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<p>Informal microenterprises are central to livelihoods in developing economies, yet their development paths often diverge. It challenges the traditional reductionist focus on financial constraints by testing a multidimensional capital framework to explain why some informal ventures scale while others remain in a subsistence trap. Utilising a quantitative cross-sectional design, data were collected from 617 informal microentrepreneurs across eight geographically diverse regions of Bangladesh. An ordered logistic regression model was employed to analyse how specific resource endowments and behavioural orientations predict the probability of transitioning between life cycle stages, reporting odds ratios, and average marginal effects to interpret probability changes across outcome categories. Multicollinearity diagnostics and proportional-odds tests were used to assess model assumptions. Entrepreneurial orientation is the strongest positive differentiator of favourable trajectories, followed by access and support and human capital; personal endowments also contribute positively. In contrast, financial literacy is negatively associated with growth trajectories, indicating a context-specific <i>“financial literacy paradox”</i> in which greater financial capability may correspond to stability-seeking and risk containment rather than expansion. Social capital and entrepreneurial competence do not exhibit direct effects once the broader resource bundle and behavioural orientation are modelled. This study advances the literature by moving beyond the financial–human capital dichotomy. It offers a novel theoretical contribution by identifying that successful informal growth requires a specific configuration of <i>“foundational buffers”</i> (endowments), <i>“institutional bridges”</i> (access), and <i>“behavioural proactiveness”</i> (EO), rather than simply more resources. The findings provide empirical nuance to the <i>“institutional void”</i> debate, highlighting how formal literacy can conflict with the <i>“animal spirits”</i> required for informal expansion.</p>

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The paradox of preparedness: re-examining the role of financial literacy and social capital in informal enterprise growth

  • 期刊论文

  • 出版模式：

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  • 发表日期：

    2026年7月14日

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  • Sarif Mohammad Khan,
  • Md. Nur Alam,
  • Imtiaz Masroor,
  • Md. Hesham Ahmed,
  • Md. Noor Un Nabi

摘要

Informal microenterprises are central to livelihoods in developing economies, yet their development paths often diverge. It challenges the traditional reductionist focus on financial constraints by testing a multidimensional capital framework to explain why some informal ventures scale while others remain in a subsistence trap. Utilising a quantitative cross-sectional design, data were collected from 617 informal microentrepreneurs across eight geographically diverse regions of Bangladesh. An ordered logistic regression model was employed to analyse how specific resource endowments and behavioural orientations predict the probability of transitioning between life cycle stages, reporting odds ratios, and average marginal effects to interpret probability changes across outcome categories. Multicollinearity diagnostics and proportional-odds tests were used to assess model assumptions. Entrepreneurial orientation is the strongest positive differentiator of favourable trajectories, followed by access and support and human capital; personal endowments also contribute positively. In contrast, financial literacy is negatively associated with growth trajectories, indicating a context-specific “financial literacy paradox” in which greater financial capability may correspond to stability-seeking and risk containment rather than expansion. Social capital and entrepreneurial competence do not exhibit direct effects once the broader resource bundle and behavioural orientation are modelled. This study advances the literature by moving beyond the financial–human capital dichotomy. It offers a novel theoretical contribution by identifying that successful informal growth requires a specific configuration of “foundational buffers” (endowments), “institutional bridges” (access), and “behavioural proactiveness” (EO), rather than simply more resources. The findings provide empirical nuance to the “institutional void” debate, highlighting how formal literacy can conflict with the “animal spirits” required for informal expansion.