Explaining Ethnic Minority Immigrant Women’s Motivation for Informal Entrepreneurship: An Institutional Incongruence Perspective

Abstract

The informal economy has been a popular subject of research across the wider globe. However, there exists a dearth of literature exploring informal entrepreneurship among ethnic minority immigrant women. Different theoretical frameworks have been employed to explain the competing rationales. This study draws from institutional theory and collective identity. The institutional perspective proposes that informal entrepreneurship arises out of institutional asymmetry. By adopting an intersectional gendered lens, this paper evaluates the formal and informal institutional forces which influence women entrepreneurs to engage in informal business ventures. To do so, it reports findings from 25 face-to-face interviews with Pakistani and Bangladeshi women and representatives of local employment support organisations in Newham borough of London. The findings highlight that majority of these women entrepreneurs are engaged in informal homebased businesses mainly because of an interplay of informal and formal institutional forces whereby the former play a dominant role. The resulting incongruence between the formal and informal institutional forces creates opportunities in the informal sector while the collective identity of immigrant women entrepreneurs helps them recognise and exploit these opportunities. The outcome is a call for a new policy approach based on an institutional approach.

This chapter is based on the author’s master thesis research at London School of Economics and Political Science, UK.

Appendices

Appendix I: Figures and Tables

Fig. A

Ethnic profile of Newham borough of London. Source: Newham.info 2017

Table A Main reasons for interviewees participation in the informal economy

Appendix II: Questionnaire

1.1 Questionnaire A: For Pakistani/Bangladeshi Women

To avoid ambiguity in defining informal work, the term was defined clearly for the interviewees.

Undeclared work is a relatively common and socially acceptable activity, and refers to activities which were not or not fully reported to the tax or social security authorities and where the person who acquired the good or service was aware of this. Apart from regular employment, have you yourself carried out any informal paid activities in the last 12 months? (Williams et al. 2015: 299).

Section 1 (Demographics)

• 1. What is your age?

• 2. Where in Newham do you reside?

• 3. If you don’t mind, could you please tell me your educational qualification?

• 4. Are you self-employed?

• 5. What is your country of origin?

• 6. Are you married? If yes, do you have children?

• 7. When and from where in your home country did you migrate from?

• 8. What was the primary reason for migrating to Britain?

• 9. Are you a British national?

• 10. What is your average weekly income from your current occupation?

• 11. Do you claim any sort of social security benefits?

Section 2 (General Questions About Their Work)

• 1. In your view, how many Pakistani/Bangladeshi women are involved in cash-in hand homebased businesses without declaring their income to tax and social security authorities?

• 2. Have you personally carried out work in similar settings without declaring your income to tax and social security authorities?

• 3. Can you please elaborate on the types of work you have been engaged in and which one of these holds the most importance in terms of the number of hours you spend doing it?

• 4. When did you start doing this work? Has this been a continuous engagement or more of a seasonal work?

Section 3 (Perception About the Formal Labour Market Opportunities)

• 1. Did you ever apply for formal jobs prior to initiating your informal homebased business?

• 2. Do you prefer working formally or informally?

• 3. Does your locality have enough opportunities to work formally?

• 4. Does your locality offer employment/enterprise support services through Jobcentre Plus, ‘Workplace’ and any other private support agencies?

• 5. Did you ever seek assistance from these support agencies?

• 6. If yes, were you satisfied with the kind of support offered?

• 7. What is your perception of the social security benefits and how fair is the tax system?

• 8. Are you aware about the procedures involved in formalising your homebased business?

• 9. What is the biggest impediment to formalising your business?

• 10. Have you made use of any childcare services? (This question was posed to the mothers in the sample.

• 11. If better opportunities arise in the formal sector, would you prefer working formally?

Section 4 Open-Ended Questions About Participation in Informal Employment

• 1. How did you start your informal business? Who was your primary source of information and influenced you to start this work?

• 2. Would you please explain the reasons for operating informally?

• 3. Amongst the reasons you just mentioned, which one of these would you consider as the most important rationale for informal participation?

• 4. What are social, cultural benefits for operating informally?

• 5. Who is the most prominent customer to your products/services?

• 6. What are the primary means of advertising about your work and improving your clientele?

• 7. Do you see any disadvantages in operating formally?

• 8. Do you risk detection from the tax and/or social security authorities?

• 9. What kind of social network do you have? Does it comprise of consist of South Asian women only or are there people from other localities as well? Are these people residents of Newham or more widely spread?

• 10. What role does your social network play in helping you promote your business?

• 11. Do you wish or plan to formalise your work in the near future? If yes, why? If no, why not?

• 12. Do you think majority of Pakistani/Bangladeshi women are inclined to working informally?

1.2 Questionnaire B: For Representatives of Local Employment Support Agencies

Section 1 General Information About the Local Labour Market

• 1. In your view what is the local labour market like?

• 2. What are the opportunities for employment for the residents of Newham? Is there a fair mix of highly skilled jobs or is it skewed towards low to medium skilled jobs?

• 3. What is your view about levels of unemployment and economic activity in this borough? Are these levels particularly high among women of certain ethnicities?

• 4. In this area, what is the type of benefits with the highest proportion of people claiming?

• 5. Has the type of people claiming these benefits changed? Have they increased/decreased in the last 5 years?

• 6. Are there any ethnic group or population group over-represented in benefit claimants?

• 7. What is the business environment in the area? Are small and medium business important to the area?

• 8. Does your organisation provide exclusive support to women of ethnic minorities seeking to initiate entrepreneurial ventures?

• 9. Your organisation provides a list of services, what do you think is the most popular service and most common problem people come to seek advice for?

Section 2 Perception of Informal Work in the Borough

• 1. Could you tell me your understanding of the informal economy in this area?

• 2. Who do you think is most likely to be involved in informal economy? Are you aware about the cash-in-hand, homebased businesses?

• 3. How big is the informal economy? Do you think people informal entrepreneurship is motivated by need or greed or a confluence of factors?

• 4. Amongst the given options, which of the following set of reasons would you rate as the most likely for Pakistani/Bangladeshi women entrepreneurs’ motivation to operate informally?

• 5. Do Pakistani/Bangladeshi women seek assistance for formal jobs from your organisation? Is their participation rate as high as other ethnicities?

• 6. Your organisation provides a list of services, what do you think is the most popular service and most common problem people come to seek advice for?

Section 3 Future Implications

• 1. What kind of work has your organization undertaken in response to informal entrepreneurship?

• 2. In your opinion, can entrepreneurs be steered towards the formal enterprise?

• 3. Do you think there is a need to formalize the informal businesses?

• 4. Do you think the punishment approach has worked? Do you think informal work can be stamped out?

• 5. Do you think policy makers have a good understanding of informal entrepreneurship in this area and the initiatives undertaken are sound?

• 6. Do you think the response to informal entrepreneurship should be gender and culture specific?