Scholarlink

<p>We examine whether and how impact investment—investing to secure both financial and social returns—is associated with formalization at founding. While impact investing has increasingly been promoted as a tool to support economic development, evidence on its relationship with patterns of formal firm entry in the Global South remains limited. This is important because while informality provides important livelihoods, widespread informal activity constrains growth, limits employment quality, and weakens public revenue generation, thereby hindering broader economic development. Building on the external enabler framework, we theorize that impact investment increases the likelihood that new firms register formally at inception. This relationship operates through two pathways: directly, by improving access to resources and enhancing the viability and legitimacy of formal operations; indirectly, by reducing corruption. Analyzing a novel, comprehensive dataset of impact investments in 86 countries, we find support for our hypotheses. These effects are particularly strong in lower-middle-income countries, illustrating the varying effects of impact investment. By providing large-scale, cross-country evidence on how impact investors affect new-firm formalization, we advance work on firm formalization and external enablement.</p>

错误：搜索内容不能为空，请输入英文关键词
错误：关键词超出字数限制，请精简
高级检索

Impact investment as an enabler of firm formalization in the Global South

  • 期刊论文

  • 发表日期：

    2026年4月1日

查看全文
  • Gilbert Kofi Adarkwah,
  • Peter Kalum Schou

摘要

We examine whether and how impact investment—investing to secure both financial and social returns—is associated with formalization at founding. While impact investing has increasingly been promoted as a tool to support economic development, evidence on its relationship with patterns of formal firm entry in the Global South remains limited. This is important because while informality provides important livelihoods, widespread informal activity constrains growth, limits employment quality, and weakens public revenue generation, thereby hindering broader economic development. Building on the external enabler framework, we theorize that impact investment increases the likelihood that new firms register formally at inception. This relationship operates through two pathways: directly, by improving access to resources and enhancing the viability and legitimacy of formal operations; indirectly, by reducing corruption. Analyzing a novel, comprehensive dataset of impact investments in 86 countries, we find support for our hypotheses. These effects are particularly strong in lower-middle-income countries, illustrating the varying effects of impact investment. By providing large-scale, cross-country evidence on how impact investors affect new-firm formalization, we advance work on firm formalization and external enablement.