Colin C. Williams

Beyond Necessity-Driven versus Opportunity-Driven Entrepreneurship: A Study of Informal Entrepreneurs in England, Russia and Ukraine

To evaluate critically the conventional view that entrepreneurs are either necessity-driven or opportunity-driven, empirical data are reported from England, Ukraine and Russia on the motives of a specific group of entrepreneurs – those operating wholly or partially in the informal economy. The paper finds that, for the vast majority, both necessity and opportunity drivers are involved in their decision to start up enterprises, along with a clear shift from necessity-oriented to opportunity-oriented motivations as their ventures become more established. The paper concludes with a discussion of the public policy implications of these findings.

Entrepreneurship and the Informal Sector: Some Lessons from India

This paper critically evaluates the popular structuralist representation of informal workers as marginalized populations who work as dependent employees out of economic necessity and as a last resort. Reporting on an empirical survey of 1,518 informal workers in India, it reveals not only that a large proportion work on their own account as informal entrepreneurs, but also that not all do such work purely out of economic necessity and in the absence of alternative means of livelihood. The paper concludes by calling for a wider recognition of the opportunity-driven entrepreneurial endeavour of many working in the informal sector.

Corruption in the Post-Soviet Workplace: The Experiences of Recent Graduates in Contemporary Ukraine

While Ukraine was bestowed market economy status by the European Union in 2005 its labour market still endures many structural problems. By exploring the experiences of young graduate employees this article highlights the difficultly in obtaining work within Ukraines labour market and the problems they face once they have secured employment. Rather than seeing the development of a transparent labour market the collapse of the command economy has seen a relatively closed system develop. The article demonstrates how many jobs are secured through the use of connections or the demanding, and payment, of bribes.The situation does not improve once graduates obtain long-term employment. Interviewees discuss the lack of job security, the informal payment of wages and the lack of legal protection from corrupt employer practices. The article has broader resonance outside of the Ukrainian case study as the discussion of workplace corruption highlights how the issue is concerned with much more than simply cash based transactions and how those that endure it are likely to turn to the informal economy for employment.

Everyday tactics and spaces of power: the role of informal economies in post-Soviet Ukraine

Utilising de Certeaus concepts of daily life and his delineation between strategies and tactics as everyday practices this paper examines the role of informal economies in post-Ukraine. Based on 700 household surveys and seventy-five in-depth interviews, conducted in three Ukrainian cities, the paper argues that individuals/households have developed a wide range of tactics in response to the economic marginalisation the country has endured since the collapse of the Soviet Union. Firstly, the paper details the importance of informal economies in contemporary Ukraine while highlighting that many such practices are operated out of necessity due to low wage and pension rates and high levels of corruption. This challenges state-produced statistics on the scale of economic marginalisation currently experienced in the country. By exploring a variety of these tactics the paper then examines how unequal power relations shape the spaces in which these practices operate in and how they can be simultaneously sites of exploitation and resistance to economic marginalisation. The paper concludes pessimistically by suggesting that the way in which these economic spaces are shaped precludes the development of state policies which might benefit the economically marginalised.

Out of the shadows: a classification of economies by the size and character of their informal sector

Given that 60 per cent of the global workforce is in the informal sector, this article develops a typology that classifies economies according to, firstly, where different countries sit on a continuum of informalization and, secondly, the character of their informal sectors. This is then applied to the economies of the 27 member states of European Union (EU-27). Finding a clear divide from east to west and south to north in the EU-27, with the more informalized and wage-based informal economies on the eastern/southern side and the less informalized and more own-account informal economies on the western/Nordic side, it is then revealed that formalization and more own-account informal sectors are significantly correlated with wealthier and more equal (as measured by the gini-coefficient) countries in which there is greater labour market intervention, higher levels of social protection and more effective redistribution via social transfers. The article concludes by discussing the implications for theory and practice.

Reconceptualising paid informal exchange: some lessons from English cities

Most studies of paid informal exchange evaluate its varying magnitude across space and social groups. Little attention, however, has been paid to the variable nature of paid informal exchange. Instead, the unchallenged assumption is that such exchanges are universally conducted under work relations akin to formal employment for profit-motivated purposes. To evaluate critically this dominant conceptualisation of the character of paid informal exchange, empirical research is here reported from lower-income and higher-income neighbourhoods of two English cities. This identifies that although most paid informal exchange in affluent suburbs is conducted under market-like relations for economic gain, this is not the case in lower-income neighbourhoods. Here, such exchange is more undertaken for and by friends, neighbours, and relatives for an array of reasons associated with developing social capital and/or redistribution. We conclude by suggesting that a more socially, culturally, and geographically embedded appreciation of the nature of paid informal exchange is now required alongside a fuller exploration of its implications for policy.

Evaluating Informal Entrepreneurs’ Motives: Evidence from Moscow

PurposeRecently when studying mainstream (legitimate) entrepreneurs, the distinction between ‘necessity-driven’ entrepreneurs pushed into entrepreneurship because other options for work are absent or unsatisfactory, and ‘opportunity-driven’ entrepreneurs pulled into entrepreneurship to exploit some perceived business opportunity, has been transcended by commentators displaying the co-presence of opportunity and necessity in entrepreneurs’ motives and how their relative importance shifts over time. This paper evaluates critically whether this re-theorisation is also valid when considering the motives of informal entrepreneurs. MethodologyA household survey of entrepreneurship is reported conducted in Moscow during late 2005 and early 2006. In the 313 households surveyed, 81 entrepreneurs were identified who had started-up a business venture in the past 42 months, all of whom reported that they were operating wholly or partially in the informal economy.FindingsFor some 80 per cent of informal entrepreneurs, both necessity- and opportunity-drivers were co-present in their decision to start-up an enterprise. There was also a clearly identifiable shift in their motives away from necessity- and towards opportunity-drivers as their ventures became more established. Research implicationsAkin to recent literature on mainstream (legitimate) entrepreneurs’ motives, this survey thus displays the need for a less bifurcated understanding of informal entrepreneurs’ motives that recognises the co-existence of necessity- and opportunity-drivers and the temporal changes in their relative importance.Value of paperThis study reveals the need to transcend the currently dominant simplistic portrayals of informal entrepreneurs as either universally necessity-driven or universally opportunity-driven.

The Undeclared Sector, Self-Employment and Public Policy

PurposeViewing undeclared work as low-paid exploitative organised employment conducted under sweatshop conditions, public policy has widely treated this illegitimate sphere as a hindrance to development and actively pursued its deterrence using stringent regulations and punitive measures to change the cost-benefit ratio for those considering participation in such endeavour. In this paper, however, the intention is to evaluate critically this portrait of the nature of undeclared work and resultant public policy approach.DesignTo evaluate this representation of undeclared work and consequent public policy approach, empirical evidence is reported from 861 face-to-face interviews in English localities.FindingsThe finding is that the majority of undeclared work is undertaken on a self-employed basis by people who have identified an opportunity to provide a good or service and are taking a calculated risk in order to fulfil others needs.Research limitationsFuture research will need to further investigate this relationship between self-employment and the undeclared sector.Practical implicationsIdentifying that the undeclared sphere is predominantly composed of self-employed endeavour, a call is made for greater emphasis in public policy on developing initiatives to legitimise this illegitimate self-employment, rather than simply deterring such work. ValueBy re-reading the nature of undeclared work as primarily composed of self-employed activity, it highlights the need for public policy to stop treating undeclared work purely as something to be deterred and for more emphasis to be put on developing enabling initiatives to help such workers formalise their business ventures.

Local exchange and trading systems: a new source of work and credit for the poor and unemployed?

In this paper the aim is to evaluate critically the potential of local exchange and trading systems (LETS) as a new source of work and credit for the poor and unemployed. LETS are local associations whose members list their offers of and requests for goods and services in a directory and then exchange them priced in a local unit of currency. From the results of a national survey of LETS, it is found that LETS are growing rapidly and that a high proportion of the national membership are poor and unemployed. With use of a membership survey of Manchester LETS, it is then revealed that, although the poor and unemployed are capitalising on LETS to gain access to work and credit, it is utilised mainly by what can be called the ‘disenfranchised middle class’. In this paper it is advocated that, for a wider cross-section of the poor and unemployed to become involved, changes are needed not only in the internal operating environment of LETS but also in the approach of the government towards benefit claimants working on such systems.

Beyond Negative Depictions of Informal Employment: Some Lessons from Moscow

Informal employment is conventionally viewed as residual, marginal and sweatshop-like work that impairs urban economic development and social cohesion. Reporting data from 313 interviews conducted with Moscow households during 2005/06, this negative reading is found to apply to just one segment of the informal labour market in this post-socialist city— namely, informal waged employment. Examining the multiple types of informal employment conducted on an own-account basis, more positive impacts emerge of this sphere as the key seedbed for enterprise development and principal mechanism for delivering community self-help. The outcome is a call for a finer-grained understanding and more nuanced policy approach towards informal employment that recognises its plurality of forms and their varying consequences for economic development and social cohesion.