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Do Black and Minority Ethnic (BME) Informal Economy Participants Represent A Renaissance Of Entrepreneurship As We Know It?

  1. Introduction

The late nineties saw UK government policy make efforts to incentivise disadvantaged communities by supporting the development of business start-ups (Williams, 2014; Williams and Huggins, 2013; Devins, 2009). Initiatives such as New Labour’s Social Exclusion Unit were formed to regenerate local communities and entrepreneurship was highlighted as a fundamental element in achieving this outcome (Southern, 2011; Devins, 2009). The focus on entrepreneurship was influenced by the realisation that an entrepreneurial culture existed within underprivileged neighbourhoods and it was making significant contributions to economic growth (Bureau and Fendt, 2011; Gurtoo and Williams, 2009).

This entrepreneurial culture, widely identified as the ‘informal economy’ (Williams and Nadin, 2010:363), is defined in literature as “the paid production and sale of goods and services which are unregistered by, or hidden from, the state for tax and/or benefit purposes but which are legal in all other respects” (Williams and Nadin, 2011; Williams et al, 2009; Evans et al, 2006; Katungi et al, 2006; Williams and Windebank, 1998; Thomas, 1992). Although this definition differentiates the informal economy from the illegal economy, it implies a degree of deviance by relating it to legality and tax evasion, while omitting any association with entrepreneurship. On the other hand, the rise of qualitative research into entrepreneurship offers a narrative where a richer, darker form of entrepreneurship (Williams and Martinez, 2014; Smith, 2007) exists among the necessity-driven entrepreneurs of the informal economy (Miller and Miller, 2017; Williams, 2014). The idea that informal economy participants are forced to engage in hidden activities as a means of survival however (Williams and Huggins, 2013; Williams, 2011; Morris and Pitt, 1995), illustrates a stark contrast between said participants and the ‘formal’ entrepreneurs, who literature identifies as opportunity-driven superheroes (Williams, 2014; Williams,2011; Gurtoo and Williams, 2009; Burns, 2001; Cannon, 1991). Conversely, Blackburn and Ram (2006) find that “situations of adversity can provide opportunities for individuals to respond in an entrepreneurial fashion, for example by starting a business to cater for local needs” (p.77), which implies that entrepreneurs in informal economies can in fact be driven by opportunity and not just necessity. To determine whether informal economy participants represent a renaissance of entrepreneurship as we know it, this dissertation seeks to clarify whether there are any distinguishing factors between the two ‘types’ of entrepreneur, other than the economy in which they operate. To do so, the key features of an entrepreneur, as identified by Williams (2011), will be considered in the research, as there is no widely accepted definition of entrepreneurship. These features are as follows:

  • Pursuing independence
  • Pursuing achievement
  • Internal locus of control
  • Ability to live with uncertainty and take measured risks
  • Opportunistic
  • Innovative
  • Self-confident
  • Proactive and decisive with higher energy
  • Self-motivated
  • Vision and flair

(Williams, 2011)

This list makes no indication that resources such as finances or a registered business contribute to the definition of entrepreneurship. Rather, a particular set of behaviours and motivations are used to define an entrepreneur. This implies that there is no ‘dark side’ to entrepreneurship, as is suggested in literature regarding the informal economy (Williams and Martinez, 2014; Smith, 2007). Instead, entrepreneurship may be comprised of a mind-set and behaviours which can be manifest anywhere (Dees, 1998). To establish the validity of this theory, it is important to develop an understanding of the lived practices of entrepreneurs (Gurtoo and Williams, 2009). In doing so, there is potential for conventional interpretations of entrepreneurship to be unpacked, which could influence a new approach to establishing a conclusive definition of entrepreneurship.

The research will focus on BME participants because they are most commonly associated with the informal sector in literature, as are inner-city areas (Llanes and Barbour, 2007; Ram et al, 2003). For these reasons, the study will be conducted in disadvantaged neighbourhoods across London, UK. The key respondents of the research will be informal entrepreneurs (i.e. those who trade off-the-books full time), employees (i.e. those who are in formal employment but operating in the informal economy part-time) and micro-entrepreneurs (i.e. those who have graduated from informal to formal entrepreneurship).

[Chapters 2-3 available upon request]

  1. Findings

Interviews for this research were carried out with black people from disadvantaged neighbourhoods across London, who are or have been active in the informal economy. This chapter presents the findings from the interviews through thematic and conceptual coding. Each behaviour and motivation that appears in Williams’ (2011) list of entrepreneurial features is explored by comparing the findings from literature to the responses of the respondents. This data analysis method is used to fulfil the aim of assessing whether the theory that opportunity-driven entrepreneurship exists in the informal economy (Blackburn and Ram, 2006) is demonstrated in this research. The additional aim in using this method is to measure the extent to which the interview responses contribute to the development of an understanding of entrepreneurship as a means of fostering independent livelihoods (Chinguta et al, 2005).

 

4.1. Profile of Interview Respondents

The literature reviewed in this research suggests that the informal economy is commonly populated with BME residents of inner city and rural areas (Ram et al, 2003; Llanes and Barbour, 2007). These findings guided the sampling of interview respondents from the top 10 deprived London boroughs (Figure 2), according to factors including income, health, education, crime, employment, housing and living/environmental standards (Department for Communities and Local Government, 2015). The participants, all black and of working age, were categorised according to their role in the informal economy (Figure 3).  Literature suggests that these categories are namely absolute informal entrepreneurs (Williams, 2011; Sauvy 1984), employees in formal employment (Llanes and Barbour, 2007) and micro-entrepreneurs (Chinguta et al, 2005). Demographics such as age and gender were not relevant to the aims and objectives of this research, so they have not been considered in the descriptive profiles of interview participants. The pivotal factors in this research were the behaviours and motivations of the participants, which are explored in the following sections.

 

Figure 2 – Indices of Multiple Deprivation in London, 2015 Ranking (Department for Communities and Local Government, 2015)

m

 

Figure 3 – Informal Economy Participant Categories

Category Participant Number Role
Micro-entrepreneur P2

P4

Hair and beauty

Social network innovation

Employee P1

P6

P8

Procurement

Innovation

Decorative services

Informal entrepreneur P3

P5

P7

Motor trade

Merchandise

Social network

 

 

4.2. Behaviours and Motivations of Interview Participants

4.2.1. Innovation and Social Capital

A narrative of “innovation” echoes stridently in entrepreneurship literature (Williams and Nadin, 2010; Bureay and Fendt, 2011; Frith and McElwee, 2007; Dees, 1998; Schumpeter, 1934). Williams (2011) finds that innovation is one of the most important distinguishing factors of entrepreneurship, describing it as a creative process of doing, rather than owning.  This correlates with the suggestion that informal entrepreneurs may initially prioritise being paid to address needs, over registering as a business and pursuing profit (Morris and Pitt, 1995).

Conversely, key author Schumpeter (1934), who defines innovation as the ability to drive a creative-destructive process, also argues that it is an integral characteristic. However, he argues that this is because it enables entrepreneurs to use their abilities to deliver new and improved economic outcomes.

This finding can be challenged by the interview responses, which illustrate innovation as the product of a need or desire to gain personal benefit in alternative ways that are not necessarily financial. For Participant 1 (P1 hereafter), this simply meant finding “ways of cutting costs” while P4, P6 and P7, found that they needed to create products and services which cater to their needs. For P6, this need was to find a solution to his frustration with a product that he owned, to better protect its longevity. For P4 however, his need was to find a solution to his racial frustrations. P4 felt that his career aspirations were inhibited because:

In acting I was always getting the same role, same thing. I wanted to branch out and show what I could do as an actor for my development. So I felt I needed to create a good opportunity…Just knowing that I have a network, how can I put this together to create a way that we can come together collaboratively to create solutions to a problem. Because we can scream and shout to the institutions but they don’t care. It’s all about the people power and what we can do.

P4’s creation of a social networking platform in response to his frustrations, demonstrates a mindset which enables one to use the resources available to them, i.e. social capital, to find opportunities to respond to challenges (Stevenson, 1983; Drucker, 2007). Social capital, although highlighted in literature in Chapter 2, is not apparent in Williams’ (2011) list because it focuses on formal entrepreneurship. His previous research on informal entrepreneurship however, finds that the informal economy is comprised of friends, neighbours and acquaintances who engage in paid favours, not for financial gain, but to help one another (Williams, 2011:2). This is another finding which links to the suggestion that purpose trumps profit for informal entrepreneurs (Blackburn and Ram, 2006; Morris and Pitt, 1995).

P4 finds purpose in developing people power, which indicates the potential to develop a creative-destructive process. This can also be linked to Schumpeter’s (1934) definition of entrepreneurship. Conversely, P4 indicates that his motives and desired outcomes are for social development, as opposed to economic growth. Regardless of the intentions and outcomes of innovation however, it is a skill which would inherently involve risk-taking and a willingness to live with uncertainty, since processes and/or outcomes would be delivered in a new way. The ability to manage risk and uncertainty is shown in the interviews to stem from confidence in oneself, which is developed through confidence in ones venture. These capabilities, namely risk tolerance and self-confidence, are explored further in the next section.

 

4.2.2. Risk Tolerance and Self-Confidence

Williams (2011) finds that the ability to manage uncertainty, particularly with regards to income, is not a common characteristic amongst the general, risk averse population, but it is an ability which is associated with entrepreneurs. The interview respondents show familiarity with risk and uncertainty in a variety of contexts. It is apparent that daily routines have been developed, with respondents “setting a list of targets and achieving those targets” to ensure the achievement of “wins every day”. However, some experience uncertainty in their routines, which test their confidence. The uncertainty highlighted by P5, relates to supply and demand. He gives the following example:

There was a period, I would say of like a month, where I would say I didn’t make any money. But that’s because that stock had changed, I couldn’t get certain things and I had to change what I wanted to get. To be honest, it was a good thing because I ended up making more money, [but] there was a gap within that time.

As the literature indicates, necessity is the mother of invention (Blackburn and Ram, 2006; Miller and Miller, 2017). P5 could have waited for his usual stock to become available again, but he took the initiative to source new stock, which generated customer demand. He took the risk of making an investment which could have resulted in him losing money during a period when he was already uncertain about when he would next receive income. Indeed, the risk of investment resonates amongst most of the participants, bar P1, who admits that she has “no concerns because I am not using my own income”, and as such, feels comfortable taking risks with sourcing products which are not necessarily those requested by her clients. This case is interesting because P1 is the only respondent who does not invest her own money into her venture. Her business partner provides the funds, while she administers them. This delegation of responsibility may influence her to take the initiative to source cheaper products to those which are ordered. The risk she takes in doing so is usually measured; either she finds discounted products or researches alternative brands to ensure that they are in likeness to those originally ordered. The outcomes from this procedure have generally been positive, which could be the cause of her growth in confidence in taking the financial risk of potentially procuring unsuitable products. However, she has experienced loss from taking this risk on occasion. She explains that “maybe I was getting complacent…So because I knew that I had not sent the brand that I said I would, I offered to use my money to buy and send the right brand”. By taking accountability in this situation, P1 indicates that, similarly to the other respondents, she perceives her actions as a gamble, for which she is prepared to lose personal finances, should she experience undesired outcomes.

P3, P4 and P6 also liken their investments to “a gamble” (P3), explaining that “you pay for everything” (P6) with “personal money” (P3, P4 and P6) and while they experience “anxiety” (P3, P4 and P6) regarding a “return on investment” (P4), they embrace the risk because “you have to invest in yourself whether it be time, money or dedication, you have to invest in yourself” (P6). This mentality is echoed by P7, whose “biggest risk was quitting my job and just going for it. It paid well but you just have to sometimes take a leap and follow what you believe in.”  The literature argues that the development of risk tolerance stems from a desire to address local needs (Blackburn and Ram, 2006; Miller and Miller, 2017). However, the responses from the interviews suggest that the ability to live with uncertainty may not always be motivated by others. Risk tolerance could also be motivated by confidence of self and in the work that one is doing. Williams (2011) finds that it is self-confidence in ones judgement and their venture, which enables them to take opportunities and innovate. P1 expressed pride in her venture, explaining that “I do talk about it because I find it interesting and it somehow gives me more, it excites me more than my normal job…I think I am successful especially, I repeat this, as I am not trained”. This is a feeling that may arise because, as explained by P4, “It feels really good because you’ve proved to yourself you can do it and you’ve proved to yourself you have diversity which is key to running a business, and learning how to manage diversity.” This sense of fulfilment from ones work resonated throughout the interviews, with P3 expressing that “it’s something that I tell everyone about because I’m not hiding it… It helps with self-confidence for yourself. It helps with everything about yourself to appreciate yourself and feel good about yourself because you’re doing something”.

The participants insinuate that they identify personally with their work, developing personal confidence through the success of their ventures. This contradicts many titles that have been embedded  in the informal economy, including “shadow” and “hidden” economy (Williams and Nadin, 2010:363), which are associated with the illustration of transactions that take place under the radar, undeclared for tax and/or benefit purposes Williams and Nadin, 2011; Williams et al, 2009; Evans et al., 2006Katungi et al., 2006Williams and Windebank, 1998Thomas, 1992). None of the participants demonstrate concealment of their activities, possibly because they have a clear vision of what they want to achieve, which they readily express to influence both customers and employees (Williams, 2011). Indeed, when made aware of the “informal economy” definition in post-interview discussions, all participants vehemently disagreed with it and described a vision of what they felt they needed to achieve in order to register as businesses. Williams (2011), finds that the possession of a vision is what motivates entrepreneurs. This is explored in the next section, along with the sense of opportunism that is demonstrated by the interviewees.

 

4.2.3. Vision and Opportunism

Although all of the respondents show confidence in their ventures, they present a clear-cut vision of what their ventures must look like before registering as businesses.  A common theme in the reasons for not registering is the infancy of the ventures and the instability of income. These issues are perceived as steps to be achieved before business registration, as opposed to reasons for avoiding registration altogether. P1 argues that:

A business has to have a business plan. It includes you financing it, and you borrowing money for it and you getting business advice and I have not done any of these things. It’s not a planned thing, I have not borrowed money for it and I haven’t been advised about it. So it is a venture like you going on holiday or you selling things in a car boot sale

This corroborates P7’s view that:

There are loads of other factors that contribute to it. Like I had to leave work then go back to work because you need money to invest in things. If funding is not gonna[sic] do it for you, then you have to fund yourself. If I had that money I’d be able to push it miles ahead but I’m not rich so I can’t do that. If I’m not getting the money. I’m not gonna pay to register. It doesn’t necessarily mean we’re doing anything dodgy, we’re just not yet in a position where it makes sense to register. But when we are, then that’s no problem.

The interview participants did identify as entrepreneurs because they felt that the concept did not necessitate a registered business. Their perceptions of what it means to be an entrepreneur were summarised by P4 in the following way:

It’s not a thing it’s not a criterion, it’s a mentality. You’ve either got it or you don’t. You either lead or you don’t. To be an entrepreneur is to be a problem solver, that’s all it is, there’s no darkness to it. If you’re saying someone’s a dark entrepreneur, so that person is solving a problem which is going on so yea [sic], you could say this entrepreneur is doing something in a dark area, that’s the whole reason they created the dark web, because there are lots of people who want to buy guns and drugs and what-not so someone came along and created that solution. So entrepreneurship is someone having that mentality to go and do that. Therefore, I would never say there is a split between entrepreneurship, it’s all one thing, it just depends what avenue you decide to go into, it doesn’t make you bad for doing it, you’re just solving a problem…So entrepreneurship is a mindset as opposed to this thing of what a person is or what the person does.

Interestingly, this argument reflects the theory that entrepreneurship is a mindset which allows entrepreneurs to capitalise on the resources available to them, without adoption of a moral stance or ethical choice (Stevenson, 1983; Atherton, 2004).  Collectively with the previous interview responses, it suggests that opportunity-driven entrepreneurship exists in the informal economy, which is an outcome that supports the recommendation of a more inclusive definition of entrepreneurship.

 

4.2.4. Summary

The findings in this chapter have been identified by fulfilling the objectives, which included completing a critical review of the literature and using data from the semi-structured interviews to develop an insight into the lived practices of informal economy participants. By developing codes from the information gathered in the interviews, the behaviours and motivations expressed by the participants was compared to those features selected in Williams’ (2011) list of entrepreneurial features. As suggested above, the findings correlate with the theory that the informal economy befits the opportunity-driven dialogue of entrepreneurship, which evidences the literature that calls for a more inclusive definition of the concept. As demonstrated under the sub-headings of this chapter, the informal economy participants share the ability to take opportunities and foster them in innovative ways to achieve a vision, for which they are willing to take risks, even with personal investments such as time and finances. They possess the ability and desire to create useful social networks, which may contribute to the successes of their ventures. Coming full circle, experiencing success in their ventures reflects personal success for the informal entrepreneurs, which develops the self-confidence that drives the ongoing pursuit of their visions. This process reflects Williams’ (2011) list of entrepreneurial features, which demonstrates its likeness to the informal economy. This relationship is further explored in the following chapter which presents a challenge to the descriptions of entrepreneurship and the informal economy.

 

5. Discussion

  • Introduction

Entrepreneurs are typically portrayed as superheroes in literature (Williams, 2014; Williams,2011; Gurtoo and Williams, 2009; Burns, 2001; Cannon, 1991), contrary to the depiction of necessity-driven informal economy participants who trade to survive (Miller and Miller, 2017; Williams, 2014; Williams and Huggins, 2013; Williams, 2011; Morris and Pitt, 1995). Nonetheless, the rise of qualitative entrepreneurship research (Williams and Martinez, 2014; Smith, 2007) has offered literature regarding an entrepreneurial culture, which exists in disadvantaged neighbourhoods and makes significant contributions to economic growth (Bureau and Fendt, 2011; Gurtoo and Williams, 2009). Such findings have contributed to the development of the theory that entrepreneurship is comprised of a mindset and behaviours which can be manifest anywhere (Dees, 1998). Guided by this theory, this research aims to explore the lived practices of informal economy participants, to develop an understanding of the sectors likeness to entrepreneurship, in order to support recommendations for a more inclusive definition of entrepreneurship.

Directed by the literature, the semi-structured interviews for this research sample black people who are living in disadvantaged neighbourhoods and operating in the informal economy, either part-time or full-time, or have used it as a stepping stone into the formal economy. Through conceptual and thematic coding of the interviews, this research has been able to develop a discussion that addresses the research questions which were developed from the objectives. The following sections address each question with a discussion regarding the responses, in comparison to the literature, including Williams’ (2011) list of entrepreneurial features.

 

  • What is the relationship between the informal economy and entrepreneurship?

Williams (2011) finds that the informal economies of the western world are yet to be accurately defined in literature, so he makes recommendations for greater understanding to be developed regarding the relationship between this sector and entrepreneurship. Following guidance from his list of entrepreneurial features (Williams, 2011), this study has produced data which indicates that those operating in the informal economy may possess the features associated with formal entrepreneurs, but in ways that challenge the assumptions made in the literature. For example, the interview respondents imply that the ability to live with uncertainty may not always be motivated by a desire to meet the needs of others. Risk tolerance could also be motivated by confidence of self and in the work that one is doing. For the respondents, confidence increases when they experience resilience in the face of challenges and “prove to yourself that you have diversity, which is key to running a business, and learning how to manage adversity” (P4). This in turn, fuels the unanimous pursuit of independence and achievement.

The analysis of coded interview responses led to the decoding of results into the two categories, pursuit of independence and pursuit of achievement, with behaviours and feelings being found to stem from these motivations. The research participants seem to be in agreement that they “don’t want to work for someone else at all” (P8) because they seek the fulfilment of having “something that’s yours” (P8). For P6, this desire equates to freedom. He explains that:

I always want to do what I want and to be able to do what I want, I’m gonna [sic] need to be able to be in charge of my time… If I’m working full time five days a week, I’ll be earning money which is nice, don’t get me wrong, but I won’t be free. So if I’m genuinely going to be free, I’m going to need to be in charge of as much of my time as possible. You can always get money but you can’t get back time.

The prioritisation of freedom over money supports the literature which insinuates that informal economy participants may desire purpose over profit (Williams, 2011; Blackburn and Ram, 2006; Morris and Pitt, 1995).  However, the interviewees imply that in order to achieve independent livelihoods by addressing local needs (Sauvy, 1984; Morris and Pitt, 1995; Blackburn and Ram, 2006), they will require some financial success. P5 describes his ultimate goal as:

Financial freedom. All my goals are financial [but] there’s not a figure… Basically, I can do what I want with the money. That’s all my aim is.

The desire to be in control, be it in control of time or of expenditure etc., is reflected in the ways that the interviewees conduct their work. Many display proactivity in decision-making and in learning about their chosen industry in order to develop expertise. This includes a lot of “self-directed learning” (P7) using various methods. For example, P1’s routine involves:

[listening] to programmes on Radio 4, or on telly [sic], or there is a program called Money Expert. These people who have done economics, or who know things about importing and exporting, give ideas and ways of how to run a business or how to lower your costs, how to source the same product at a cheaper price, so through this and through surfing the net [sic], I am able to get info[sic] on how to lower costs

P6, describes such self-directed learning as an investment in oneself. He explains that “I spent quite a lot of money even on research. Because if you’re going to do something, you’re going to want to know it thoroughly and in depth, otherwise what’s the point.” The respondents indicate that through self-directed learning, the ability to take measured risks develops as research is executed before making well-informed decisions.  This self-directed learning challenges the theory that informal entrepreneurs do not necessarily possess the ability to trade, but they do so out of necessity (Williams and Huggins, 2013). Instead, the interview responses suggest that the ability to trade is acquired through the attainment of the appropriate knowledge and skills, which is fueled by an aspiration to achieve. This pursuit of achievement has been a common theme throughout the interviews, indicating that it is a root cause of the development of entrepreneurial characteristics. Achievement is typically goal-oriented, as opposed to financial (P1, P3, P4, P7 and P8), although all of the participants acknowledge that finances are a signal of achievement, as explained by P7:

Success isn’t all about money, but I think money has a huge part to play on success. To me it’s the end result, saying yes, you did this. I think I have been successful in starting the business and pushing it forward. I think the real success comes when you get a constant stream of income from it and then you can say it is a lucrative business and is standing on its own feet.

This mindset links back to vision, as P7 has illustrated what her venture will look like when it is successful, so she has a goal to work towards. For P3, having something to work towards is a reward in itself, because “when you’re building towards something you feel good in yourself when you reach your small achievements.” This may be the driver for self-motivation, which is displayed consistently in each of the interviews. Stevenson (1983) and Drucker (2007) define the entrepreneurial mindset as one which finds ways to capitalise on the resources available, rather than being deterred by a lack thereof. This characteristic would inherently require self-motivation to make one capable of resilience when faced with limited resources. As demonstrated in the interviews, the most challenging resource to capitalise on has often been time. P6 describes an experience when:

I would [collect feedback] after finishing work. I’d be on my feet 8-9 hours and I would be knackered and exhausted, thinking let me just get it done another day. Then I’d think no, let me just get it done… I’d say to myself, you’re not leaving here until you get at least 20 [responses].

The commitment to completing smaller tasks which build towards the bigger vision, does not necessarily come easily to the respondents. However, they seem to be motivated by a desire to capitalise on their time, even when it requires working seven days a week to “balance the challenge of working full time and managing a venture” (P8). Indeed, Williams (2011) highlights time as an entrepreneurs most precious commodity, which the respondents seem to preserve using vision, dedication and self-motivation, which are driven by the desire to achieve.

To address the question regarding the relationship between the informal economy and entrepreneurship, the findings indicate that, while informal entrepreneurs may mirror formal entrepreneurs, they are not representative of the description of formal entrepreneurship. The interview respondents portray themselves as entrepreneurs not because they are extraordinary, but because they possess the mindset to address needs and get paid for doing so. These findings collectively indicate that, similarly to the superhero ideal, the necessity-driven informal entrepreneur narrative may also be outdated and in need of a definition which links an entrepreneurial mindset (Stevenson, 1983; Drucker, 2007) to Williams’ (2011) list of entrepreneurial features. This suggestion is explored further in the next section.

 

  • Are informal entrepreneurs necessity-driven and are formal entrepreneurs superheroes?

The rise in qualitative entrepreneurship research influenced the theory that a richer, darker form of entrepreneurship exists amongst survivors of the informal economy (Williams and Martinez, 2014; Williams and Huggins, 2013; Williams, 2011; Smith, 2007; Morris and Pitt, 1995). Those who live and trade in disadvantaged neighbourhoods are not portrayed specifically as entrepreneurs (Williams and Huggins, 2013), but as individuals who develop the necessary qualities, including risk tolerance, social skills, and creativity, when addressing local needs (Miller and Miller, 2017:7). In contrast, formal entrepreneurs are revolutionary change-agents who exploit any opportunities available to them to create economic outcomes (Atherton, 2004; Dees, 1998).

What is interesting about the two descriptions is that one is laden with negative connotations, while the other illustrates a utopian being. The implication is that both definitions lack a balance between the ideal and the reality. For example, the superhero ideal leaves very little room for the establishment of undesirable outcomes. This is dissimilar from the findings of the research, which suggest that entrepreneurs experience adverse emotions throughout their practices. Indeed, an unanticipated finding was that multiple references are made to negative feelings, which suggests that an emotional element could be factored into entrepreneurship research. For P3, contingencies which he doesn’t plan for make him feel like “those are the saddest days. I feel down. I feel like why me”. Interestingly, this is a feeling which he says stays with him, even after the issue is resolved. Nonetheless, all the participants do resolve their challenges. They display resilience by expressing that they have no choice but to resolve any issues which may arrive; they see it not only as an imperative, but as a “lesson learned”, which is a phrase that came up often throughout the interviews. The perception of setbacks as opportunities for learning, links back to self-motivation in the pursuit of achievement and this exhibition of resilience is likely to be the medium through which negative emotions, such as being “scared”, “worried”, “anxious” and “increasingly stressed” (P1 and P6) are managed. Such emotions typically arise in experiences of setbacks, including loss of investments and being failed by social networks. For P2 and P4, developing trust in social networks has proved to be challenging. P4 explains that:

My hardest thing is still having to rely on people. If I could do everything I would. But you have to rely on people and one of my biggest problems is having to rely on people and them saying they’ll do something and then not being able to do it on time really irks me. So I have to work on my patience as well as curbing my enthusiasm and my expectations.

This is interesting because entrepreneurship carries with it the prospective need to employ others if the business develops (Williams, 2011). Having reached this hurdle, P2 has found that:

Small businesses require an entrepreneurial mindset from managers and employees…Not everyone has that spirit…To work in these environments, you have to have a certain mindset. If not, they should work for Argos, Sainsburys or Tesco, where they have guaranteed customers.

This response is interesting because it highlights an entrepreneurial “mindset” again, but as a characteristic that entrepreneurs and employees must both possess to achieve business success. In his response he mentions integrity, pro-activity and an internal locus of control as features that he looks for in others in order to “entrust them with your business”, which he has admittedly struggled to do. This indicates that social capital necessitates a foundation of trust in order for it to be beneficial to entrepreneurs. Otherwise, social networks could be perceived as burdensome by entrepreneurs, which is a finding that was also unexpected.

Conversely, the interview responses demonstrate a virtuous relationship between opportunism and social capital. For P1, it was through a social network that the opportunity to start her venture arose. She provided a solution to her friends “problem of sourcing products, because most suppliers…did not want to supply to small clinics” and from this she created further opportunities for herself to benefit financially, by building relationships with suppliers. She explained that “because I have now built a rapport with them, they usually give me their own employee discounts, which also is very beneficial to me, because I don’t pass this saving on to my contact”. Although there is some deviance implied in this opportunity, it adheres to the finding that social capital can be developed through repeated transactions (Williams et al, 2017). By developing social capital, P1 was able to take an opportunity to create economic outcomes for herself (Putnam, 2000). Nonetheless, P1 describes her venture as one that is founded on “loyalty and trust”, which are portrayed as the features which embed social capital into the informal economy (Williams et al, 2017).

To address the question of whether informal entrepreneurs are necessity-driven and formal entrepreneurs are superheroes, reference can be made to the unexpected findings from this research. The abundance of routines, self-discipline and references to negative emotions, suggest that informal economy participants are driven by passion for their work, rather than necessity. It is also apparent that formal entrepreneurs may be mere humans, who are subjected to a description which overlooks the struggles and setbacks that they regularly overcome to achieve their desired outcomes.

 

5.4. Summary

The discussion in this chapter has highlighted a link between the interview responses and Williams’ (2011) list of entrepreneurial features. Unexpectedly, this link primarily seems to stem from an entrepreneurial mindset (Stevenson, 1983; Drucker, 2007) which enables the exploitation of available resources.  Another unanticipated outcome is the suggestion that the definition of informal economy is also outdated, as it should be more synonymous with said entrepreneurial mindset and Williams (2011) list of entrepreneurial features, although the assumptions assigned to these features can be challenged.

The size and hegemony of the sample group limit the findings. However, they make implications for future research into the suggestion that informal and formal entrepreneurship could be equal, if not the same. By taking these findings into account, it is likely that a renaissance of entrepreneurship as we know it could indeed occur, subject to further in-depth research. This could result in the humanising of entrepreneurs, while accentuating their invaluable mindsets.

The next chapter concludes the research and addresses the research objectives, before identifying the limitations of this study and making recommendations for future research.

 

6. Conclusion

  • Introduction

The first aim of this research has been to contribute to the theory that informal entrepreneurs may be driven by opportunities (Blackburn and Ram, 2006), contrary to literature which restricts them to necessity-driven entrepreneurship (Miller and Miller, 2017; Williams, 2014). This aim has been achieved by interviewing BME informal economy participants from disadvantaged areas across London, and comparing their responses to Williams’ (2011) list of entrepreneurial features. This list was chosen because it enlists select behaviours and motivations which have been identified in key entrepreneurship literature and it makes no reference to the resources available to an entrepreneur, or lack thereof. The comparison between this list and the interview responses found that informal entrepreneurs demonstrate all of the characteristics of an entrepreneur. In addition, the interview responses indicate that the pursuit of independence and achievement may be the foundation from which entrepreneurial characteristics are developed. This suggests that entrepreneurship may be a mindset (Stevenson, 1983), rather than a type of person. This is a finding that has contributed to the achievement of the second aim of this research, which is to support literature which calls for a more inclusive definition of entrepreneurship (Williams, 2009). The findings indicate that an opportunistic mindset binds informal and formal entrepreneurs. In addition, there is a suggestion that regular battles with negative emotions, which were unexpectedly discovered in this research, are overcome with the use of this mindset, along with the pursuit of achievement and freedom. These are factors which point to a potential renaissance of entrepreneurship as we know it, which could occur if further research is carried out, focussing on BME informal economy participants, as they are most commonly associated with the sector (Blackburn and Ram, 2006).

This research is of importance because entrepreneurship still lacks a conclusive definition. By developing greater understanding of the versatility within the concept through empirical research, a realistic definition may ultimately be agreed upon, which could reform the superhero ideal (Williams, 2014; Williams,2011; Gurtoo and Williams, 2009; Burns, 2001; Cannon, 1991). The knock-on effect of this could be that the informal economy may also experience a reform of definition, with emphasis being placed on the entrepreneurial culture that exists within this sector. As this is yet to happen, this research addresses these gaps in research by asking: 1.What is the relationship between the informal economy and entrepreneurship? 2. Is it appropriate to segregate ‘formal’ and ‘informal’ entrepreneurship? 3. Is informal entrepreneurship solely a necessity-driven means of survival? 4. Is the superhero narrative of entrepreneurship still a suitable description of entrepreneurship, or is it in need of a more inclusive definition?

This chapter continues with a statement of findings and their theoretical implications in response to each of the research questions. This leads to recommendations for future research, not withholding acknowledgement of the limitations of this study.

 

  • Findings and Implications

To address the research questions, the study was guided by the research objectives, which initiated the critical literature review. Entrepreneurship and informal economy literature were studied beyond the point of saturation to ensure that the sources produced consistent findings, which guided the questions produced in the chapter. By defining the term “informal economy”, identifying the participants who are associated with the sector and outlining the relationship with entrepreneurship; the literature review presented the sample group and the descriptions of entrepreneurship and informal economy which were used in the research.

The geographical element in informal economy literature, along with the highly proportioned reference to BME participants, steered the decision to adopt purposive sampling in the methodology, while the perceived sensitivity of operating a venture in a “hidden” economy also necessitated the anonymisation of data.

The discovery of Williams (2011) list of entrepreneurial features offered a list of entrepreneurial characteristics against which the behaviours and motivations of the interview respondents could be explored. This list was used as the foundation from which the interview questions were developed, using a critical incident interviewing technique to encourage an open and honest narrative from the respondents, from which their lived experiences could be explored and compared to entrepreneurship.

The findings from the research achieve the aims of indicating the likeness between informal and formal entrepreneurship, which in turn indicates that the superhero ideal used to define entrepreneurship does not befit its reality. However, there are a number of unanticipated research findings, which indicate a need for further qualitative research into both formal and informal entrepreneurship, to develop a deeper understanding of the lived practices of entrepreneurs.

In response to Question 1 (Q1), it was discovered that informal entrepreneurs may possess the characteristics of a formal entrepreneur, according to Williams (2011) list of entrepreneurial features. In particular, two common themes resound throughout the responses, namely the pursuit of independence and achievement, which are features that Williams (2011) finds to be most commonly associated with entrepreneurs. The indication is that the pursuit of independence and achievement bind informal and formal entrepreneurs, as the foundation from which entrepreneurial characteristics develop. Interestingly, these findings were expected to develop the response to Q2 that no, informal entrepreneurs should not be distinguished from the definition of formal entrepreneurship. However, the responses indicate that informal entrepreneurs do not represent the description of formal entrepreneurship. For example, the entrepreneurs portray risk tolerance, which is found to stem from a desire to address local needs in literature (Blackburn and Ram, 2006; Miller and Miller, 2017). The interview responses challenge this assumption by indicating that it is their pursuit of independence and achievement which develop self-confidence to take risks. The respondents challenge both informal and formal entrepreneurship literature, portraying themselves as entrepreneurs not because they are extraordinary, but because they possess the mindset to address needs and get paid for doing so. These findings collectively address Q3, indicating that, similarly to the superhero ideal, the necessity-driven informal entrepreneur narrative may also require a definition which links an entrepreneurial mindset (Stevenson, 1983; Drucker, 2007) to Williams’ (2011) list of entrepreneurial features. Interestingly, multiple references are made to negative feelings, which suggests an implication for theory to fill a gap in the understanding of the emotional element of entrepreneurship. Using such findings to address Q4, it is indicated that the superhero ideal disallows the exploration of the ways in which entrepreneurs use their opportunistic mindsets and pursuit of independence and achievement, to manage negative emotions and exhibit resilience when faced with challenges.

 

  • Recommendations

Along with the use of purposive sampling, the application of a qualitative research approach prohibits the generalisation of the results from this research. However, it achieved the purpose of providing in depth data regarding BME informal entrepreneurs. Because of the time restrictions applied to this research, it was not possible to produce a large sample size, so this limitation was addressed by securing three respondents from the three informal entrepreneur categories. Due to availability issues, one respondent was not able to partake in the research, which further reduced the sample size. However, there was generally consistency in the interview results, which strengthened the findings. Due to the limitations of wordcount, not all of these findings were explored in the research. However, the findings which were highlighted were able to contribute to fulfilling the aims and making indications for further research.

This research recommends that the pursuit of independence and achievement be used as the starting point for future research of both formal and informal entrepreneurship. This can be used as the lens through which the exploration of an entrepreneurial mindset can be explored to build an understanding of the ways in which entrepreneurial behaviours and motivations are developed. A mixed methods research approach is also recommended, to achieve some reliability and validity in the findings from research which seeks to gain an insight into the potential complexity of the lived experiences of entrepreneurs. This may be used to highlight any negative experiences faced by entrepreneurs and the ways in which they may use an entrepreneurial mindset to manage such situations. If such findings are discovered, indications could be made to the likeness of formal and informal entrepreneurship, the latter of which should also be subjected to further research to clarify whether the definition of the informal economy is in need of an entrepreneurship element.

The findings from this research indicate that the understanding of entrepreneurship as a utopian ideal is in need of a renaissance to achieve a more realistic definition, which highlights the complexity of entrepreneurship. By seeking to redefine entrepreneurship, the result could be that a more inclusive paradigm may be achieved, which could have the knock-on effect of acknowledging the invaluable mindset that exists amongst formal and informal economies alike. There is infinite power in a label, so by relabelling ‘formal’ and ‘informal’ entrepreneurs, there is great potential to discover new approaches to social and economic development by strengthening the relationship between the bond between the informal economy and entrepreneurship, allowing for shared learning and successes for wider society.

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