While many businesses in the informal sector are survivalist and micro enterprises, there is some heterogeneity in business size, innovation and capabilities. The diversity necessitates a shift from generalized support to differentiated policy and targeted interventions. In this policy brief, we apply a new indicator framework to distinguish different profiles of innovation capabilities in the informal sector. Four distinct business profiles – skilled emulators, incremental improvers, proactive survivalists and intrinsic innovators – are identified, each of which exhibits a unique combination of competences and strategies to innovate. The classification supports the design of targeted support to unlock growth potential.
Human Sciences Research Council (Fri,) studied this question.