Uplifting the underdog: The impact of remittances on transforming informal entrepreneurship

Abstract

With a combined theoretical lens of the informal economy and entrepreneurial mobility, this research explores the role of remittances in promoting the transitions from informal to formal entrepreneurship. We propose a mediation model where venture funding availability partially mediates the relationship between remittances and the transition from informal to formal entrepreneurship. We posit that remittances can serve as a critical pathway for promoting the entrepreneurial mobility of underdog entrepreneurs in the informal sector, ultimately boosting the transition from informal entrepreneurship to formal entrepreneurship in the home country. Our study highlights the need for policies and programs designed to attract and facilitate remittances. Such initiatives could allow underdog entrepreneurs to gain improved access to financing and other forms of startup capital, thereby easing the transition from informal to formal entrepreneurship.