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Beyond necessity-driven versus

opportunity-driven
entrepreneurship
A study of informal entrepreneurs in England,
Russia and Ukraine

Colin C. Williams

Abstract: To evaluate critically the conventional view that entrepreneurs


are either necessity-driven or opportunity-driven, empirical data are
reported from England, Ukraine and Russia on the motives of a specific
group of entrepreneurs – those operating wholly or partially in the infor-
mal economy. The paper finds that, for the vast majority, both necessity
and opportunity drivers are involved in their decision to start up enter-
prises, along with a clear shift from necessity-oriented to
opportunity-oriented motivations as their ventures become more estab-
lished. The paper concludes with a discussion of the public policy
implications of these findings.
Keywords: necessity entrepreneurs; opportunity entrepreneurs; informal
economy; England; Ukraine; Russia
Colin C. Williams is Professor of Public Policy in the Centre for Regional Economic and Enterprise
Development, School of Management, University of Sheffield, 9 Mappin Street, Sheffield S1 9DT,
UK. E-mail: C.C.Williams@sheffield.ac.uk.

When discussing entrepreneurs’ motives, it has now Russia with a specific group of entrepreneurs, namely
become commonplace in the entrepreneurship literature those starting up businesses that operate wholly or
to find a distinction being drawn between ‘necessity- partially in the informal economy.
driven’ entrepreneurs pushed into entrepreneurship First, therefore, this paper will address how the bifur-
because other options for work are absent or unsatisfac- cated depiction of entrepreneurs as either necessity- or
tory, and ‘opportunity-driven’ entrepreneurs pulled into opportunity-driven has increasingly pervaded the litera-
entrepreneurship more out of choice (Aidis et al, 2006; ture on entrepreneurs’ motives, along with how the
Bosma and Harding, 2007; Harding et al, 2006; Maritz, literature focusing on informal entrepreneurship has
2004; Minniti et al, 2006; Perunović, 2005; Reynolds et similarly, albeit often implicitly, adopted this dualism
al, 2002; Smallbone and Welter, 2004). In this paper, when depicting informal entrepreneurs as necessity-
however, the intention is to evaluate critically the driven, pushed into this enterprise as a survival strategy in
validity of adopting this bifurcated portrayal of entrepre- the absence of alternative options (eg Castells and Portes,
neurs as either necessity- or opportunity-driven. To do 1989; Gallin, 2001; Lagos, 1995; Maldonado, 1995).
this, empirical evidence will be reported from face-to- Demonstrating that although this dualistic typology has
face interviews conducted in England, Ukraine and begun to be questioned in relation to legitimate entrepre-

ENTREPRENEURSHIP AND INNOVATION Vol 9, No 3, 2008, pp 157–165 157


Informal entrepreneurs in England, Russia and Ukraine

neurs but not with regard to informal entrepreneurship, developed to explain the factors that drive the decision
the second section will then report on empirical data to start up a business venture (Baty, 1990; Bolton and
collected during face-to-face interviews with 503 entre- Thompson, 2000; Burns, 2001; Brockhaus and
preneurs in England, Ukraine and Russia, which evaluate Horowitz, 1986; Chell et al, 1991; Cooper, 1981;
critically the validity of reading the motives of informal Kanter, 1983). Recently, however, one particular
entrepreneurs through the lens of this either/or dualism. classificatory schema has become increasingly perva-
The final section then draws some conclusions about the sive. Despite it being earlier argued that the complex
appropriateness of using this necessity/opportunity motives of entrepreneurs should not be oversimplified
dichotomy to understand entrepreneurs’ motivations. (Rouse and Dallenbach, 1999), a stream of thought has
At the outset, however, it is necessary to define what followed Bögenhold (1987), who distinguished between
is meant here by entrepreneurship and the informal entrepreneurs driven by economic need and those
economy. Entrepreneurship has long proved a problem- motivated by a desire for self-realization. Adopting this
atic and elusive concept to define (Brockhaus and simplistic bifurcated depiction, many contemporary
Horowitz, 1986; Cole, 1969; Shaver and Scott, 1991). commentators have differentiated between entrepreneurs
Indeed, in a now notorious phrase, Hull et al (1980) according to whether they are necessity-driven, pushed
liken it to ‘hunting the heffalump’. Once one moves into entrepreneurship because all other options for work
beyond the narrow definition of entrepreneurs as people are absent or unsatisfactory, or opportunity-driven,
starting up a new business venture (Harding et al, 2006), pulled into this endeavour more out of choice to exploit
a heated debate ensues over whether a multiplicity of some business opportunity (Aidis et al, 2006; Bosma
characteristics, traits and qualities should be used to and Harding, 2007; Harding et al, 2006; Maritz, 2004;
define entrepreneurship (Baty, 1990; Blanchflower and Minniti et al, 2006; Perunović, 2005; Smallbone and
Meyer, 1991; Bolton and Thompson, 2000; Brockhaus Welter, 2004). Indeed, this bifurcated classification has
and Horowitz, 1986; Carr, 2002; Chell et al, 1991; begun to move ever more centre stage in the contempo-
Kanter, 1983; McClelland, 1961; Schumpeter, 1996; rary entrepreneurship literature, reflected not only in its
Storey and Sykes, 1996; Williams, 2006). For this usage in the Global Entrepreneurship Monitor (GEM),
reason, the working definition adopted here is this the predominant global survey of the degree and nature
narrow definition of the entrepreneur as somebody of entrepreneurship (Bosma and Harding, 2007; Harding
starting up a new business that is less than 42 months et al, 2006; Minniti et al, 2006), but also in the emerging
old. This definition, although excluding aspects some- literature that is seeking to unravel what is meant by an
times included, such as intrapreneurship, is fit for the entrepreneurial opportunity (Casson and Wadeson,
purpose for which it is here intended, namely studying 2007; Companys and McMullen, 2007; McMullen et al,
the motives of those starting up business ventures. 2007; Plummer et al, 2007).
The informal economy, or what is variously called For a long time, this bifurcated depiction has also
‘cash-in-hand work’, ‘off-the-books’ transactions, the been at the heart, albeit often implicitly, of the literature
‘shadow economy’ or the ‘underground sector’, is here that explains the motives of informal entrepreneurs.
defined as the paid production and sale of goods and Today, it is widely recognized that many individuals
services that are unregistered by, or hidden from, the state engaged in the informal economy are pursuing entrepre-
for tax and/or benefit purposes, but which are legal in all neurial ventures (Browne, 2004; Cross, 2000; De Soto,
other respects (European Commission, 1998; Evans et al, 1989, 2001; Evans et al, 2006; Franks, 1994; ILO, 2002;
2006; Katungi et al, 2006; Renooy et al, 2004; Small Rakowski, 1994; Small Business Council, 2004;
Business Council, 2004; Thomas, 1992; Williams, 2004, Williams, 2005a and b, 2006). As the International
2006; Williams and Windebank, 1998). This widely Labour Organization (ILO, 2002, p 54) for example
agreed definition recognizes that the only illicit aspect of states, the informal economy acts as ‘an incubator for
informal work is that the transactions are unregistered business potential and … transitional base for accessibil-
and/or hidden from the state for tax and/or social security ity and graduation to the formal economy’ and many
purposes. Where goods and services are themselves illicit informal workers show ‘real business acumen, creativity,
(eg in drug trafficking or gun-running), these are dynamism and innovation’. Until now, however, few
excluded from informal work, as are unpaid exchanges. studies have sought to evaluate their motives
empirically. Instead, as Travers (2002, p 2) puts it, ‘most
research on the informal economy gives short shrift to
Necessity- and opportunity-driven the motivations of people to do this work. It is usually
entrepreneurship said that people do the work to earn extra money and
Reviewing the entrepreneurship literature, over the past left at that.’ The result is that informal entrepreneurs
few decades various conceptual frameworks have been have generally been portrayed as being driven out of

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Informal entrepreneurs in England, Russia and Ukraine

necessity into this realm by their inability to find formal … nearly all individuals can be sorted into one of the
employment, and participation in such work is viewed two categories’.
as a survival strategy and a last resort (Castells and Recently, however, several studies of legitimate
Portes, 1989; Gallin, 2001; Portes and Walton, 1981; entrepreneurs have questioned the separateness of
Raijman, 2001; Sassen, 1997). This depiction, neverthe- opportunity and necessity drivers and argued that they
less, has been an a priori assumption rather than a co-exist in entrepreneurs’ motives (Aidis et al, 2006;
finding of empirical studies. Smallbone and Welter, 2004). For example, studying
A range of studies of those starting up business Ukraine, Belarus and Moldova, Smallbone and Welter
ventures wholly or partially in the informal economy, (2004) invited business owners to provide up to three
however, have questioned whether they are always reasons for starting their businesses. They find that
necessity-driven. Indeed, some argue the inverse, although most entrepreneurs are opportunity-driven, it is
depicting them as opportunity- rather than necessity- rather overly simplistic to adopt an either/or approach
driven. As Gerxhani (2004, p 274) asserts, those starting because in early-stage transition economies, well
up businesses on a wholly or partly off-the-books basis educated people can be presented with limited opportu-
‘choose to participate in the informal economy because nities for satisfying and sufficiently rewarding
they find more autonomy, flexibility and freedom in this employment, meaning that both opportunity and neces-
sector than in the formal one’. Snyder (2004), in her sity co-exist among reasons for starting up business
study of 50 informal entrepreneurs in New York City’s ventures. Similarly in 2002 in Ukraine, Aidis et al
East Village neighbourhood, similarly concludes that (2006) surveyed 297 women and 81 men in four cities
although previous literature has assumed that external about why they had started their own businesses. Asked
pressures (such as discrimination, economic restructur- to give three reasons, they identified the co-existence of
ing and unemployment) force people to work both opportunity (eg the desire for independence, to
off-the-books, the informal entrepreneurs she studied have one’s own business) and necessity in individual
were all doing so out of choice. They engaged in such entrepreneurs’ motives, as well as evidence that their
endeavours to set their careers on a new path, either in motives change over time.
order to transform their work identity or to reveal their Until now, however, there has been little consideration
true selves. This is also the finding of Cross (1997, of the co-presence of necessity and opportunity drivers
2000). Studying street vendors, he argues that many are amongst informal entrepreneurs. Nor, with the exception
doing this work out of choice. The conventional depic- of Snyder (2004) who notes that some informal entre-
tion of informal entrepreneurs as universally preneurs’ motives shift over time, has there been any
necessity-driven is therefore in a growing number of consideration of whether there is fluidity in motives, and
studies being replaced by a view of them as universally if so, the direction in which their motives move. Here, in
driven by opportunity and doing so out of choice. consequence, a survey is reported of informal entrepre-
Few studies until now, however, have gone beyond neurs in three countries that evaluates critically the
portraying informal entrepreneurs as either universally validity of not only the necessity/opportunity dualism in
necessity-driven or universally opportunity-driven. The relation to informal entrepreneurship, but also the
study by Lozano (1989) of 50 dealers at flea markets in dynamics of informal entrepreneurs’ motives.
northern California is one notable exception. She found
that 80% were involuntary entrants pushed into this
endeavour due to few other opportunities being open to
Evaluating informal entrepreneurs’ motives
them, and that the remaining 20% were voluntary
in England, Ukraine and Russia
entrants who had chosen this endeavour. Akin to the To determine whether informal entrepreneurs can be
wider literature on legitimate entrepreneurs, therefore, depicted as necessity- or opportunity-driven, case study
she seeks not to depict informal entrepreneurs as evidence is here reported from face-to-face interviews
universally either opportunity- or necessity-driven, but with informal entrepreneurs in three countries, namely
to understand the ratio of opportunity v necessity England (conducted between 1998 and 2002), Ukraine
entrepreneurship (eg Harding, 2003; Harding et al, and Russia (both conducted in late 2005 and early
2006; Maritz, 2004; Minniti et al, 2006; Perunović, 2006). Grounded in previous studies, which reveal that
2005). Necessity- and opportunity-driven entrepreneurs, the extent and character of informal economic practices
however, are still being treated as entirely separate vary markedly across both affluent and deprived
categories constituted via their negation of each other (ie populations, as well as urban and rural areas (Fortin et
to be an entrepreneur out of choice means that one is not al, 1996; Jensen et al, 1995; Renooy, 1990; Williams,
doing so out of necessity). As Minniti et al (2006, p 21) 2004, 2005a and b; Williams and Windebank, 1998), a
assert in relation to the GEM survey, ‘In most countries maximum variation sampling method was employed to

ENTREPRENEURSHIP AND INNOVATION Vol 9, No 3 159


Informal entrepreneurs in England, Russia and Ukraine

including whether any household member had started up


Table 1. Localities studied in England, Ukraine and Russia.
a business venture in the past 42 months. Second, and
Country Area type Locality No of adopting a gradual approach to addressing this sensitive
interviews topic of participation in informal work, questions were
England Affluent rural Fulbourn, 70 asked about the type of labour the household last used to
Cambridgeshire
Affluent rural Chalford, 70 complete a range of common domestic tasks, followed
Gloucestershire by questions on whether they had conducted any of
Deprived rural Grimethorpe, 70 these tasks for other households, and if so, whether or
South Yorkshire
Deprived rural Wigton, Cumbria 70 not they had been paid, and whether they had been paid
Deprived rural St Blazey, Cornwall 70 ‘cash-in-hand’. Third and only following these ‘warm-
Affluent suburb Fulwood, Sheffield 50 up’ questions, was the issue of whether the
Affluent suburb Basset/Chilworth, 61
Southampton entrepreneurs who had started up some business venture
Deprived urban Manor, Sheffield 100 in the past 42 months participated in the informal
Deprived urban Pitsmoor, Sheffield 100 economy, and why they had decided to start up their
Deprived urban St Mary’s, 100
Southampton enterprise. To do this, a range of open-ended questions
Deprived urban Hightown, 100 was asked about the nature of their business venture,
Southampton whether their transactions had been wholly or partly
Russia Affluent urban Krylatskoe, west 100
Moscow conducted on an off-the-books basis, why they had
Deprived urban South-east okrug, 100 originally decided to start up their enterprise and
Moscow whether their motives had changed over time. The
Mixed Leshkovo, outer 113
Moscow results are reported below.
Ukraine Affluent urban Perchersk, Kiev 150
Deprived urban Vynogardar, Kiev 150 The prevalence and character of informal entrepreneurs
Deprived rural Vasilikiv 150
Mixed urban Uzghorod 150 Across the three countries, as Table 2 reveals, 503
individuals were identified who had started a business
venture during the past 42 months: 91 entrepreneurs in
select a range of localities for study in each country (see England, 331 in Ukraine and 81 in the Russian city of
Table 1). Although the outcome is that this is not a Moscow. Of these, some 77%, 90% and 100% respec-
nationally representative sample, it does avoid the tively reported during the face-to-face interviews that
common pitfall in many previous small-scale studies of some or all of their business transactions were con-
studying only one particular locality in each country and ducted in the informal economy. Although this is
consequently being unable to decipher whether the obviously a very small sample of all entrepreneurs in
findings are unique to this locality type (Leonard, 1994). these countries and, as stated above, not nationally
Having selected diverse locality types for investiga- representative, this finding that such a high proportion
tion in each country, a spatially stratified sampling of entrepreneurs was engaged in the informal economy
technique (Kitchen and Tate, 2001) was then used to will require further research in future studies. Until now,
select households for interview in each locality. If there there has perhaps been a perception that most entrepre-
were some 1,000 households in the locality and 100 neurs play entirely by the rulebook, but this study
interviews were sought, that is, the researcher called at tentatively reveals that this might not always be the case.
every 10th household. If there was no response and/or an A large proportion of entrepreneurs appear to conduct
interview was refused, then the 11th household was some or all of their transactions in the informal economy
visited, then the 9th, 12th, 8th and so on. This provided in all of these countries.
a spatially stratified sample of each locality. In total, Indeed, breaking down these data according to
some 811 household interviews were conducted in whether entrepreneurs operate wholly in the informal
deprived and affluent urban and rural districts in Eng-
land between 1998 and 2002, 600 in Ukraine during late
Table 2. Do entrepreneurs engage in the informal economy?
2005 and early 2006 and 313 in Russia again in late
2005 and early 2006 (resulting in 1,724 interviews). England Russia Ukraine
In order to gather data on informal entrepreneurs’ No 91 81 331
motives, a relatively structured face-to-face interview Engaged in informal economy (%) 77 100 90
Wholly legitimate (%) 23 0 10
schedule was employed. First, background information Registered but conducting share
was gathered from households on the age, gender, of trade off-the-books (%) 57 4 39
employment status and work history of household Not a registered business/
no licence to trade (%) 20 96 51
members as well as the gross household income,

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Informal entrepreneurs in England, Russia and Ukraine

economy or conduct only a portion of their transactions 41% in Ukraine and 56% in Russia. Furthermore, the
in this realm, the finding is that although in England entrepreneurs surveyed who report that they run regis-
most have registered their enterprises with the tax tered enterprises but conduct a portion of their trade
authorities and conduct only a portion of their trade in off-the-books are concentrated in the highest-income
the informal economy, this is not the case in Ukraine or quartile of households, whilst those surveyed working
Russia. Whilst only one in five of the English entrepre- on a wholly informal basis are more heavily concen-
neurs surveyed operated on a wholly informal basis, in trated in the lowest-income households. Table 3 presents
Ukraine, over half (51%) of the entrepreneurs surveyed the distribution of informal entrepreneurs by gross
had not registered their business or sought a licence to household income.
trade and were operating totally in the informal This, however, is not the only difference in the
economy, whilst amongst those surveyed in the Russian character of the informal entrepreneurs in the highest-
city of Moscow, this figure was 96%, intimating that the and lowest-income households. Those in the highest
vast bulk of entrepreneurs are not even on the radar quartile in terms of gross household income were also
screen of the state. generally found to be in formal employment or regis-
Across all three countries, therefore, the finding of tered self-employed (95% of the informal entrepreneurs
this survey is that only a small proportion of the entre- surveyed in England, 98% in Ukraine and 92% in
preneurs surveyed claim to operate fully legitimate Russia) and to use their formal occupation to engage in
enterprises. The vast majority are engaged in the relatively well paid informal self-employment related to
informal economy in all three countries. their formal job. One example is a husband and wife in
Who, therefore, are these informal entrepreneurs? Moscow, both schoolteachers, who supplement their
Conventionally, as stated earlier, the perception has been income from their formal jobs by providing additional
that informal entrepreneurs are marginalized groups lessons on an informal self-employed basis. Between
who cannot gain access to the formal labour market and them, they have four groups of 10 children who each
are engaged in informal enterprise out of economic pay 200 roubles for a 1 hour 30 minute lesson. Each
necessity as a last resort. This study, however, reveals gives three informal lessons per week, so they earn
that in all three countries, these entrepreneurs are 24,000 roubles per week in additional income to com-
polarized at the two ends of the income spectrum; they plement their 12,000 roubles in formal earnings.
are concentrated in both the poorest and most affluent Those in the lowest quartile in terms of gross house-
households in terms of gross household income. In the hold income, in stark contrast, often do not have a
lowest quartile of households surveyed in terms of gross formal occupation that they can use to foster their
household income, one finds clustered 34% of informal informal enterprise. Instead, entrepreneurs in this
entrepreneurs in England, 35% in Ukraine and 30% in quartile generally engage in lower-paid forms of infor-
Russia, whilst in the highest quartile of households mal entrepreneurial endeavour. Indeed, the vast majority
surveyed in terms of gross household income, one finds of these respondents asserted that they would prefer a
40% of all informal entrepreneurs surveyed in England, ‘normal’ formal job so as to minimize their risks of

Table 3. Distribution of informal entrepreneurs by gross household income (%).

Household by gross income


Lowest quartile Lower quartile Upper quartile Highest quartile
Percentage of sample 25 25 25 25
England
Percentage of all entrepreneurs (n = 91) 29 5 22 44
Percentage of informal entrepreneurs (n = 70) 34 7 19 40
Percentage of wholly illegitimate (n = 18) 61 11 6 22
Percentage doing portion off-the-books (n = 52) 29 6 23 46
Russia
Percentage of all entrepreneurs (n = 81) 30 11 3 56
Percentage of informal entrepreneurs (n = 81) 30 11 3 56
Percentage of wholly illegitimate (n = 78) 33 11 3 53
Percentage doing portion off-the-books (n = 3) 0 0 0 100
Ukraine
Percentage of all entrepreneurs (n = 331) 34 13 10 43
Percentage of informal entrepreneurs (n = 298) 35 14 10 41
Percentage of wholly illegitimate (n = 169) 46 14 8 32
Percentage doing portion off-the-books (n = 129) 21 14 12 53

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Informal entrepreneurs in England, Russia and Ukraine

Table 4. Why did you decide to start up your enterprise? Table 5. Motivations cited by entrepreneurs following
additional probes.
Motive England Russia Ukraine
Motive England Russia Ukraine
To generate sufficient income to 23 45 55
live/survive (%) Solely necessity (%) 6 12 13
To generate additional income (%) 3 25 34 Mostly necessity but also 14 60 56
Desire to have own business (%) 26 6 4 opportunity (%)
To fill a gap in the market (%) 24 15 2 Mostly opportunity but also 70 23 24
Independence (%) 21 7 3 necessity (%)
Other (%) 3 2 2 Solely opportunity (%) 10 5 7
Total (%) 100 100 100
ended manner, ‘any other reasons?’ Analysing the
being cheated or robbed and to be able to take paid responses, it becomes apparent that delineating entrepre-
leave, but did not have the opportunity to do so. Instead, neurs in all of these countries as either necessity- or
they had to rely on piecemeal informal entrepreneurial opportunity-driven is an oversimplification.
endeavour as a means of livelihood. Examples from As Table 5 reveals, when the fuller range of motives
Moscow include a pensioner who supplements her state was analysed in response to these additional probes,
pension of 2,200 roubles per month by selling cigarettes very few entrepreneurs cited solely economic necessity.
at a train station, and an illegal street vendor who sells The majority cited a mixture of both necessity and
flowers, which she grows on her dacha, just outside a opportunity motivations: 83% in Russia, 80% in Ukraine
market. and 84% in England. Of these, the majority in Russia
and Ukraine emphasized mainly economic necessity, but
Informal entrepreneurs: necessity- and/or opportunity- also some opportunity motives, eg that they had identi-
driven? fied ‘a need they could fill’, whilst in England the
Given these characteristics of informal entrepreneurs, is majority identified mainly opportunity motivations, but
it the case therefore that they are necessity-driven? Or is also some economic necessity underpinning their
it more the case that opportunity drivers prevail? To decision to start up a business venture. Just 5, 7 and 10%
answer these questions, those who had started up in Russia, Ukraine and England respectively cited purely
business ventures were first asked in an open-ended opportunity drivers.
manner, ‘why did you decide to start up this enterprise?’ Compared with previous studies of informal entrepre-
As Table 4 reveals, the finding is that in Russia and neurs, therefore, this study reveals that those setting up
Ukraine, some 70% and 89% respectively stated that it business ventures are not either universally necessity-
was in order to generate sufficient income to survive or driven or universally opportunity-driven. Instead,
to generate additional income, whilst in England some necessity and opportunity drivers are co-present in the
71% cited motives normally associated with ‘opportu- rationales of the vast majority of informal entrepreneurs
nity entrepreneurship’ such as the desire to have one’s surveyed. To take just one example to see how opportu-
own business, to fill a gap in the market or to have nity and necessity combine, a computer worker
greater independence. employed by a software company was interviewed who
If this study of the motives of informal entrepreneurs often offered to do small jobs more cheaply for the
were to end its analysis here, then it would be one of the company’s clients if they paid him independently on an
first studies to reveal that informal entrepreneurs are not off-the-books basis. For him, this was mostly necessity-
either universally necessity-driven (Castells and Portes, driven because he deemed his wages too low to support
1989; Gallin, 2001; Portes and Walton, 1981; Raijman, his family sufficiently, but also in part opportunity-
2001; Sassen, 1997) or universally opportunity-driven driven since he had ready access to clients unwilling to
(Gerxhani, 2004; Snyder, 2004). Instead, it demonstrates pay the formal fees charged by the company, and he saw
that there are both necessity- and opportunity-driven himself as filling a gap in the market.
informal entrepreneurs in each country, and that in the Importantly, these entrepreneurs’ motives did not
Eastern and Central European countries informal always remain fixed over time. In response to a question
entrepreneurship is more necessity-driven, while being about whether, and if so how, their reasons for engaging
more opportunity-driven in the Western European in such entrepreneurial endeavour had changed, a clear
nation. pattern can be discerned. As Table 6 reveals, there is a
To drill down further into their motives, however, two transition from necessity- to opportunity-oriented
further probes followed this initial question. These first motives as their businesses mature. Of those who stated
repeated the answer given by the respondent with an that their motivations had changed, a clear majority
inflexion (eg ‘to earn sufficient money?’ or ‘to generate asserted that the shift had been away from necessity-
additional income?’) and second, asked in an open- oriented motives and towards opportunity-oriented

162 ENTREPRENEURSHIP AND INNOVATION Vol 9, No 3


Informal entrepreneurs in England, Russia and Ukraine

precisely the entrepreneurship and enterprise that with


Table 6. Do informal entrepreneurs’ motives change over
time? the other hand, through their enterprise culture policies,
they are seeking to nurture, especially given that some
England Russia Ukraine two-thirds who start out as necessity-orientated turn into
Motives unchanged (%) 74 40 42 opportunity-orientated entrepreneurs. Recognizing the
From necessity-oriented to 10 49 51
opportunity-oriented (%) integrative and dynamic nature of entrepreneurs’
From opportunity-oriented to 6 11 7 motives is thus more than simply a matter of academic
necessity-oriented (%) interest. A fuller and more nuanced understanding of
informal entrepreneurs’ motives is crucial so that
motivations: 82% in Russia and 88% in Ukraine. In appropriate public policy decisions can be taken towards
England, meanwhile, where a smaller proportion of this hidden enterprise culture, such as initiatives to
informal entrepreneurs had started out as necessity- enable these entrepreneurs to legitimize their business
driven, this figure was 62%. ventures rather than solely measures to eradicate the
Put another way, some two-thirds of those who started enterprises. If this paper therefore stimulates further
out as necessity-driven entrepreneurs in these countries studies that evaluate whether there is the same co-
had become more opportunity-driven over time. This presence of necessity and opportunity factors and
has important implications. For those asserting that dynamism in entrepreneurs’ motives elsewhere, as well
opportunity-driven entrepreneurs are more likely to as greater reflection on what should be done about the
make a positive contribution to economic development prevalence of informal entrepreneurs, then the paper will
and growth than necessity-driven entrepreneurs (eg have fulfilled its objectives.
Harding et al, 2006; Minniti et al, 2006; Reynolds et al,
2002), it suggests that necessity-driven informal entre-
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