Empirical evidence on opportunity recognition behaviours of informal traders

Abstract

This study provides empirical evidence on the nature of entrepreneurship in the informal sector. By interrogating opportunity recognition behaviour, motives for start-ups and perceptions of community support, better understanding of the entrepreneurial mindset is achieved. Informal traders were surveyed in a wide range of businesses of varying age and size. Results suggest that opportunity recognition behaviours are mixed and these informal traders are motivated by a variety of reasons for business start-ups. Additionally many respondents find community norms not to be suitable to entrepreneurial activity. Moreover, business size, but not age, accounts for significant variation across the study variables. Customised interventions are recommended, where informal businesses can be formalised and expanded, to enable them to take full advantage of opportunities. Implications are that as part of government’s initiative to enhance the skills of informal traders, policies should encourage the development of specific behavioural skills of which opportunity recognition is central. Key words: Informal sector, entrepreneurship, new firms, start-up motives, South Africa.

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