Entrepreneurs Operating in the Informal Economy: Necessity or Opportunity Driven?

Abstract

To evaluate the validity of distinguishing between opportunity and necessity entrepreneurship, this paper investigates the motives of entrepreneurs who conduct some or all of their transactions on an off-the-books basis. Reporting empirical evidence from England on the motives of such entrepreneurs, this paper reveals not only that necessity is by no means their predominant motive, with a similar ratio of necessity-to-opportunity entrepreneurship being identified as amongst legitimate entrepreneurs, but also that squeezing individuals into one side or the other of this dichotomy over-simplifies the motives for entrepreneurship in the informal economy. The outcome is a call for the necessity/opportunity dualism to be transcended and replaced by a richer and more textured understanding of the diverse and complex motives underpinning participation in both this hidden enterprise culture as well as mainstream entrepreneurship more generally.

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