Women entrepreneurs in the informal economy: Is formalization the only solution for business sustainability?

Ramani, Shyama V., Thutupalli, Ajay, Medovarszki, Tamas, Chattopadhyay, Sutapa and Ravichandran, Veena (2013). Women entrepreneurs in the informal economy: Is formalization the only solution for business sustainability?. UNU-MERIT.

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  • Author Ramani, Shyama V.
    Thutupalli, Ajay
    Medovarszki, Tamas
    Chattopadhyay, Sutapa
    Ravichandran, Veena
    Title Women entrepreneurs in the informal economy: Is formalization the only solution for business sustainability?
    Publication Date 2013
    Publisher UNU-MERIT
    Abstract The existing marketing, strategy and economics literature have little to offer by way of recommendations to promote entrepreneurship in the informal economy, except to advocate that multinationals, local firms, state and public agencies should work together to bring the informal economy into the fold of the formal economy. In contrast, this paper argues that the business sustainability of women entrepreneurs in the informal economy depends upon their engagements or business partnerships with other women (and men) and women-focussed intermediaries. More than formalization, women entrepreneurs need 'spaces' for dialogue with other women (and men) to learn and build business capabilities. Both the State and firms wanting to penetrate the informal economy can create such spaces through partnerships with NGOs and women-focussed organizations. While formalization of entrepreneurial activity is favourable under some circumstances, it can be detrimental under others - necessitating a case by case evaluation rather than a general rule. In order to ensure the business sustainability of women's ventures in the informal economy, any sort of formalization must occur through a gradual process accompanied by intermediaries. These results are formulated through the compilation and analysis of the existing literature and the study of six detailed case studies of women entrepreneurs from developing countries validated by extensive interviews. The results are then used to propose a closed model of linkages between formal and informal economies which has novel organizational implications for firms competing to establish consumer bases and business partnerships in the Base of Pyramid (BoP) markets of developing countries.
    UNU Topics of Focus Entrepreneurship
    Gender
    Keyword Informal economy
    Entrepreneurship
    Gender
    Business sustainability
    JEL L26
    B54
    E26
    Copyright Holder UNU-MERIT
    Copyright Year 2013
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    Created: Wed, 11 Dec 2013, 17:30:20 JST