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Entrepreneurs operating in the informal economy: necessity or opportunity driven?

Introduction

To understand the motives of entrepreneurs, a distinction often drawn is between "necessity" entrepreneurs pushed into entrepreneurship because all other options for work are absent or unsatisfactory, and "opportunity" entrepreneurs who seek to exploit some business opportunity and who are pulled into entrepreneurship more out of choice (Harding et al., 2006; Maritz, 2004; Minniti, Bygrave and Autio, 2006; Perunoviae, 2005; Smallbone and Welter, 2004). This paper evaluates this distinction between necessity-push and opportunity-pull entrepreneurship in relation to a particular group of entrepreneurs, namely those starting up businesses that operate either wholly or partly on an off-the-books basis. Until now, few studies have sought to understand the motives of these entrepreneurs. Given that this sphere is often assumed to be a relatively low-paid realm into which participants are forced to engage, it might be assumed that when the motives of these entrepreneurs are analyzed, the ratio of necessity to opportunity entrepreneurship would be much higher amongst these informal entrepreneurs than amongst entrepreneurs starting up legitimate business operations. This paper investigates whether this is indeed the case.

To do this, firstly, the literature on necessity and opportunity entrepreneurship as well as entrepreneurship in the informal economy is reviewed so as to identify why it might be assumed that informal entrepreneurs are largely necessity entrepreneurs and to display the paucity of empirical evidence currently available on whether this is indeed the case. Having identified the lack of evidence, this paper then reports the findings of structured interviews with 811 households conducted in English localities between 1998 and 2001. Analyzing the 70 individuals who reported that they were in the process of starting up a business that engaged wholly or partially in off-the-books transactions, on the one hand, the prevalence of necessity entrepreneurship will be analyzed and on the other hand, case studies will be reported of individuals and their motives for engaging in informal entrepreneurship. This will reveal that in this "hidden enterprise culture," the ratio of necessity to opportunity entrepreneurs is about the same as amongst legitimate entrepreneurs, meaning that the vast majority of such entrepreneurs are far from driven by necessity into such endeavor. However, analyzing the case studies of individual entrepreneurs and their motives, it will be then shown that this push-pull dichotomy is far too simplistic to explain the complex motives underpinning decisions to start up businesses trading either wholly or partly on an off-the-books basis. The outcome is a call for a richer and more textured understanding of not only the diverse and complex motives underpinning participation in this hidden enterprise culture but also for a transcendence of the necessity/opportunity dichotomy when analyzing the rationales of mainstream entrepreneurs.

Before commencing, however, it is necessary to define what is here meant by participation in the "informal economy." Throughout this paper, and reflecting the widespread consensus amongst policy-makers and academics on what activity is included and excluded, the informal economy refers to the paid production and sale of goods and services which are unregistered by, or hidden from the state for tax and/or benefit purposes but which are legal in all other respects (European Commission, 1998; Portes, 1994; Renooy et al., 2004; Small Business Council, 2004; Thomas, 1992; Williams and Windebank, 1998). Based on this definition, the informal economy includes only paid work that is illegal because of its non-declaration to the state for tax and/or social security purposes. Paid work in which the good and/or service itself is illegal (such as drug trafficking, prostitution) is excluded, as are all forms of unpaid work. Although there are blurred edges to this sector, with some including exchange for gifts, this paper restricts itself to the core definition including only monetized transactions.

Necessity/Opportunity Entrepreneurship and Entrepreneurs in the Informal Economy

To explain the motives of entrepreneurs, it has become increasingly common in recent years to distinguish between "necessity" entrepreneurs pushed into entrepreneurship because all other options for work are absent or unsatisfactory and "opportunity" entrepreneurs pulled into this endeavor more out of choice to exploit some business opportunity (Aidis et al., 2006; Harding et al., 2006; Maritz, 2004; Minniti, Bygrave and Autio, 2006; Perunoviae, 2005; Smallbone and Welter, 2004). This necessity/opportunity dualism that reads the rationales for entrepreneurship primarily in terms of a structure/agency binary, viewing some entrepreneurs as pushed due to structural factors and others as pulled into entrepreneurship out of choice, has moved center-stage in much of the recent literature. Take, for example, the Global Entrepreneurship Monitor (GEM) survey that in 1999 covered 10 countries but by 2005 had expanded out to 35 countries and had become one of the principal global data sources on entrepreneurship (Minniti, Bygrave and Autio, 2006). At the very heart of this survey is a differentiation between necessity-driven and opportunity-driven entrepreneurs. Its overall finding is that the ratio of opportunity-driven to necessity-driven business owners is greater in higher-income countries than in middle-income countries and that there is a significant relationship between the prevailing startup motive in a country and new business survival rates. Countries dominated by opportunity-driven entrepreneurship have a lower rate of early-stage business failure than nations with higher proportions of necessity-driven entrepreneurship (Minniti, Bygrave and Autio, 2006).

Turning to the UK, the focus of this paper, the 2005 GEM survey finds that some 6.2% of the adult working population was involved in some form of entrepreneurial activity (Harding et al., 2006), the third highest level behind the USA at 12.4% and Canada at 9.3% (Minniti, Bygrave and Autio, 2006). Analyzing early-stage entrepreneurs, necessity entrepreneurship covered 0.7% of the working-age population in 2005 (having fallen from 1.4% in 2001) while opportunity entrepreneurship covered 5.2% of the working-age population (rising from 5.1% in 2001). Indeed, the UK is the only country amongst the G7 countries to see a 50% drop in necessity entrepreneurship combined with a slight increase in opportunity entrepreneurship. In all other G7 countries, both necessity and opportunity entrepreneurship have declined, with the exception of the USA, where there has been a small but insignificant increase from 1.3% to 1.5% and from 10.3% to 10.4% respectively. The outcome is that the ratio of opportunity to necessity entrepreneurs grew from 3.6 to 7.4 between 2001 and 2005 in the UK. This turn towards understanding the motives underpinning entrepreneurship in terms of a simple necessity/push and opportunity/pull dichotomy is now being replicated in many other surveys in different parts of the world (see, for example, Aidis et al., 2006; Maritz, 2004; Perunoviae, 2005; Smallbone and Welter, 2004).

It is not only when studying entrepreneurs who are starting up legitimate business ventures, however, that such a dichotomy has begun to come to the fore. This is also the case when studying entrepreneurship in the informal economy. For many years in western nations, this sphere was represented as a largely negative realm and hindrance to development. In a third-world context, in stark contrast, it has for several decades been recognized that some operating in the informal sector display entrepreneurial qualities (Browne, 2004; Cross, 2000; De Soto, 1989, 2001; Franks, 1994; ILO, 2002; Rakowski, 1994). As the ILO (2002: 54) state, the informal sector acts as "an incubator for business potential and ... transitional base for accessibility and graduation to the formal economy" and many informal workers show "real business acumen, creativity, dynamism and innovation." In western nations, however, it is only very recently that a similar representation of the informal sector as a site for new enterprise creation and development has begun to occur (Evans, Syrett and Williams, 2006; Renooy et al., 2004; Small Business Council, 2004; Tabak, 2000; Williams, 2005a,b, 2006).

Until now, however, and despite the rapidly growing policy interest in this hidden enterprise culture (European Commission, 2003; Small Business Council, 2004), few studies have sought to depict the nature and motives of entrepreneurs operating in the informal sector. Those attempting to do so have adopted the necessity/choice approach. For many, and grounded in the marginality thesis which purports that such work is lowpaid and conducted by populations excluded from the formal economy (Gallin, 2001), the representation of entrepreneurs operating partially or wholly on an off-the-books basis has been that the vast majority are necessity entrepreneurs. Indeed, there are a large number of studies in North America, especially amongst ethnic minority and immigrant communities, which predominantly assume that engagement in informal work is necessity driven (Portes and Walton, 1981; Raijman, 2001; Sassen, 1997).

In recent years, however, the widespread observation that relatively affluent populations and those already in employment engage in more informal work than deprived populations and the unemployed has led to a refutation of this marginality thesis (see Renooy et al., 2004; Williams, 2004, 2006). The question that arises, therefore, is whether entrepreneurs operating in the informal economy are always necessity entrepreneurs.

For some, the inverse has been argued. As Gerxhani (2004: 274) argues, such entrepreneurs "choose to participate in the informal economy because they find more autonomy, flexibility and freedom in this sector than in the formal one. In other words, participants have the freedom of operating their own business; they have flexibility in determining hours or days of operation; they can use and develop their creativity." This is also the finding of Snyder (2004) in her study of informal entrepreneurs in New York City's East Village neighborhood. She argues that although most literature assumes that external pressures (such as discrimination, economic restructuring and unemployment) force people into the informal sector, most of the 50 informal entrepreneurs she studied were doing so out of choice such as to meet some personal goal. Most used the informal sector to set their careers on a new path in order to transform their work identity or to reveal their true selves. Even those originally joining due to constrained opportunities in the formal economy developed a long-term commitment to developing their informal enterprises. For her, therefore, informal entrepreneurs are engaged in such endeavors not out of necessity but more out of choice or opportunity. This is also the finding of Cross (1997, 2000) in his study of street vendors who argues that whilst these informal entrepreneurs have been conventionally represented as doing such work out of necessity due to a lack of other opportunities, he finds that many conduct this work out of choice.

One of the few other studies to have investigated this issue, however, does not come down on one side or the other of the necessity/opportunity dualism but instead asserts that some informal entrepreneurs are opportunity driven and others necessity driven. Lozano (1989) in a study of 50 dealers at flea markets in northern California differentiates between voluntary and involuntary entrants to this market. Voluntary entry occurs when an individual decides to leave their job in order to earn income through self-employment, or when informal employment is conducted as a source of additional income beyond that necessary to cover normal living expenses and levels of indebtedness. One fifth of respondents fell into this category. Involuntary entry, meanwhile, takes place when: a person loses their formal job; income from employment, pensions or welfare payments is insufficient to cover normal living expenses and levels of indebtedness; or a person leaves school to enter the formal labor market and is unable to find a job. The remaining 80% of dealers experienced one of these situations prior to their involvement in the flea market. While the former explain their participation in terms of intense dissatisfaction with the routine and authority of the formal workplace and opt for self-employment for reasons of personal autonomy and flexibility and to "be my own boss," the latter involuntary joiners, however, offer very different explanations. Although a quarter claim to enjoy the autonomy of this work, none give this as a principal reason for their participation. They run such micro-enterprises because they need the money and, provided they have not been out of work for long, because their desire for a job is strong.

Until now, therefore, few studies in western economies have been conducted on the motives underpinning informal entrepreneurship and the findings on whether they are necessity or opportunity-driven is by no means clear cut. Given this, the decision was thus taken to undertake research to investigate the motives underpinning those starting up fledgling enterprises that were conducting some or all of their transactions on an off-the-books basis.

Motives of Informal Entrepreneurs: Evidence from England

Between 1998 and 2001, primary data on the extent and nature of participation in the informal sector was collected from 811 households spread across a range of deprived and affluent urban and rural English localities. These localities were chosen using a maximum variation sampling technique, employing data from the UK government's Index of Multiple Deprivation (ODPM, 2000), whilst households in each locality were selected using a spatially stratified sampling technique (Kitchen and Tate, 2001). To gather data on participation in the informal sector, a relatively structured face-to-face interview schedule was designed. Besides gathering background information on their age, gender, employment status, work history and gross household income, questions were asked about the type of labor the household last used to complete 44 common domestic tasks and whether they had conducted any of these tasks either on a paid or unpaid informal basis for other households. Following this, open-ended questions were asked about other forms of informal work carried out over the past year with prompts to elicit further information on what they had done, how much they had been paid and why they had engaged in such activity.

Similar to previous studies using this technique which discusses informal work in the context of overall household work practices (Leonard, 1994; MacDonald, 1994; Pahl, 1984), the finding was that respondents displayed little reticence in openly talking about their informal work. Indeed, the total sum of money that customers reported spending on informal work in each neighborhood was near enough exactly the same as suppliers of informal work reported that they had received. So too was the mean price customers paid broadly equivalent to the mean price suppliers received. There is thus little evidence either of suppliers under-reporting such work and their incomes, or of customers falsely allocating economic activity to informal work when this was not the case.

In this paper, the emphasis is solely on a specific sub-section of these respondents, namely those who had used the informal economy to start up businesses. Those who had engaged in off-the-books work as an employee for a business, those running established self-employed businesses and conducting a portion of their trade on an off-the-books basis and those conducting "paid favors" for kin, friends or neighbors often on a one-off basis, are not here considered.

The Balance of Necessity- and Opportunity-driven Informal Entrepreneurs

As stated above, the GEM survey of the UK identifies that amongst early-stage entrepreneurs, necessity entrepreneurship covered 0.7% of the working-age population in 2005 (having fallen from 1.4% in 2001) while opportunity entrepreneurship covered 5.2% of the working-age population (rising from 5.1% in 2001). The outcome is that the ratio of opportunity to necessity entrepreneurship changed from 3.6 in 2001 to 7.4 in 2005.

Analyzing the primary motives of those seeking to start up enterprises by conducting a portion or all of their transactions on an off-the-books basis, the finding of this survey is that of 70 fledgling entrepreneurs operating in the informal economy, for some 77%, their decision to pursue such a business venture was on balance a voluntary choice, and for the remaining 23% it was more a matter of necessity and due to a lack of choice rather than a matter of choice. The result, therefore, is that contrary to the marginality thesis, less than a quarter of them are necessity entrepreneurs. Indeed, the ratio of opportunity to necessity amongst informal entrepreneurs is 3.3, which is approximately the same level as the 3.6 ratio of opportunity to necessity entrepreneurship amongst those operating in the mainstream formal economy identified in the 2001 GEM survey covering approximately the same time period as this survey (Harding et al., 2006).

How can this be explained? One important issue to note is that very few of those setting up fledgling business ventures and conducting some or all of their transactions on an off-the-books basis are the economically inactive or registered unemployed. Indeed, these groups cover just 20% of all such entrepreneurs. Most (77%) of the 70 fledgling entrepreneurs identified are employees in employment and in the process of setting up a business venture "on the side" which either they eventually hope to do on a full-time basis or have just started to do full-time, having resigned from their employment.

Contrary to Snyder (2004) who argues that hardly any of the informal entrepreneurs she studied were necessity-driven and Lozano (1989) who argues that some 80% are necessity-driven, this English study reveals that when their primary motive is analyzed, some 23% appear to be necessity entrepreneurs and that the 3.3 ratio of opportunity to necessity informal entrepreneurship is approximately the same as the 3.6 ratio in the UK amongst legitimate entrepreneurs at the time.

The problem with this attempt to delineate informal entrepreneurs as either necessity or opportunity driven by analyzing their primary motive, however, is that it obfuscates more than it clarifies. The complex ways in which these informal entrepreneurs explained their rationales for deciding to set up in business cannot be easily squeezed into one side or the other of this necessity/opportunity dichotomy. To see this, the rest of this section reports case studies of individual entrepreneurs so as to reveal that even if the vast majority (77%) of those engaged in this hidden enterprise culture might be classified as opportunity entrepreneurs when an attempt is made to identify a primary motive, nearly all of these (some 90%) in fact reported much more complex rationales, often stating that they feel both pushed, due to dissatisfaction with their formal employment, as well as pulled due to their desire for independence, an interest in the activity involved, a desire to increase their income and so forth. On the whole, in consequence, both choice and constraint are often involved in their decision to set up a business venture. To see this, case studies of individual informal entrepreneurs are here reported to display the complex and diverse array of motives normally involved.

Unraveling the Complex Motives of Informal Entrepreneurs: Case Studies

Justin is a young man in his early 20s, registered self-employed and running his own rapidly growing car valet business with a number of employees and is a shining example of the sort of entrepreneurial person that western governments are seeking to nurture through their enterprise culture policies. How, therefore, did he become what he is today? As a young teenager, he had washed cars one Saturday morning at a charity event and following this, having seen the demand for such a service and how nobody was meeting that demand, had decided to continue to do so at weekends for people in his neighborhood in order to earn some extra cash. Knocking on doors and offering his services, he had quickly built up a regular clientele and had carried on doing this throughout his school years. By the time he was 16 years old, he had a well-formulated plan of what he was going to do for a living. Rather than continue with his education, he therefore left school and set about implementing it. He used the relatively substantial capital accumulated from his weekend work to purchase a van and equipment to set up as a car valet and then set about building upon his existing client base. Five years after starting up, he employs three people and is currently seeking to reduce the share of his turnover from domestic customers and expand the proportion from the more commercial side of his operation, such as used car dealers and car maintenance garages for whom he provides a valet service. Although he continues to conduct a portion of his work for domestic customers on an off-the-books basis, especially for long-standing customers, he has over the years slowly transferred a greater share of his business into the legitimate realm and is intending to be, in his words, "more or less fully legit" within the next year or so. This entrepreneur, to all intents and purposes, seems to be a straightforward case of an opportunity entrepreneur. Yet a little deeper delving into his background reveals evidence of necessity. His family was by his own admittance relatively deprived in relation to those of his peers and, as he put it, "they would never be able to have supported me to stay on at school or to go to university." Although superficially an opportunity-driven entrepreneur, therefore, the reality was a complex mix of somebody seizing an opportunity when identifying a gap in the market and a person pushed to do so due to his familial circumstances.

Another instance of an opportunity-driven entrepreneur is Chris. Working as a consultant for a large organization, tenders often fell on his desk too small for the organization to deem worthy of a bid. He sometimes did these contracts on a self-employed basis "on the side," depositing the income into his personal bank account and not declaring it to the tax authorities. He had every intention of eventually setting up in business on his own and was busy at the time of interview exploring whether this was feasible. He had identified an opportunity by realizing that these smaller contracts were being ignored by larger organizations in his specialist niche market and did not perceive many other competitors bidding for this work. For him, these contracts were currently being conducted by him on an off-the-books basis because he was "not yet a properly established business" and he was "testing the market" for his services. Although Chris again appears to be an opportunity-driven entrepreneur, it takes only a little deeper analysis to realize that this is too simplistic. During the interview with him, he repeatedly mentioned not only how he desired to become independent and set up on his own to generate more income but also how he wanted to do so in order that he would have greater freedom over his time so that he could care for his chronically-ill sibling. Once again, therefore, the reality was a combination of both pull/opportunity and push/necessity factors that were influencing his decision to start up a business venture.

Informal entrepreneurs do not only set up on their own using the skills gained from their employment but also sometimes as a result of some hobby or interest that they have outside of their formal job, or what Stebbins (2004) calls "serious leisure," by which he means the systematic pursuit of an amateur, hobbyist or volunteer activity that participants find so substantial and interesting that they launch themselves on a career centered on acquiring and expressing its special skills. An example is Eric whose life outside employment revolves around breeding canary birds. He breeds up to 150 at any time in a large shed in his garden, selling "good quality" canaries to fellow members of local and regional canary breeding clubs and the rest to pet shops. His principal focus, however, was making canary birdcages, having noticed that nobody manufactures such cages. At first he made them for friends and acquaintances but then rapidly expanded as demand grew. Indeed, he was the only producer of such cages and had a well-defined niche market with good access to his target market. At the time of interview a thriving micro-business was emerging which was conducted on a wholly off-the-books basis. He was considering employing some people to help him manufacture the birdcages so as to fill the growing demand. Although again this appears to be a case of opportunity entrepreneurship, a little deeper delving displays the presence of necessity amongst his motives. In his early sixties and employed as a manual laborer, he was finding the heavy manual work increasingly difficult and felt the need to secure additional income for his retirement since he had no private pension arrangement. For him, therefore, this informal business venture was set up to provide a source of income since he had few other opportunities open to him to earn an income. Again, therefore, a mix of opportunity and necessity is involved in his decision to set up such a venture.

Another example of a person developing a business venture out of some hobby is Mick. In his mid-40s, he had reached a stage in his life where he was searching for something more fulfilling than his job as an executive in a large insurance company, and had set up a web business selling antique yacht chandlery that he acquired at auctions on the south coast of England. This business not only reflected his hobby and passion, namely sailing, but also that, living near one of the global centers of sailing, he had identified an opportunity to be able to obtain chandlery that people elsewhere could not and to sell it on to them via the internet at a good profit. For him, this was at first a voluntary "sideline" reflecting his hobby, and which he eventually intended would be his full-time occupation, but when he had been recently made redundant, he decided to pursue this entrepreneurial venture full-time after having little success finding full-time employment. He had registered the business but only put a small proportion of his trades through the formal company. The vast majority were off-the-books transactions. For him, informal work was being used to enable him to establish his business and compete with others in the same market. Here, therefore, is somebody whose motives had shifted from being primarily voluntary to more involuntary. At the time of interview, his motives included a mixture of not only pull factors in that he had identified an opportunity but also push factors in that he was at first disgruntled with his formal job and wanted to do something more fulfilling and was later forced out of necessity to pursue this entrepreneurial venture, having encountered difficulties finding another job.

A final case study is Geoff who, whilst working as an employee of a painting and decorating company and learning the trade, had begun to take on cash-in-hand jobs at weekends on a word-of-mouth basis through friends, neighbors and acquaintances in order to set up on his own. Two rationales had driven his decision. On the one hand, his work as an employee was not satisfying. He did the preparatory tasks with the more fulfilling final stages being undertaken by the owner of the business. Self-employment was a way for him to undertake the more interesting work in the final stages of each job. On the other hand, however, he also wanted to become self-employed because he had recently divorced and had custody of the child, and wanted more control over his working hours so as to spend more time with his child and fulfill his familial obligations. At the time of interview, Geoff had swiftly built up a client base large enough to resign from his job and to work full-time on a self-employed basis developing his own business. He had also bought a van and all the necessary equipment and had started to do commercial contracts such as decorating the public areas of blocks of flats, often on a cash-in-hand basis, employing up to three casual employees on a fairly regular basis, all paid on a cash-in-hand basis. For him, conducting off-the-books work was an inherent part of his working practices to allow him to get established. Although a small part of his business was now declared, he continued to conduct a large proportion off-the-books and this was his primary income. He was adamant, nevertheless, that he wanted to create a "legitimate" business. As he put it, he had "too much to lose" if caught. This appears to be a case, therefore, of necessity entrepreneurship since all other work is either absent or insufficient. Yet this is not the case. This was not only a freely chosen and voluntary decision to set up on is own but also he had identified various niche markets in painting and decorating that others were not currently exploiting in his locality. His motives, in other words, were thus a mixture of constraints pushing him into this endeavor and pull factors leading him to voluntarily choose to engage in such work and exploit the opportunities in particular niche markets.

In sum, these case studies of individuals setting up business ventures and conducting a portion or all of their transactions on a cash-in-hand basis display the difficulty in practice of representing entrepreneurs as either necessity or opportunity driven. The lived practice is far more complex and the motives underpinning their decisions to set up fledgling enterprises more diverse than can be captured by such a simplistic either/or dichotomy since the rationales of all these entrepreneurs for setting up a business venture combine both pull/opportunity and push/necessity features.

Conclusions

In much of the recent literature seeking to understand the motives of entrepreneurs, there has been a tendency to differentiate between "necessity" entrepreneurs pushed into entrepreneurship because all other options for work are absent or unsatisfactory, and "opportunity" entrepreneurs seeking to exploit some business opportunity and pulled into entrepreneurship out of choice (Harding et al., 2006; Maritz, 2004; Minniti, Bygrave and Autio, 2006; Perunoviae, 2005; Smallbone and Welter, 2004). This paper has applied this distinction between necessity-push and opportunity-pull entrepreneurs to a particular group, namely those starting up businesses that operate either wholly or partly on an off-the-books basis. Until now, few studies have sought to understand the motives of entrepreneurs operating in the informal economy. Given that this sphere is often assumed to be a relatively low-paid realm into which populations are forced, it might be assumed that when the motives of these entrepreneurs are analyzed, the ratio of necessity to opportunity entrepreneurship would be much higher amongst these informal entrepreneurs than amongst entrepreneurs starting up legitimate business operations.

Reporting evidence from interviews in English localities with 70 such informal entrepreneurs, however, the finding of this study is that necessity is by no means the predominant motive and that the same ratio of necessity to opportunity entrepreneurs prevails as amongst legitimate entrepreneurs. It also displays that squeezing individuals into one side or the other of this either/or dichotomy over-simplifies the complex motives for entrepreneurship in the informal economy. As the case studies of individual entrepreneurs have shown, this push-or-pull dualism is far too simplistic to explain the motives underpinning decisions to start up businesses trading either wholly or partly on an off-the-books basis. Although for the majority the decision to start-up their business is seen on balance as a voluntary choice, this decision is one into which they feel both pushed, such as due to dissatisfaction with their formal employment or as a consequence of redundancy, as well as pulled because of their interest in the activity involved. On the whole, in consequence, both choice and constraint are involved in the decisions of most entrepreneurs starting up enterprises operating in the informal sector, as shown in the case studies, even if, on balance, choice is often more prominent than constraints. What is therefore required is a richer and more textured understanding of the diverse and complex motives underpinning participation in this hidden enterprise culture as well as a transcendence of the necessity/opportunity dichotomy when analyzing the rationales of mainstream entrepreneurs.

Perhaps most importantly for public policy, however, this paper reveals that not all entrepreneurs engaged in off-the-books transactions are simply necessity entrepreneurs. Given this, then perhaps a rather different approach is required in public policy towards this sphere. To continue to depict entrepreneurship in the informal economy as composed of necessity entrepreneurs not only does an injustice to many engaged in entrepreneurial endeavor in this realm but also carries the inherent danger that a deterrence approach can continue towards such enterprise. If this occurs, then western governments might well find that through their deterrence policies towards the informal economy they will with one hand eradicate precisely the entrepreneurship and enterprise that with another hand through their enterprise culture policies they are seeking to nurture. Recognizing the diversity and complexity of entrepreneurship in the informal economy is thus more than a simple matter of academic interest. As a seedbed for opportunity entrepreneurship, it might well be far more important than has so far been considered. If this paper therefore encourages further research on the nature of this hidden enterprise culture and public policy discussion on how the entrepreneurship in this sphere might be helped to legitimize, then it will have achieved one of its intentions. If it also encourages recognition that the necessity/opportunity dichotomy is far too simplistic to capture the complex and diverse motives underpinning entrepreneurship more generally, then it will have fulfilled all of its objectives.

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Contact Information

For further information on this article, contact

Colin C. Williams, Professor of Public Policy, Enterprise and Regional Development Unit, School of Management, University of Sheffield, Sheffield S1 9DT, United Kingdom

E-mail: C.C.Williams@sheffield.ac.uk

Colin C. Williams, Enterprise and Regional Development Unit, School of Management, University of Sheffield, Sheffield, United Kingdom

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Author:Williams, Colin C.
Publication:Journal of Small Business and Entrepreneurship
Article Type:Survey
Geographic Code:4EUUK
Date:Jun 22, 2007
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