Entrepreneurial identity and response strategies in the informal economy

Abstract

While entrepreneurs generally confront many challenges in running their businesses, those in the informal economy must do so in a state of constant environmental change outside the boundaries and support of formal institutions. We explore how the identity of such underdog entrepreneurs shapes their response strategies to situations of adversity that characterize the informal economy. Through an exploratory study of informal entrepreneurs in Ghana, we uncover four entrepreneurial identities (guardians, survival entrepreneurs, canvassers, and growth-oriented entrepreneurs) and discuss how these are closely related to three key response strategies (succumb, improvise, and push new boundaries). These findings show how resource scarcity and uncertainty shape underdog entrepreneurial behavior. We discuss the theoretical and practical implications of these findings.