Informal Legacy and Exporting Among Sub-Saharan African Firms
Peer reviewed, Journal article
Submitted version
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Åpne
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https://hdl.handle.net/11250/3092108Utgivelsesdato
2022Metadata
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- Scientific articles [2189]
Originalversjon
https://doi.org/10.1287/orsc.2022.1623Sammendrag
Around the world and especially in areas of widespread poverty, firms start their operations
without registering with relevant authorities (i.e., in the informal economy). We explore whether firms
that initiated their operations in the informal economy but later register have a higher propensity to
export than firms that register at the time of their foundation. We reason that the experience of having
operated informally provides formally registered firms with the advantage of low-cost and flexible
exploration but also a domestic legitimacy liability. We suggest that these factors likely contribute to
making foreign export markets more attractive after registration. Based on a comprehensive sample of
Sub-Saharan African firms, we find that conditional on registration, firms with an informal legacy have
a higher propensity to initiate exporting than firms that started their operations formally. We contribute
with theoretical and policy-oriented insights on the dynamics of informality and exporting.