Understanding the intentions of informal entrepreneurs in Peru

Abstract

Purpose: This paper aims to focus on the influences that lead individuals to create and continue with operating informal business ventures in Peru. It seeks to empirically identify the factors that are significant in forming the intentions of entrepreneurs to begin or continue with their informal businesses. Design/methodology/approach: The theory of planned behaviour (TPB) is applied using data gathered from interviews with informal domestic gas cylinder sellers using a formally conducted survey. Using structural equation modelling, the constructs that influence the entrepreneurial intentions of informal gas sellers in Lima, Peru, are determined. Findings: Of the three TPB constructs, attitude was found to be most significant, reflecting a belief of informality’s benefits, social norm was also significant, revealing the importance of the opinions of family, whereas perceived behavioural control was found not to be significant. Originality/value: These results provide confirmation of a policy approach developed to address the high rates of business informality while maintaining safety in a highly regulated industry segment. By providing insight into factors beyond economic drivers, the study reveals that an understanding of the prevailing social environment is important for the development of policies dealing with informal entrepreneurship. © 2018, Emerald Publishing Limited.