Work

Implementing firm strategy in the informal economy

Year: 2025

Type: article

Abstract: The activities of firms operating in the informal economy are considered technically illegal and yet remain legitimate to large groups in society. Strategy implementation in the informal economy diverges significantly from conventional approaches. Therefore, these firms strategically navigate legal boundaries to subsist and grow. This paper examines firms’ unique approaches to implementing their strategies in the informal economy. We distinguish between general informal economy activities (i.e., primarily subsistence-oriented activities that engage in tax avoidance, skirt business license and registration requirements, etc.) and transformative informal economy activities (e.g., firms like Uber, Airbnb, and Aereo leveraging technological advancements that have outpaced changes in laws and regulations). We contrast the strategy implementation of general versus transformative informal economy activities. We describe how firms work to conceal or openly challenge regulations and leverage relational mechanisms for resource acquisition and execution.

Source: Organizational Dynamics

DOI: 10.1016/j.orgdyn.2025.101125

Authors: Justin W. Webb, Oscar Barzuna-Hidalgo

Institutions: University of North Carolina at Charlotte, Queens University of Charlotte

Language: English

Topic: Taxation and Compliance Studies

Subfield: Economics and Econometrics

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDGs: Decent work and economic growth, Peace, justice, and strong institutions, Industry, innovation and infrastructure

Open Access status: hybrid

Estimated APC paid: $2,740