To explain the prevalence and persistence of informal economic activity globally, scholars have recently advanced an institutional incongruence perspective. Institutional incongruence exists where there is a misalignment between what is considered legitimate by a society’s formal institutions (e.g. its laws and regulations) and its informal institutions (e.g. norms, values and beliefs). Reporting findings from a series of qualitative focus groups in Bulgaria, Croatia and the Former Yugoslav Republic of Macedonia, this article explores relationships between such institutional incongruence and informal economic activity. In particular, it sheds light on how informality and institutional incongruence are experienced by individuals in South-East Europe. It furthermore provides insights on the causes of such incongruence, and how it can lead to informal economic activity. Finally, it reports on individuals’ perceptions towards different measures to tackle institutional incongruence and informal economic activity, with implications for policymakers in South-East Europe and more widely.
BagnascoA (1990) The informal economy. Current Sociology38(2): 157–174.
2.
BarbourRS (2005) Making sense of focus groups. Medical Education39(7): 742–750.
3.
BarbourALlanesM (2013) Supporting People to Legitimise their Informal Businesses. York: Joseph Rowntree Foundation.
4.
BarsoumG (2015) ‘Job opportunities for the youth’: Competing and overlapping discourses on youth unemployment and work informality in Egypt. Current Sociology64(3): 430–446.
5.
BrockmannHGenschelPSeelkopfL (2015) Happy taxation: Increasing tax compliance through positive rewards?Journal of Public Policy36(3): 381–406.
6.
CortesF (1997) The metamorphosis of the marginal: The debate over the informal sector in Latin America. Current Sociology45(1): 71–90.
7.
EisenhardtKMGraebnerME (2007) Theory building from cases: Opportunities and challenges. Academy of Management Journal50(1): 25–32.
8.
FranklandJBloorM (1999) Some issues arising in the systematic analysis of focus group materials. In: BarbourRSKitzingerJ (eds) Developing Focus Group Research: Politics, Theory and Practice. London: Sage, pp. 144–155.
9.
GarvanlievaVAndonovVNikolovM (2012) Shadow Economy in Macedonia. Skopje: Centre for Economic Analyses.
10.
GodfreyPC (2011) Toward a theory of the informal economy. The Academy of Management Annals5(1): 231–277.
11.
GodfreyPC (ed.) (2015) Management, Society, and the Informal Economy. Routledge Advances in Management and Business Studies. Abingdon: Routledge.
12.
GoevV (2009) Estimating the hidden economy in Bulgaria. South-East Europe Review for Labour and Social Affairs12(1): 77–93.
13.
GreenbaumTL (1999) Moderating Focus Groups: A Practical Guide for Group Facilitation. London: Sage.
14.
JohnsonSKaufmannDMcMillanJWoodruffC (2000) Why do firms hide? Bribes and unofficial activity after communism. Journal of Public Economics76(3): 495–520.
15.
JonesTRamMEdwardsP (2006) Shades of grey in the informal economy. International Journal of Sociology and Social Policy26(9/10): 357–373.
16.
KlarićV (2011) Estimating the size of non-observed economy in Croatia using the MIMIC approach. Financial Theory and Practice35: 59–90.
17.
KruegarRACaseyMA (2009) Focus Groups: A Practical Guide for Applied Research. London: Sage.
18.
LittlewoodDRodgersPYangJH (2018) ‘The price is different depending on whether you want a receipt or not’: Examining the purchasing of goods and services from the informal economy in South-East Europe. The Service Industries Journal38(11–12): 688–707.
19.
MayerRCDavisJHSchoormanDF (1995) An integrative model of organizational trust. Academy of Management Review20(3): 709–734.
20.
MitrusL (2014) The fight against undeclared work: Sanctions and incentives. European Labour Law Journal5(2): 174–186.
21.
MurphyR (2012) Closing the European Tax Gap: A Report for Group of the Progressive Alliance of Socialists and Democrats in the European Parliament. Downham Market: Tax Research LLP.
22.
SamsonM (2016) The social uses of the law at a Soweto garbage dump: Reclaiming the law and the state in the informal economy. Current Sociology65(2): 222–234.
23.
SchindlerS (2016) Beyond a state-centric approach to urban informality: Interactions between Delhi’s middle class and the informal service sector. Current Sociology65(2): 248–259.
24.
SchneiderFWilliamsCC (2013) The Shadow Economy. London: Institute of Economic Affairs.
25.
ScottWR (2001) Institutions and Organizations, 2nd edn.Thousand Oaks, CA: Sage.
26.
SimJ (1998) Collecting and analysing qualitative data: Issues raised by the focus group. Journal of Advanced Nursing28(2): 345–352.
27.
SnyderKA (2004) Routes to the informal economy in New York’s East village: Crisis, economics and identity. Sociological Perspectives47(2): 215–240.
28.
StraussACorbinJ (1998) Basics of Qualitative Research: Techniques and Procedures for Developing Grounded Theory, 2nd edn.Thousand Oaks, CA: Sage.
29.
UzoUMairJ (2014) Source and patterns of organizational defiance of formal institutions: Insights from Nollywood, the Nigerian movie industry. Strategic Entrepreneurship Journal8(1): 56–74.
30.
TonoyanVStrohmeyerRHabibMPerlitzM (2010) Corruption and entrepreneurship: How formal and informal institutions shape small firm behavior in transition and mature market economies. Entrepreneurship Theory and Practice34(5): 803–831.
31.
WebbJWIrelandDR (2015) Laying the foundation for a theory of informal adjustments. In: GodfreyPC (ed.) Management, Society, and the Informal Economy. Routledge Advances in Management and Business Studies. Abingdon: Routledge.
32.
WebbJWBrutonGDTihanyiLIrelandRD (2013) Research on entrepreneurship in the informal economy: Framing a research agenda. Journal of Business Venturing28(5): 598–614.
33.
WebbJWTihanyiLIrelandRDSirmonDG (2009) You say illegal, I say legitimate: Entrepreneurship in the informal economy. Academy of Management Review34: 492–510.
34.
WelterFSmallboneD (2011) Institutional perspectives on entrepreneurial behavior in challenging environments. Journal of Small Business Management49(1): 107–125.
35.
WilliamsCC (2014) Policy approaches towards undeclared work a conceptual framework. GREY Working Paper No. 4.
36.
WilliamsCCHorodnicIA (2015) Evaluating the prevalence of the undeclared economy in Central and Eastern Europe: An institutional asymmetry perspective. European Journal of Industrial Relations21(4): 389–406.
37.
WilliamsCCHorodnicIA (2016) Evaluating the policy approaches for tackling undeclared work in the European Union. Environment and Planning C: Government and Policy35(5): 916–936.
38.
WilliamsCCMatrinez-PerezAKedirAM (2016) Informal entrepreneurship in developing economies: The impacts of starting-up unregistered on firm performance. Entrepreneurship, Theory and Practice41(5): 773–799.
39.
WilliamsCCHorodnicIAWindebankJ (2015) Explaining participation in the informal economy: An institutional incongruence perspective. International Sociology30(3): 294–313.
