Why do Firms Operate Informally? Insights from a Systematic Literature Review

This paper investigates factors that motivate entrepreneurs to completely operate within informality and the drivers of formal companies to underreport revenues. In particular, this work identifies and organizes the determinants of firm informality through a systematic literature review in Scopus a...

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Autores principales:	Florencia Verónica Pedroni, Gabriela Pesce, Anahí Briozzo
Formato:	article
Lenguaje:	EN ES FR PT
Publicado:	Universidad Nacional de Colombia 2021
Materias:	Firm informality corporate tax evasion tax compliance underreporting revenues institutional theory Social Sciences H Commerce HF1-6182 Business HF5001-6182
Acceso en línea:	https://doaj.org/article/7f985c5a3b9c410cba677b97faa68d9a
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spelling	oai:doaj.org-article:7f985c5a3b9c410cba677b97faa68d9a2021-12-03T23:35:26ZWhy do Firms Operate Informally? Insights from a Systematic Literature Review10.15446/innovar.v32n83.994510121-50512248-6968https://doaj.org/article/7f985c5a3b9c410cba677b97faa68d9a2021-11-01T00:00:00Zhttps://revistas.unal.edu.co/index.php/innovar/article/view/99451https://doaj.org/toc/0121-5051https://doaj.org/toc/2248-6968 This paper investigates factors that motivate entrepreneurs to completely operate within informality and the drivers of formal companies to underreport revenues. In particular, this work identifies and organizes the determinants of firm informality through a systematic literature review in Scopus and Web of Science databases. The article presents several contributions. First, it examines the two main frameworks of informality (structuralist/exclusion and legalistic/exit dimensions) and links this with the different roles of unregistered firms in economic development (survival, De Soto, and parasite views). It also studies the theoretical basis of informality, including economic, institutional, psychological, and sociological aspects. Second, the paper summarizes business informality determinants based on studies with different methodological approaches (macro, microeconomic), contexts (developed, emerging, transition economies), and periods (1983-2018). Our results show that firm informality is mostly addressed in the examined literature as a decision or voluntary choice by companies and entrepreneurs (legalistic vision). Third, the article proposes an integral theoretical model, according to which the firm informality level is determined by structural elements (company and entrepreneur’s characteristics) and environmental factors (corruption, bureaucracy, taxes, etc.). The analysis is relevant for researchers studying this subject and for policymakers as well. Florencia Verónica Pedroni Gabriela PesceAnahí BriozzoUniversidad Nacional de ColombiaarticleFirm informalitycorporate tax evasiontax complianceunderreporting revenuesinstitutional theorySocial SciencesHCommerceHF1-6182BusinessHF5001-6182ENESFRPTInnovar: Revista de Ciencias Administrativas y Sociales, Vol 32, Iss 83 (2021)
institution	DOAJ
collection	DOAJ
language	EN ES FR PT
topic	Firm informality corporate tax evasion tax compliance underreporting revenues institutional theory Social Sciences H Commerce HF1-6182 Business HF5001-6182
spellingShingle	Firm informality corporate tax evasion tax compliance underreporting revenues institutional theory Social Sciences H Commerce HF1-6182 Business HF5001-6182 Florencia Verónica Pedroni Gabriela Pesce Anahí Briozzo Why do Firms Operate Informally? Insights from a Systematic Literature Review
description	This paper investigates factors that motivate entrepreneurs to completely operate within informality and the drivers of formal companies to underreport revenues. In particular, this work identifies and organizes the determinants of firm informality through a systematic literature review in Scopus and Web of Science databases. The article presents several contributions. First, it examines the two main frameworks of informality (structuralist/exclusion and legalistic/exit dimensions) and links this with the different roles of unregistered firms in economic development (survival, De Soto, and parasite views). It also studies the theoretical basis of informality, including economic, institutional, psychological, and sociological aspects. Second, the paper summarizes business informality determinants based on studies with different methodological approaches (macro, microeconomic), contexts (developed, emerging, transition economies), and periods (1983-2018). Our results show that firm informality is mostly addressed in the examined literature as a decision or voluntary choice by companies and entrepreneurs (legalistic vision). Third, the article proposes an integral theoretical model, according to which the firm informality level is determined by structural elements (company and entrepreneur’s characteristics) and environmental factors (corruption, bureaucracy, taxes, etc.). The analysis is relevant for researchers studying this subject and for policymakers as well.
format	article
author	Florencia Verónica Pedroni Gabriela Pesce Anahí Briozzo
author_facet	Florencia Verónica Pedroni Gabriela Pesce Anahí Briozzo
author_sort	Florencia Verónica Pedroni
title	Why do Firms Operate Informally? Insights from a Systematic Literature Review
title_short	Why do Firms Operate Informally? Insights from a Systematic Literature Review
title_full	Why do Firms Operate Informally? Insights from a Systematic Literature Review
title_fullStr	Why do Firms Operate Informally? Insights from a Systematic Literature Review
title_full_unstemmed	Why do Firms Operate Informally? Insights from a Systematic Literature Review
title_sort	why do firms operate informally? insights from a systematic literature review
publisher	Universidad Nacional de Colombia
publishDate	2021
url	https://doaj.org/article/7f985c5a3b9c410cba677b97faa68d9a
work_keys_str_mv	AT florenciaveronicapedroni whydofirmsoperateinformallyinsightsfromasystematicliteraturereview AT gabrielapesce whydofirmsoperateinformallyinsightsfromasystematicliteraturereview AT anahibriozzo whydofirmsoperateinformallyinsightsfromasystematicliteraturereview
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Why do Firms Operate Informally? Insights from a Systematic Literature Review

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