EVALUATING THE IMPACTS OF STARTING-UP UNREGISTERED ON FIRM PERFORMANCE IN AFRICA
Vol. Volume 22, Number 3 September/2017
Colin C. Williams & Abbi M. Kedir
The aim of this paper is to contribute to an understanding of the entrepreneurship process in Africa by evaluating the link between starting-up unregistered and future firm performance. The widespread assumption has been that firms starting-up unregistered in the informal economy suffer from poor performance than those starting-up registered and in the formal economy. To test this poorer performance thesis, World Bank Enterprise Survey (WBES) data is evaluated from across 41 African countries covering the period from 2006 to 2013. Controlling for a comprehensive set of other determinants of firm performance, the finding is that formal enterprises with five or more employees that started-up unregistered have significantly higher annual sales, employment and productivity growth rates compared with those firms that registered their operations at start-up. The paper concludes by discussing the theoretical and policy implications of this finding.
nformal economy; entrepreneurship; liabilities of newness; venture creation; Africa.