Deviant response: The effect of income inequality on informal entrepreneurship in emerging economies

Drawing on anomie theory, this study examines how income inequality affects informal entrepreneurship in emerging economies. Using a sample of 6,143 new ventures across 34 emerging economies over the period of 2012 to 2013, we find that income inequality encourages informal entrepreneurship, and this relationship is weaker for entrepreneurs with greater general human capital, financial capital, and partnerships. This study enhances our understanding of the social incentives for informal entrepreneurship and how the role of income inequality in informal entrepreneurship varies with entrepreneurs’ access to resources. Moreover, we also advance anomie theory by extending its application beyond traditional deviant behaviors.