Entrepreneurs in the Informal Economy

In: Business and Management

Submitted By benitalukusa
Words 2121
Pages 9
Introduction
The father of entrepreneurship, Joseph Schumpeter (1934), defines entrepreneurship as the ability a person to innovate in implementing changes in the market by coming up with new combinations. Cassim (1982) considers the informal sector participation as “a trap associated with impoverishment” and Habib (2005) considers the informal sector participation as “the survivalist response of marginalised persons with no alternatives.” The informal sector is a part of the economy that is not under the government control and therefore any business conducted in the informal sector cannot be regulated. This paper aim is to argue against the above mentioned assertions made by Cassim and Habib.
Is it true that the participation in the informal sector is associated with impoverishment? Is it true that people engage into conducting business in the informal sector because they need to survive as they have no other alternative? These two questions serve as a foundation into developing an argument against the assertions made by Cassim and Habib about the informal sector’s participation. The argument reflects on the entrepreneurial potential and dynamics in the informal sector.
This paper firstly discusses Cassim’s and Habib’s assertions to have a general understanding of what they meant. This is then followed by a brief overview of the South African informal sector and an argument against those assertions will be provided using useful example of informal sector participation’s contribution. Finally, a conclusion is provided summarising the paper. The following lines will brighten this essay.
Cassim’s and Habib’s perspective of the informal sector
Taking into consideration Cassim’s assertion, the informal sector’s participation is associated with impoverishment. This assertion is then reinforced by Habib, stating that informal sector’s participation is done by…...

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