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Understanding how legitimacy is acquired among informal home-based Pakistani small businesses

  • Monica LentEmail author
  • Alistair Anderson
  • Mohammad Sohail Yunis
  • Hina Hashim
Article
  • 164 Downloads

Abstract

The informal business sector has been garnering attention from governments and researchers. In countries where this sector plays a significant role in business activity and employment, policymakers are eager to have entrepreneurs enter or transition to the formal economy. However, with research in its infancy, there is little basis for developing effective policy. In Pakistan, there is a preponderance of informal enterprises, many of which are home-based and invisible. A key challenge for entrepreneurs in this context is gaining stakeholder legitimacy to acquire the resources they need. With the aim of ascertaining and better understanding legitimacy, this qualitative study draws upon the two dominant theoretical perspectives -institutional and strategic - to conceptually guide an exploration of the legitimation process among a cohort of Pakistani informal home-based businesses. Using the institutional lens, the primary influences on action were found to be coercive and mimetic isomorphic mechanisms. For example, the entrepreneurs stressed how essential it was to their customers that societal norms be adhered to when doing business (coercive mechanism). A surprising discovery was that the entrepreneurs deemed action countering prevailing business practice to be the best response to uncertainty (coined anti-mimetic isomorphism). Using the strategic lens, two main strategies were identified – following cultural norms such as those regarding appropriate behavior for women (conforming); and attempting to create new audiences and legitimating beliefs through business activities that advanced women’s rights (manipulating). The interactive influence of pressures from the environment and entrepreneurial action is considered, along with implications for theory and policy.

Keywords

Legitimacy Informal home-based businesses Institutional and strategic perspectives Isomorphism 

Notes

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Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.Schwartz School of BusinessSt. Francis Xavier UniversityAntigonishCanada
  2. 2.Lancaster University Management SchoolLancasterUK
  3. 3.Institute of Management Sciences (IMSciences)PeshawarPakistan
  4. 4.Department of EconomicsSwedish University of Agricultural SciencesUppsalaSweden

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