Beyond Legitimate Entrepreneurship: The Prevalence of Off-the-Books Entrepreneurs in Ukraine

Abstract

Although entrepreneurs are commonly represented as risk-takers, there has been little evaluation of the extent to which they might weigh up the costs of being caught and the level of punishments, and engage in off-the-books work practices. Reporting a survey conducted in Ukraine during late 2005 and early 2006 of 331 entrepreneurs (defined as individuals starting-up an enterprise in the past three years), however, just 10% are found to operate on a wholly legitimate basis, while 39% have a license to trade and/or have registered their business but conduct a portion of their trade off-the-books and 51% operate wholly unregistered enterprises conducting all of their trade in the informal economy. The outcome is a call to move beyond the cleansed ideal-type representation of entrepreneurs as legitimate and wholesome super heroes that pervades the literature and towards a fuller understanding of the lived practice of entrepreneurship in the contemporary world.

Keywords: informal economy, entrepreneurship, shadow economy, underground economy, shadow economy, Ukraine

JEL Classification: H26, J46, K42, O17