A Legacy from the Informal Economy: On the Relationship between Experimentation and Exporting among African SMEs

Caroline Witte, Marcus Møller Larsen

Research output: Contribution to conferencePaperResearchpeer-review


We explore whether firms that started their operations in the informal economy are more likely to start exporting than firms that started out as formally registered. The informal economy covers the actions of economic agents that fail to adhere to the established institutional rules or are denied their protection. We utilize this context to argue that informal firms have a unique opportunity to experiment with different products and markets prior to formal registration. This, we hypothesize, increases their propensity to export after formal registration. At the same time, we also hypothesize that the relationship between firms’ informal legacy and exporting propensity is weaker in countries where formal institutions are stronger. Using a comprehensive sample of 8,933 African SMEs, we find support for our hypotheses.
Original languageEnglish
Publication date2019
Number of pages38
Publication statusPublished - 2019
EventDRUID19 Conference - Copenhagen Business School, Frederiksberg, Denmark
Duration: 19 Jun 201921 Jun 2019
Conference number: 41


ConferenceDRUID19 Conference
LocationCopenhagen Business School
Internet address


  • Exporting
  • Informal economy
  • Experimental knowledge
  • Institutional trust
  • African SMEs

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