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

Research output: Contribution to conferencePaperResearchpeer-review

Abstract

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.
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.

Conference

ConferenceDRUID19 Conference
Number41
LocationCopenhagen Business School
CountryDenmark
CityFrederiksberg
Period19/06/201921/06/2019
Internet address

Keywords

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

Cite this

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title = "A Legacy from the Informal Economy: On the Relationship between Experimentation and Exporting among African SMEs",
abstract = "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.",
keywords = "Exporting, Informal economy, Experimental knowledge, Institutional trust, African SMEs, Exporting, Informal economy, Experimental knowledge, Institutional trust, African SMEs",
author = "Caroline Witte and {M{\o}ller Larsen}, Marcus",
year = "2019",
language = "English",
note = "null ; Conference date: 19-06-2019 Through 21-06-2019",
url = "https://conference.druid.dk/Druid/?confId=59",

}

A Legacy from the Informal Economy : On the Relationship between Experimentation and Exporting among African SMEs. / Witte, Caroline ; Møller Larsen, Marcus.

2019. Paper presented at DRUID19 Conference, Frederiksberg, Denmark.

Research output: Contribution to conferencePaperResearchpeer-review

TY - CONF

T1 - A Legacy from the Informal Economy

T2 - On the Relationship between Experimentation and Exporting among African SMEs

AU - Witte,Caroline

AU - Møller Larsen,Marcus

PY - 2019

Y1 - 2019

N2 - 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.

AB - 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.

KW - Exporting

KW - Informal economy

KW - Experimental knowledge

KW - Institutional trust

KW - African SMEs

KW - Exporting

KW - Informal economy

KW - Experimental knowledge

KW - Institutional trust

KW - African SMEs

M3 - Paper

ER -