face-to-face interviews with a nationally representative sample of entrepreneurs in FYR Macedonia. .

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Why is it important?

This reveals not only a significant association between participation in the informal economy and the non-alignment of entrepreneurs’ views with the formal rules, but specific formal institutional failings that are significantly associated with the acceptability of informal entrepreneurship, namely poor quality public services, a lack of tax fairness, corruption and instability in the formal institutions.


This paper reveals the need to tackle the structural conditions that cause entrepreneurs to operate in the informal economy in FYR Macedonia.

Professor Colin C Williams
University of Sheffield

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This page is a summary of: AN INSTITUTIONAL THEORY OF INFORMAL ENTREPRENEURSHIP: SOME LESSONS FROM FYR MACEDONIA, Journal of Developmental Entrepreneurship, September 2018, World Scientific Pub Co Pte Lt, DOI: 10.1142/s108494671850019x.
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