Shova Thapa Karki

Value of Formalization for Women Entrepreneurs in Developing Contexts: A Review and Research Agenda: Women Entrepreneurs in Developing Contexts

The informal economy (IE) has attracted the attention of policy makers, practitioners and academics alike, reflected both in the growing number of publications spanning different disciplinary foci and in the recent policy emphasis on the formalisation of IE (ILO 2014, Sepulveda and Syrett 2007, Williams and Nadin 2014). The emphasis on formalisation reflects the move beyond traditional explanations of IE as lacking sustainability and stability associated with being a remnant of economic development (Webb et al. 2009) to appreciate its permanence and significance, and its links with, and interdependencies on, the formal economy (Castells and Portes 1989, Meagher 2013, Chen 2007). The IE, broadly accepted as ‘the diversified set of economic activities, enterprises, jobs, and workers that are not regulated or protected by the state’ (Chen 2012: 8), contributes substantially to national GDPs of countries at different developmental stages, accounting as much as 40-60% of the GDPs of developing countries (Godfrey 2011, Schneider 2002). The IE also attracts a disproportionately high number of women, whose participation in these often vulnerable forms of (self)employment is frequently portrayed as motivated by poverty or ‘involuntary exclusion’ from the formal labour market and concerned with sustaining their family’s livelihood (Franck 2012, Bushell 2008, Williams and Gurtoo 2011). These views often ignore the gendered constraints on women’s entrepreneurial activities and their reproduction through social norms, codes of behaviour and practices in specific socio-cultural contexts and the barriers to women’s sustainable economic activity through formalisation. While IE and women entrepreneurship (WE) have both received separate prior attention, we believe their insights are valuable in widening the theoretical lens on the perceived value of formalisation by placing centre-stage the tensions inherent in, and the institutional dynamics affecting women’s choices in developing contexts. The data available about the drivers and barriers to formalisation in relation to gender is scant with the few existing studies often being narrowly conceptualised, fragmented or lacking in rigour (Chant and Pedwell 2008). This is partly related to contrasting emphases on women’s entrepreneurial activities in IE and WE literature as we succinctly summarise below.

Formalizing women entrepreneurs in Kathmandu, Nepal: Pathway towards empowerment?

Purpose Women’s economic empowerment through entrepreneurship is increasingly being recognised as significant to achieving the Sustainable Development Goals (SDGs). However, women entrepreneurship in developing countries is characterised by an overrepresentation in the informal economy and exposure to high levels of gender disparities. The purpose of this paper is to explore whether formalisation of women’s entrepreneurial activities in the informal economy supports SDGs through ensuring empowerment and equality. Design/methodology/approach The research adopts a qualitative research design to explore the empowerment outcomes of the formalisation of women’s entrepreneurial activities in the informal economy of Kathmandu, Nepal. Data were collected through interviews with 30 women entrepreneurs engaged in a mix of formal and informal entrepreneurial activities. Findings By using Mayoux’s (1998) framework of empowerment at the individual, household and community level, the findings show the variation in empowerment outcomes as a result of women’s diverse motivations for engaging in entrepreneurship. Whilst informal entrepreneurial activities improve women’s confidence and life aspirations, they have limited potential in lifting women out of poverty and enable them to significantly challenge gender relations in the society. Formalization does further empower women at the household and community level but this is primarily the case of younger and more educated women. Originality/value The research contributes to the debates on entrepreneurship as “emancipation” and more specifically, on whether formalization contributes to the SDGs by furthering gender equality and empowerment. Formalization policies need to acknowledge the heterogeneity of women entrepreneurs.