Proceedings of Paris Economics, Finance and Business Conference
13 - 15 April 2015, Crowne Plaza Hotel Republique, Paris, France, ISBN: 978-1-922069-73-3
Dynamics of Informal Entrepreneurial Process
Govindan Marthandan*, Wan Fadzilah Wan Yusoff** and Noor Shahaliza Binti
Othman***
Study on entrepreneurs and entrepreneurial development has been in the forefront in management
research for quite some time. Many of the studies undertaken so far either focus or dwell upon the
formal and corporate entrepreneurship. The other form of entrepreneurship operates as informal
entrepreneurship influencing the economy of the country. Informal entrepreneurship is a worldwide
phenomenon but yet research community focused less on it. Like the formal and corporate
entrepreneurs, the informal entrepreneurs too promote informal form of company in more dynamic and
innovative areas and significantly contributing to the national economy. They also provide employment
avenues to the less skilled or less educated persons. Hence there is serious need to study why and
how the informal entrepreneurs get developed and pursue the process of entrepreneurship.
Several studies on entrepreneurship reveal the prevailing differences between the attitude, intention
and behaviour of the entrepreneurs. But in case of informal entrepreneur, this is yet to be empirically
established. Hence this research focuses on the factors enabling or influencing the need, motivation,
intention and the actual behaviour of informal entrepreneurs in Malaysia. While sociological theories
gives more emphasis on social, cultural and economic factors which be the cause for undertaking a
new venture, this study focuses more on psychological theories to build the relations between factors.
Psychological theories are mapped to the personal factors to fix the relevant factors among the first
time entrepreneurs and old timers. The framework covers a number of internal processes and external
environmental attributes, their interactions and mediating relationships as related to their impact on
their success, personal entrepreneurship capabilities and their contributions to their business
performance. The proposed framework details the determinants of entrepreneurial intrinsic and
extrinsic motivation, internal and external orientation and attitude. It also extends to study the intention
and behaviour of individuals to become an informal entrepreneur.
This research is sponsored by Ministry of Education, Malaysia as a part of the national plan. The
outcome of the research will help the government to precisely know the informal entrepreneurial
process and decide on the type and size of the interventions to be provided to protect as well as
convert them into formal entrepreneurs.
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*Graduate School of Management, Multimedia University, Malaysia, marthandan@mmu.edu.my
**Graduate School of Management, Multimedia University, Malaysia, wanfadzilah@mmu.edu.my
***Faculty of Management, Multimedia University, Malaysia, noor.shahaliza@mmu.edu.my