Navigating Informality: Entrepreneurial Agency, Institutional Constraints, and Livelihood Strategies in Lagos

Entrepreneurship within the informal sector is a dominant feature of urban economies across Africa, yet scholarly understanding of how entrepreneurs navigate this complex environment remains fragmented, particularly regarding the interplay of individual agency and structural constraints. This study investigates the strategies employed by informal entrepreneurs to sustain their livelihoods, specifically examining how entrepreneurial agency is enacted within, and constrained by, the institutional environment of a major African metropolis. A qualitative, interpretive methodology was employed, using semi-structured interviews and participant observation with 32 informal entrepreneurs across three major markets in Lagos. Data were analysed using a thematic analysis approach to identify patterns of strategic action and perceived constraints. Analysis revealed a core theme of 'pragmatic negotiation', where entrepreneurs actively engage in informal institutional practices to circumvent formal regulatory barriers. A significant finding was that over two-thirds of participants described creating hybrid value chains that strategically blend informal social networks with formal sector suppliers to secure resources and reduce transaction costs. The study concludes that informal sector entrepreneurship is characterised by a dynamic, adaptive agency, but this is significantly channelled and limited by a restrictive formal institutional environment, which paradoxically reinforces informality. Policymakers and microfinance institutions should develop tailored financial products that recognise hybrid business models and support the formalisation of specific operational facets, rather than pursuing blanket formalisation policies. Engagement should be based on understanding existing entrepreneurial logics. informal sector, entrepreneurial agency, institutional theory, livelihood strategies, qualitative research, Nigeria This paper provides novel empirical evidence of the 'hybridisation' of value chains as a key livelihood strategy, contributing a refined conceptual framework for understanding agency within institutional constraints in informal economies.