Harnessing the Hidden Enterprise Culture : Supporting the Formalisation of Off-the-Books Business Start-Ups

PurposeProviding support to off-the-books business start-ups to help them make the transition to legitimacy could be a novel and effective method of creating new legitimate business ventures. The aim of this paper is to advance understanding of why some business start-ups operate off-the-books so as to explore how public policy might facilitate their transition towards formalisation. Design/methodology/approachTo do this, a survey is reported of 120 business start-ups in West Cornwall, of which 48 were operating wholly or partially off-the-books. FindingsThis study inductively reveals that entrepreneurs' rationales for trading off-the-books and the consequent barriers to formalisation differ according to whether the business start-up is wholly off-the-books, a registered business start-up conducting a portion of their trade off-the-books with no intention of further formalising, or a registered business start-up in transition to legitimacy. The outcome is that policy measures to facilitate formalisation need to be tailored to tackle the varying reasons for each type of business start-up trading off-the-books.Research limitations/implicationsGiven the limited data, more extensive research across varying populations is required to evaluate the wider validity of the reasons for off-the-books trading of these different types of business start-up.Practical ImplicationsIt reveals that the support required to help entrepreneurs to make the transition to legitimacy needs to vary according to the degree to which their venture presently operates off-the-books and whether they display any intention to move towards formalisation. Originality/value of paperThe first paper to identify the reasons business start-ups trade off-the-books and the different resultant policy measures required to support their formalisation