What is it about?

The aim of this paper is to contribute to an understanding of the entrepreneurship process in Africa by evaluating the link between starting-up unregistered and future firm performance. The widespread assumption has been that firms starting-up unregistered in the informal economy suffer from poor performance than those starting-up registered and in the formal economy.

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Why is it important?

To test this poorer performance thesis, World Bank Enterprise Survey (WBES) data is evaluated from across 41 African countries covering the period from 2006 to 2013. Controlling for a comprehensive set of other determinants of firm performance, the finding is that formal enterprises with five or more employees that started-up unregistered have significantly higher annual sales, employment and productivity growth rates compared with those firms that registered their operations at start-up.

Perspectives

This paper shows that firms starting-up in the informal economy and register later are able have better levels of future firm performance than those that started-up legitimately. This has major implications for how informal sector enterprises are treated.

Professor Colin C Williams
University of Sheffield

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This page is a summary of: EVALUATING THE IMPACTS OF STARTING UP UNREGISTERED ON FIRM PERFORMANCE IN AFRICA, Journal of Developmental Entrepreneurship, September 2017, World Scientific Pub Co Pte Lt, DOI: 10.1142/s1084946717500170.
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