Experiment First, Register Later: On the Relationship Between Firms’ Informal Legacy and Exporting

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Abstract

Around the world and especially in areas of widespread poverty, unregistered organizational entities start their operations in the part of the economy that either fails to adhere to the established institutional rules or is denied the protection of those rules. In this article, we explore the export propensity of firms that start their operations in the informal economy. We argue that firms operating informally have a unique opportunity to experiment with different products and markets prior to formal registration. This experimentation reduces subsequent uncertainty related to internationalization and, hence, increases the propensity of these firms to export after formal registration. We also argue that the relationship between informal legacy and export propensity is weaker in countries with stronger formal institutional trust. Using a comprehensive sample of 9,454 African firms, we find support for our hypotheses.
Original languageEnglish
Title of host publicationProceedings of the Eightieth Annual Meeting of the Academy of Management
EditorsGuclu Atinc
Number of pages1
Place of PublicationBriarcliff Manor, NY
PublisherAcademy of Management
Publication date2020
DOIs
Publication statusPublished - 2020
EventThe Academy of Management Annual Meeting 2020: Broadening Our Sight - Virtual
Duration: 7 Aug 202011 Aug 2020
Conference number: 80
https://aom.org/events/annual-meeting/past-annual-meetings/2020-broadening-our-sight

Conference

ConferenceThe Academy of Management Annual Meeting 2020
Number80
LocationVirtual
Period07/08/202011/08/2020
Internet address
SeriesAcademy of Management Proceedings
ISSN0065-0668

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