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The central economic and social role of the informal sector is increasingly acknowledged. While evidence shows that informal entrepreneurs can drive innovation, particularly in developing countries, research on innovation has primarily been devoted to the formal sectors, organizations and institutions. Lacking are studies assessing the role of innovation emanating within and from the informal sector. Who is the archetypical innovator in the informal economy? What types of innovations are generated? What is different from the formal economy? Similarly, the vast literature on national innovation systems in countries at different stages of development largely overlooks the informal sector. The objective of this chapter is to push the boundaries of research in this field by conceptually integrating so far separate analyses of innovation and the informal economy, by using research methods not often used by those studying the economic and employment aspects of innovation or the informal economy.
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