Informal Legacy and Exporting Among Sub-Saharan African Firms

Marcus Møller Larsen*, Caroline T. Witte

*Corresponding author for this work

Research output: Contribution to journalJournal articleResearchpeer-review

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Abstract

Around the world and especially in areas of widespread poverty, firms start their operations without registering with relevant authorities (i.e., in the informal economy). We explore whether firms that initiated their operations in the informal economy but later register have a higher propensity to export than firms that register at the time of their foundation. We reason that the experience of having operated informally provides formally registered firms with the advantage of low-cost and flexible exploration but also a domestic legitimacy liability. We suggest that these factors likely contribute to making foreign export markets more attractive after registration. Based on a comprehensive sample of Sub-Saharan African firms, we find that conditional on registration, firms with an informal legacy have a higher propensity to initiate exporting than firms that started their operations formally. We contribute with theoretical and policy-oriented insights on the dynamics of informality and exporting.
Original languageEnglish
JournalOrganization Science
Volume34
Issue number3 (May/June)
Pages (from-to)987-1003
Number of pages17
ISSN1047-7039
DOIs
Publication statusPublished - 2023

Bibliographical note

Published online: 31 Aug 2022.

Keywords

  • Exporting
  • Informal economy
  • Experimentation
  • Legitimacy
  • Sub-Saharan African firms

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