This paper seeks to explain consumers’ reasons for purchasing from informal sector suppliers so t... more This paper seeks to explain consumers’ reasons for purchasing from informal sector suppliers so that policy initiatives can be developed to tackle the off-the-books consumer culture. The conventional assumption is that those purchasing from the informal economy are marginalised populations seeking a lower price. Here, however this assumption is evaluated critically. Reporting data from a 2019 Eurobarometer survey involving 11,171 face-to-face interviews in 11 East-Central European countries on who purchases home repairs and renovations from informal sector suppliers and why, the finding is that it is not the poorest populations who purchase such services and a lower price is the sole motive in just 20% of cases. Besides being “pulled” into the informal economy by a lower price, consumers are also “pushed” into the informal economy by the failures of formal sector provision and in addition do so for social and redistributive rationales. The policy implication is that there is not onl...
This paper evaluates the effect of unregistered and informal sector business ventures on the grow... more This paper evaluates the effect of unregistered and informal sector business ventures on the growth of formal sector enterprises. The hypotheses tested is that formal sector enterprises that have to compete against unregistered or informal sector business ventures suffer from lower levels of performance, measured by annual sales growth, annual employment growth and annual productivity growth. To evaluate this thesis, data is reported from a World Bank Enterprise Survey (WBES) of 760 enterprises in Italy collected in 2019. The finding is that formal sector enterprises that report competing against unregistered or informal sector business ventures have significantly lower annual sales growth and annual productivity growth than enterprises that do not. The paper concludes by discussing the theoretical and policy implications, along with the limitations of the study and future research required.
This paper evaluates critically the relationship between starting-up unregistered and firm perfor... more This paper evaluates critically the relationship between starting-up unregistered and firm performance. The widespread belief across all the dominant theories of informal entrepreneurship is that unregistered start-ups experience poorer future firm performance than those registered from the outset of their operations. To evaluate this poorer performance thesis, this paper reports World Bank Enterprise Survey (WBES) data on 377 enterprises in Albania collected in 2019. After controlling for other determinants of firm performance, the finding is that formal enterprises that started-up unregistered have significantly higher annual sales growth than enterprises that registered from the outset. To explain this, the argument is that in weak institutional environments, such as Albania, the advantages of operating unregistered at the outset outweigh the benefits of registration. The result is a call to re-theorize firm performance in the informal sector and for policy to shift toward a more...
This paper evaluates three waves of institutional theory that have variously explained participat... more This paper evaluates three waves of institutional theory that have variously explained participation in informal sector entrepreneurship. The first wave of institutional theory explains informal entrepreneurship as resulting from formal institutional failures. This second wave of theory explains it as resulting from an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions. Finally, a third wave of theory as resulting from a lack of both vertical and horizontal trust has explained informal entrepreneurship. To evaluate these waves of institutional theory, this study reports evidence from a 2015 survey of businesses in Albania. This finds that 30 percent of turnover of Albanian businesses is under-reported and that this percentage is higher in smaller firms. In terms of the institutional failures that explain participation in informal entrepreneurship, the regression analysis reveals a strong association betw...
Journal of Financial Management of Property and Construction, 2020
Purpose The purpose of this paper is to explain who purchases undeclared home repairs and renovat... more Purpose The purpose of this paper is to explain who purchases undeclared home repairs and renovations and their motives to tackle the cash-in-hand consumer culture. The conventional view has been that undeclared home repairs and renovations are sought by those consumers needing to save money and desiring a lower price. Here, this is evaluated critically. Design/methodology/approach To do so, evidence from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries is reported. Findings The finding is the need for a nuanced and variegated understanding of who purchases undeclared home repairs and renovations and why. Lower price is their sole rationale in just 25% of purchases, one of several rationales in 34% of cases and not a reason in the remaining 42% of purchases. Besides a lower price, consumers purchase undeclared not only unintentionally but also to circumvent the failings of formal sector provision in terms of its availability, speed and qu...
EMAN 2019 – Economics & Management: How to Cope With Disrupted Times CONFERENCE PROCEEDINGS, 2019
This article evaluates the effect of process innovation’s dimensions (new production methods, new... more This article evaluates the effect of process innovation’s dimensions (new production methods, new logistics and distribution, new supporting activities) into the product innovation, considering a comparable pattern between EU and non-EU countries. To examine this cause-effect chain, 516 interviews with innovative firms, randomly selected using stratified random sampling method, are reported. The sample comprised two sub-samples: four EU countries (Italy, Greece, Slovenia, and Croatia) and four non-EU countries (Albania, Bosnia and Herzegovina, Montenegro and Serbia). The logistic regression analysis reveals a positive association between new or significantly improved methods of manufacturing and product innovation and this causativeness effect is stronger among firms in the EU countries. When it comes to the other process innovation dimensions (new logistics and distribution, new supporting activities), the analysis uncovers no significant association for both sub-samples. Analysing...
It is widely assumed that informal sector enterprises have a harmful impact on the performance of... more It is widely assumed that informal sector enterprises have a harmful impact on the performance of formal enterprises. This paper aims to provide an evidence-based evaluation of whether this is the case. To do so, it reports World Bank Enterprise Survey (WBES) data collected from 360 formal enterprises in Bosnia and Herzegovina in 2019. The finding is that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower sales growth, employment growth or productivity growth. Indeed, such enterprises witness significantly higher sales growth than those who do not view informal sector competitors as a severe obstacle. The theoretical and policy implications are discussed.
Acta Oeconomica Universitatis Selye, ISSN print 1338-6581, 2020
this paper evaluates empirically the relationship between corruption and innovation, in the conte... more this paper evaluates empirically the relationship between corruption and innovation, in the context of a developing economy. There are two different theses that argue on the corruption effects on firms' innovativeness capacities. "Sanding the wheels" thesis supports the harmful impact corruption has on innovation while "greasing the wheels" thesis supports the positive impact corruption has on innovation. this papers seeks to test the "grease the wheels" thesis. to do this, data is reported from the World Bank Enterprise Survey (WBES) on 377 enterprises in Albania, collected in 2019. After controlling for other determinants of innovation, the finding is that corruptions harms firms' innovativeness capacities. This finding supports the "sand the wheel" thesis. theoretical and policy implications are then discussed.
23rd International Conference on Multidisciplinary Studies: "Resilience for Survival" - Cambridge, 30-31 July 2020, 2020
This paper aims to investigate the relationship between business model design (BM), explorative a... more This paper aims to investigate the relationship between business model design (BM), explorative and exploitative innovation, and business performance. Andrew Hayes Process macro for SPSS was employed to perform a parallel mediation analysis and test the proposed model using a sample of 193 Albanian enterprises. The results demonstrate that the adoption of a given BM has direct and indirect effects on business performance. More specifically, the indirect relationship of efficient business model design (EBM) and new markets business model design (NMBM) with business performance, through explorative innovation, is significantly weaker compared to the effect of novel business models (NBM). In contrast, study results show that the difference in indirect effects on the performance of different BMs through exploitative innovation is not significant. Contribution to both technological innovation and business model design literature, and managerial implications are further discussed.
Last year, Albania took the third step in the government's plan to reduce economic informality, a... more Last year, Albania took the third step in the government's plan to reduce economic informality, an issue which has long restricted development and prosperity for the country. For this article, the informal economy is defined as activities which are legal but do not fully comply with state regulations. They include tax evasion, lack of business registration, and labor regulation avoidance. Such forms of informal economic activity are detrimental to a country's economic growth, and seem to occur more frequently in countries that are undergoing structural reforms and transitional economic adjustments, such as Albania.
On November 17, 1917, a coup d’état in Russia led by Bolshevik leader Vladimir Lenin opened a dar... more On November 17, 1917, a coup d’état in Russia led by Bolshevik leader Vladimir Lenin opened a dark communist era, marked by fear, death, economic chaos and a complete assault on individual freedoms. Communism was implemented in Russia 100 years ago and spread throughout much of the 20th century to Eastern and Central Europe, China, Vietnam, Cambodia, parts of Africa, Afghanistan, North Korea and Cuba. It is estimated that communism was responsible for over 100 million deaths– more casualties than those in World War I and II combined.
This paper seeks to explain consumers’ reasons for purchasing from informal sector suppliers so t... more This paper seeks to explain consumers’ reasons for purchasing from informal sector suppliers so that policy initiatives can be developed to tackle the off-the-books consumer culture. The conventional assumption is that those purchasing from the informal economy are marginalised populations seeking a lower price. Here, however this assumption is evaluated critically. Reporting data from a 2019 Eurobarometer survey involving 11,171 face-to-face interviews in 11 East-Central European countries on who purchases home repairs and renovations from informal sector suppliers and why, the finding is that it is not the poorest populations who purchase such services and a lower price is the sole motive in just 20% of cases. Besides being “pulled” into the informal economy by a lower price, consumers are also “pushed” into the informal economy by the failures of formal sector provision and in addition do so for social and redistributive rationales. The policy implication is that there is not onl...
This paper evaluates the effect of unregistered and informal sector business ventures on the grow... more This paper evaluates the effect of unregistered and informal sector business ventures on the growth of formal sector enterprises. The hypotheses tested is that formal sector enterprises that have to compete against unregistered or informal sector business ventures suffer from lower levels of performance, measured by annual sales growth, annual employment growth and annual productivity growth. To evaluate this thesis, data is reported from a World Bank Enterprise Survey (WBES) of 760 enterprises in Italy collected in 2019. The finding is that formal sector enterprises that report competing against unregistered or informal sector business ventures have significantly lower annual sales growth and annual productivity growth than enterprises that do not. The paper concludes by discussing the theoretical and policy implications, along with the limitations of the study and future research required.
This paper evaluates critically the relationship between starting-up unregistered and firm perfor... more This paper evaluates critically the relationship between starting-up unregistered and firm performance. The widespread belief across all the dominant theories of informal entrepreneurship is that unregistered start-ups experience poorer future firm performance than those registered from the outset of their operations. To evaluate this poorer performance thesis, this paper reports World Bank Enterprise Survey (WBES) data on 377 enterprises in Albania collected in 2019. After controlling for other determinants of firm performance, the finding is that formal enterprises that started-up unregistered have significantly higher annual sales growth than enterprises that registered from the outset. To explain this, the argument is that in weak institutional environments, such as Albania, the advantages of operating unregistered at the outset outweigh the benefits of registration. The result is a call to re-theorize firm performance in the informal sector and for policy to shift toward a more...
This paper evaluates three waves of institutional theory that have variously explained participat... more This paper evaluates three waves of institutional theory that have variously explained participation in informal sector entrepreneurship. The first wave of institutional theory explains informal entrepreneurship as resulting from formal institutional failures. This second wave of theory explains it as resulting from an asymmetry between the laws and regulations of formal institutions and the unwritten socially shared rules of informal institutions. Finally, a third wave of theory as resulting from a lack of both vertical and horizontal trust has explained informal entrepreneurship. To evaluate these waves of institutional theory, this study reports evidence from a 2015 survey of businesses in Albania. This finds that 30 percent of turnover of Albanian businesses is under-reported and that this percentage is higher in smaller firms. In terms of the institutional failures that explain participation in informal entrepreneurship, the regression analysis reveals a strong association betw...
Journal of Financial Management of Property and Construction, 2020
Purpose The purpose of this paper is to explain who purchases undeclared home repairs and renovat... more Purpose The purpose of this paper is to explain who purchases undeclared home repairs and renovations and their motives to tackle the cash-in-hand consumer culture. The conventional view has been that undeclared home repairs and renovations are sought by those consumers needing to save money and desiring a lower price. Here, this is evaluated critically. Design/methodology/approach To do so, evidence from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries is reported. Findings The finding is the need for a nuanced and variegated understanding of who purchases undeclared home repairs and renovations and why. Lower price is their sole rationale in just 25% of purchases, one of several rationales in 34% of cases and not a reason in the remaining 42% of purchases. Besides a lower price, consumers purchase undeclared not only unintentionally but also to circumvent the failings of formal sector provision in terms of its availability, speed and qu...
EMAN 2019 – Economics & Management: How to Cope With Disrupted Times CONFERENCE PROCEEDINGS, 2019
This article evaluates the effect of process innovation’s dimensions (new production methods, new... more This article evaluates the effect of process innovation’s dimensions (new production methods, new logistics and distribution, new supporting activities) into the product innovation, considering a comparable pattern between EU and non-EU countries. To examine this cause-effect chain, 516 interviews with innovative firms, randomly selected using stratified random sampling method, are reported. The sample comprised two sub-samples: four EU countries (Italy, Greece, Slovenia, and Croatia) and four non-EU countries (Albania, Bosnia and Herzegovina, Montenegro and Serbia). The logistic regression analysis reveals a positive association between new or significantly improved methods of manufacturing and product innovation and this causativeness effect is stronger among firms in the EU countries. When it comes to the other process innovation dimensions (new logistics and distribution, new supporting activities), the analysis uncovers no significant association for both sub-samples. Analysing...
It is widely assumed that informal sector enterprises have a harmful impact on the performance of... more It is widely assumed that informal sector enterprises have a harmful impact on the performance of formal enterprises. This paper aims to provide an evidence-based evaluation of whether this is the case. To do so, it reports World Bank Enterprise Survey (WBES) data collected from 360 formal enterprises in Bosnia and Herzegovina in 2019. The finding is that formal enterprises viewing informal competition as a severe obstacle do not witness significantly lower sales growth, employment growth or productivity growth. Indeed, such enterprises witness significantly higher sales growth than those who do not view informal sector competitors as a severe obstacle. The theoretical and policy implications are discussed.
Acta Oeconomica Universitatis Selye, ISSN print 1338-6581, 2020
this paper evaluates empirically the relationship between corruption and innovation, in the conte... more this paper evaluates empirically the relationship between corruption and innovation, in the context of a developing economy. There are two different theses that argue on the corruption effects on firms' innovativeness capacities. "Sanding the wheels" thesis supports the harmful impact corruption has on innovation while "greasing the wheels" thesis supports the positive impact corruption has on innovation. this papers seeks to test the "grease the wheels" thesis. to do this, data is reported from the World Bank Enterprise Survey (WBES) on 377 enterprises in Albania, collected in 2019. After controlling for other determinants of innovation, the finding is that corruptions harms firms' innovativeness capacities. This finding supports the "sand the wheel" thesis. theoretical and policy implications are then discussed.
23rd International Conference on Multidisciplinary Studies: "Resilience for Survival" - Cambridge, 30-31 July 2020, 2020
This paper aims to investigate the relationship between business model design (BM), explorative a... more This paper aims to investigate the relationship between business model design (BM), explorative and exploitative innovation, and business performance. Andrew Hayes Process macro for SPSS was employed to perform a parallel mediation analysis and test the proposed model using a sample of 193 Albanian enterprises. The results demonstrate that the adoption of a given BM has direct and indirect effects on business performance. More specifically, the indirect relationship of efficient business model design (EBM) and new markets business model design (NMBM) with business performance, through explorative innovation, is significantly weaker compared to the effect of novel business models (NBM). In contrast, study results show that the difference in indirect effects on the performance of different BMs through exploitative innovation is not significant. Contribution to both technological innovation and business model design literature, and managerial implications are further discussed.
Last year, Albania took the third step in the government's plan to reduce economic informality, a... more Last year, Albania took the third step in the government's plan to reduce economic informality, an issue which has long restricted development and prosperity for the country. For this article, the informal economy is defined as activities which are legal but do not fully comply with state regulations. They include tax evasion, lack of business registration, and labor regulation avoidance. Such forms of informal economic activity are detrimental to a country's economic growth, and seem to occur more frequently in countries that are undergoing structural reforms and transitional economic adjustments, such as Albania.
On November 17, 1917, a coup d’état in Russia led by Bolshevik leader Vladimir Lenin opened a dar... more On November 17, 1917, a coup d’état in Russia led by Bolshevik leader Vladimir Lenin opened a dark communist era, marked by fear, death, economic chaos and a complete assault on individual freedoms. Communism was implemented in Russia 100 years ago and spread throughout much of the 20th century to Eastern and Central Europe, China, Vietnam, Cambodia, parts of Africa, Afghanistan, North Korea and Cuba. It is estimated that communism was responsible for over 100 million deaths– more casualties than those in World War I and II combined.
This paper evaluates critically the relationship between starting-up unregistered and firm perfor... more This paper evaluates critically the relationship between starting-up unregistered and firm performance. The widespread belief across all the dominant theories of informal entrepreneurship is that unregistered start-ups experience poorer future firm performance than those registered from the outset of their operations. To evaluate this poorer performance thesis, this paper reports World Bank Enterprise Survey (WBES) data on 377 enterprises in Albania collected in 2019. After controlling for other determinants of firm performance, the finding is that formal enterprises that started-up unregistered have significantly higher annual sales growth than enterprises that registered from the outset. To explain this, the argument is that in weak institutional environments, such as Albania, the advantages of operating unregistered at the outset outweigh the benefits of registration. The result is a call to retheorize firm performance in the informal sector and for policy to shift toward a more facilitating approach that enhances benefits of registration.
This diagnostic report evaluates the extent, nature and drivers of the undeclared economy in Alba... more This diagnostic report evaluates the extent, nature and drivers of the undeclared economy in Albania. Based on desk-research and interviews with various stakeholders, this report sets the scene for a strategy and action plan for tackling undeclared work in Albania, presented in a separate document
Journal of Financial Management of Property and Construction, 2020
Purpose-The purpose of this paper is to explain who purchases undeclared home repairs and renovat... more Purpose-The purpose of this paper is to explain who purchases undeclared home repairs and renovations and their motives to tackle the cash-in-hand consumer culture. The conventional view has been that undeclared home repairs and renovations are sought by those consumers needing to save money and desiring a lower price. Here, this is evaluated critically. Design/methodology/approach-To do so, evidence from a 2019 Eurobarometer survey involving 27,565 face-to-face interviews in 28 European countries is reported. Findings-The finding is the need for a nuanced and variegated understanding of who purchases undeclared home repairs and renovations and why. Lower price is their sole rationale in just 25% of purchases, one of several rationales in 34% of cases and not a reason in the remaining 42% of purchases. Besides a lower price, consumers purchase undeclared not only unintentionally but also to circumvent the failings of formal sector provision in terms of its availability, speed and quality, as well as for social and redistributive rationales. Practical implications-To reduce the cash-in-hand consumer culture, not only are incentives needed to persuade consumers to purchase declared along with awareness-raising campaigns about the benefits of purchasing declared services but initiatives are also needed to improve the availability, speed, reliability and quality of formal provision and to address undeclared purchases conducted for social and redistributive purposes. Originality/value-This paper improves understanding of how governments can stop consumers asking "how much for cash" and reduce demand for undeclared home repair and renovation services.
This paper evaluates the effect of unregistered and informal sector business ventures on the grow... more This paper evaluates the effect of unregistered and informal sector business ventures on the growth of formal sector enterprises. The hypotheses tested is that formal sector enterprises that have to compete against unregistered or informal sector business ventures suffer from lower levels of performance, measured by annual sales growth, annual employment growth and annual productivity growth. To evaluate this thesis, data is reported from a World Bank Enterprise Survey (WBES) of 760 enterprises in Italy collected in 2019. The finding is that formal sector enterprises that report competing against unregistered or informal sector business ventures have significantly lower annual sales growth and annual productivity growth than enterprises that do not. The paper concludes by discussing the theoretical and policy implications, along with the limitations of the study and future research required.
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Papers by Brunilda Kosta, PhD
start-ups experience poorer future firm performance than those registered from the outset of their operations. To evaluate this poorer performance thesis, this paper reports World Bank Enterprise Survey (WBES) data on 377 enterprises in Albania collected in 2019. After controlling for other determinants of firm performance, the finding is that formal enterprises that started-up unregistered have significantly higher annual sales growth than enterprises that registered from the outset. To
explain this, the argument is that in weak institutional environments, such as Albania, the advantages of operating unregistered at the outset outweigh the benefits of registration. The result is a call to retheorize
firm performance in the informal sector and for policy to shift toward a more facilitating approach that enhances benefits of registration.