Associate Professor Joel Bothello, Concordia University
In many informal economies, new ventures must minimise their exposure to certain audiences, for instance, law enforcement or criminal elements. At the same time, entrepreneurs must also attract the attention of customers and resource providers in order to overcome liabilities of newness. We explore this “visibility paradox” for informal economy entrepreneurs by examining the multidimensionality of visibility and how it is associated with embeddedness and performance in an informal economy. We leverage a unique, hand-collected, small-area census dataset of ventures in the township of Delft South in Cape Town, South Africa, providing rare insight into a population of otherwise unobserved ventures. Through an abductive approach that includes quantitative and configurational analyses, we identify distinct dimensions of visibility, namely authority- vs. community-oriented visibility. Using qualitative comparative analysis (QCA), we explore how these dimensions of visibility are associated with entrepreneur, venture, and industry characteristics as well as performance. Our theoretical framing of embeddedness reveals insider/outsider status as a key factor in venture visibility and show that authority- and community-oriented visibility have a joint bearing on venture performance. We distill our abductive findings into the concept of selective visibility, which we define as practices around making a venture visible to certain stakeholders but not to others.
We advance research on legitimacy by theorising a multilevel model of how an individual legitimacy belief—propriety—is affected by an exogenous shock and how two collective constructs—validity and consensus—influence this effect. Whereas validity can reflect underlying consensus, the constructs are not the same, given that validity may hide disagreement and thus low consensus. Disentangling validity from consensus allows us to theorise that changes in evaluators’ propriety beliefs are strongest following exogenous shocks characterised by high validity and low consensus, because a shock may reveal that validity was contested. Using a regression discontinuity design based on data from 6,198 evaluators across 16 countries, we examine the effect of the 2008 financial crisis on individuals’ propriety beliefs in free markets. Our results provide empirical support for our theory and thereby shed light on how legitimacy changes in the wake of an exogenous shock.
