Informal entrepreneurship under transition: causes and specific features
The paper deals with informal entrepreneurial activity as one of the specific outcomes of societal change called ‘transition’. It stresses that in some transitional environments there are not only the usual constraints of the start-up stage but also some additional incentives which motivate entrepreneurs to remain informal. The author focuses on the different reasons of doing business informally in the majority of transitional countries, employing relevant data on entrepreneurial activity in these countries. Explaining the specific features of informality resulting from the character of the country’s socio-economic model he argues that the character of informal entrepreneurial activity is dependent on the level of employees’ entrepreneurial activity, sole entrepreneurship with low growth expectations and self-employment, as well as on the degree of economic freedom. Based on these characteristics, a new approach to classifying ‘transitional’ countries is offered, explaining different reasons, and settings, of informal entrepreneurial activity. From this point of view, five groups of transitional countries are identified.