{"id":5089,"date":"2025-10-29T13:16:17","date_gmt":"2025-10-29T17:16:17","guid":{"rendered":"https:\/\/damore-mckim.northeastern.edu\/cem\/?post_type=dmsb_resource&p=5089"},"modified":"2026-07-13T14:21:25","modified_gmt":"2026-07-13T18:21:25","slug":"navigating-the-visibility-paradox-in-informal-economies-insights-from-south-africa","status":"publish","type":"dmsb_resource","link":"https:\/\/damore-mckim.northeastern.edu\/cem\/resources\/navigating-the-visibility-paradox-in-informal-economies-insights-from-south-africa\/","title":{"rendered":"Navigating the visibility paradox in informal economies: Insights from South Africa"},"content":{"rendered":"\n

This brief is part of the <\/em>Insights @ Center for Emerging Markets<\/em><\/a>, a publication focused on cutting-edge ideas and advice for global leaders about emerging markets<\/em>.<\/p>\n\n\n\n

By Robert Nason (McGill University, Canada), Siddharth Vedula (Miami University), Joel Bothello (Concordia University, Canada), Sophie Bacq (IMD, Switzerland), and Andrew Charman (Sustainable Livelihoods Foundation, South Africa)<\/strong>.<\/p>\n\n\n\n

In Short:<\/strong> In informal economies, visibility is both a necessity and a risk. Entrepreneurs must be seen to attract customers and partners, yet exposure also invites scrutiny from authorities or criminals. Drawing on fieldwork in the township of Delft, Cape Town, this study examines how informal business owners balance these competing pressures through \u201cselective visibility,\u201d strategically revealing themselves to certain audiences while remaining hidden from others. The findings show that \u201csocial embeddedness\u201d\u2014i.e., connections through age, gender, or nationality\u2014shapes how entrepreneurs navigate visibility. Policymakers and development practitioners can use these insights to design more nuanced, context-sensitive support for informal entrepreneurs.<\/em><\/p>\n\n\n\n

Across many emerging markets, informal businesses sustain local livelihoods yet operate in environments of uncertainty and limited regulation. For these entrepreneurs, visibility presents a paradox. Being visible helps attract customers, suppliers, and community trust, but it can also bring unwanted attention from tax authorities, law enforcement, or criminals. Drawing on a small-area census in Delft South (Cape Town, South Africa), the research shows visibility is not a yes-no choice but a calibrated practice. While a substantial share of firms choose a path of remaining \u201cinvisible\u201d, others practice one of two paths of \u201cselective visibility\u201d: either to the state (\u201cauthority-oriented visibility\u201d) or to local customers and networks (\u201ccommunity-oriented visibility\u201d).<\/p>\n\n\n\n

Who chooses which path? Social \u201cembeddedness\u201d (local roots) matters. Highly embedded entrepreneurs\u2014typically older, domestic, and female\u2014can leverage their trust and reputation to remain off the radar of formal authorities while sustaining sales via word-of-mouth. By contrast, less embedded entrepreneurs\u2014often younger men or recent migrants\u2014lack deeper local ties. They tend to pursue community-oriented visibility to win legitimacy and demand, accepting higher exposure to risks as a trade-off.<\/p>\n\n\n\n

Performance is configurational, not a one-size-fits-all. The study's qualitative-comparative analysis indicates no universal \u201cwin\u201d from full visibility. Paths to better performance tend to involve: (a) low-embedded entrepreneurs practicing community-oriented selective visibility, or (b) partially embedded entrepreneurs succeeding via invisibility or authority-oriented selective visibility, depending on age, gender, firm age, and local competition.<\/p>\n\n\n\n

What this Means for Policy and Practice<\/h5>\n\n\n\n

Visibility in the informal economy isn't inherently good or bad: it's shaped by context. What often looks like \u201cinvisibility\u201d is better understood as a risk-management strategy, not necessarily evasion. Policy can meet people where they are: make low-stakes registration simple, create safe first steps through amnesties or grace periods, and favor trust-building over punitive sweeps. When channels into formality are co-designed with community intermediaries, gradual engagement starts to feel credible and safe.<\/p>\n\n\n\n

Programs on the ground benefit from seeing how deeply entrepreneurs are embedded in their communities. Those who are highly embedded (frequently women and older locals) tend to value quiet growth: a steadier flow of customers, fairer supplier terms, small upgrades to home-based production. Others (often younger workers or recent migrants) may need pathways to public legitimacy: help choosing compliant locations, straightforward guidance on basic rules, and links to dispute resolution that don't require insider status.<\/p>\n\n\n\n

Managing the \u201cvisibility paradox\u201d means balancing protection with opportunity. If we recognize selective visibility as a rational strategy, we can design phased, trust-first interventions that strengthen (rather than expose) the informal firms that sustain local livelihoods.<\/p>\n\n\n\n

Original Work<\/h3>\n\n\n\n

Nason, R., Vedula, S., Bothello, J., Bacq, S., & Charman, A. (2024). Sight unseen: The visibility paradox of entrepreneurship in an informal economy.<\/a>\u00a0Journal of Business Venturing<\/em>,\u00a039<\/em>(2), 106364. Journal of Business Venturing Best Article 2024<\/em><\/p>\n\n\n\n

Contact<\/h2>\n\n\n\n

If you are interested in learning more about this work, contact Professor Robert Nason at robert.nason@mcgill.ca<\/a><\/strong>.<\/p>\n\n\n\n

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<\/p>\n","protected":false},"excerpt":{"rendered":"

Nason, Vedula, Bothello, Bacq, and Charman explore how entrepreneurs in South Africa's informal economy balance the need to be seen with the risk of exposure. Through fieldwork in Cape Town's Delft township, they introduce the concept of \u201cselective visibility,\u201d showing that entrepreneurs reveal themselves strategically to customers or authorities based on social embeddedness. Older, locally rooted business owners often remain discreet, while younger or migrant entrepreneurs seek community visibility for legitimacy. The study highlights visibility as a calibrated practice rather than a binary choice and calls for policies that de-risk gradual formalization, promote trust, and support context-sensitive growth for informal firms.<\/p>\n","protected":false},"featured_media":5094,"template":"","meta":{"post_unlisted":false,"post_preheader":"","post_footer":""},"category":[8,49,36],"dmsb_audience":[66,65,64],"dmsb_group":[],"class_list":["post-5089","dmsb_resource","type-dmsb_resource","status-publish","has-post-thumbnail","hentry","category-africa","category-entrepreneurship","category-insights","dmsb_audience-academics","dmsb_audience-practitioners","dmsb_audience-students"],"yoast_head":"\nNavigating the visibility paradox in informal economies: Insights from South Africa - Center for Emerging Markets<\/title>\n<meta name=\"description\" content=\"Nason, Vedula, Bothello, Bacq, and Charman explore how entrepreneurs in South Africa\u2019s informal economy balance the need to be seen with the risk of exposure. 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