Evaluating informal entrepreneurs' motives: evidence from Moscow

• Published in: International journal of entrepreneurial behaviour & research Vol. 15; no. 1; pp. 94 - 107
• Main Authors: Williams, Colin C, Round, John
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Group Publishing Limited 01.01.2009
• Subjects: Business formation; Economics; Entrepreneurialism; Entrepreneurs; Entrepreneurship; Informal economy; Opportunity; Russia; Small business; Startups; Studies; Tax planning; Russia; Economics; Entrepreneurialism; Tax planning; Business formation; Russia
• DOI: 10.1108/13552550910934477
• ISSN: 1355-2554

Purpose - Recently, distinctions between "necessity-driven" entrepreneurs who have limited options for work and "opportunity-driven" entrepreneurs pulled into the exploitation of a perceived business opportunity have been transcended by commentators displaying the co-presence of opportunity and necessity in entrepreneurs' motives and how their relative importance shifts over time. This paper aims to evaluate, critically, whether this re-theorisation is also valid when considering the motives of informal entrepreneurs.Design methodology approach - A household survey of entrepreneurship is reported conducted in Moscow during late 2005 and early 2006. In the 313 households surveyed, 81 entrepreneurs were identified who had started-up a business venture in the past 42 months, all of whom reported that they were operating wholly or partially in the informal economy.Findings - For some 80 per cent of informal entrepreneurs, both necessity- and opportunity-drivers were co-present in their decision to start up an enterprise. There was also a clearly identifiable shift in their motives away from necessity- and towards opportunity-drivers as their ventures became more established.Research limitations implications - Akin to recent literature on mainstream (legitimate) entrepreneurs' motives, the survey thus displays the need for a less bifurcated understanding of informal entrepreneurs' motives that recognises the co-existence of necessity- and opportunity-drivers and the temporal changes in their relative importance.Originality value - The study reveals the need to transcend the currently dominant simplistic portrayals of informal entrepreneurs as either universally necessity-driven or universally opportunity-driven.