Evaluating competing theories of informal entrepreneurship: some lessons from Ukraine

The purpose of this paper is to evaluate critically the competing theories of informal entrepreneurship that variously represent such endeavour as a residue from a previous mode of accumulation (modernisation theory), a direct by‐product of contemporary capitalism and survival strategy for those marginalised from the circuits of the modern economy (structuralism), an endeavour voluntarily pursued due to over‐regulation in the formal economy (neo‐liberalism) or a practice chosen for social, redistributive, political or identity reasons (post‐structuralism).

To evaluate these competing theories, a 2005/2006 survey involving face‐to‐face interviews with 298 informal entrepreneurs in Ukraine is analysed.

Contrary to previous studies which assert that one single theorisation is universally applicable, this study finds that each theory is valid for different types of informal entrepreneurship, and therefore proposes a typology of informal entrepreneurship that joins together the contrasting theorisations in order to achieve a more accurate and finer‐grained explanation of the complex and heterogeneous configuration of informal entrepreneurship in contemporary Ukraine.

This paper reveals the need to move beyond treating the competing explanations as mutually exclusive by outlining a typology that combines the contrasting theorisations in order to more fully understand the heterogeneity of informal entrepreneurship.

By unravelling the heterogeneity of informal entrepreneurship, a more nuanced policy approach is shown to be required which does not seek to simply either eradicate such endeavour, pursue a laissez‐faire approach or harness such entrepreneurship but instead pursues all these approaches to varying extents in relation to different kinds of informal entrepreneur.

This is one of the first papers to identify and empirically evaluate the competing theories of informal entrepreneurship.