Challenges of the Informal Economy for the Field of Management

Executive Overview The informal economy comprises business activities that are unregistered and unregulated but not otherwise illegal (Hart, 2006). Studying informal activity yields important insights for mainstream theories of management, pointing to areas for new theorizing on the boundaries of the firm, diversification, dynamic capabilities, absorptive capacity, property rights, governance, stakeholder theory, disruptive technology, innovation, and organizational legitimacy. I argue that research on this sector is not only an opportunity for management scholars but also essential to the continued relevance and vitality of management as a discipline.