Informal businesses are not outside entrepreneurial ecosystems: they are shaped by the institutions, networks, markets and cultural practices around them, and they can also contribute to those systems. A 2025 review of 61 peer-reviewed studies finds that informal entrepreneurship is linked to factors such as regulatory burdens, institutional gaps and limited access to formal finance. A publisher excerpt describes a separate 2026 review of 72 papers reaching the broader conclusion that informal businesses belong in ecosystem analysis, though its full article details are not verified here.
What it means to include informal businesses in an entrepreneurial ecosystem
An entrepreneurial ecosystem is commonly understood as the interrelated institutions, people, networks and conditions that shape business activity. Treating informal businesses as peripheral can leave out part of that picture: the same policy environment, social norms, market access and relationships can shape both informal and formal entrepreneurship.
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In their 2025 systematic review, Tanya Munir and Sean Watts synthesize 61 peer-reviewed articles published from 2009 through 2023. Their review describes informal entrepreneurship as shaped by ecosystem structures, especially policy frameworks, social norms and cultural practices. It also finds that informal entrepreneurs may draw on both formal and informal networks to access resources, markets and legitimacy. Read the review abstract.
Why businesses operate informally
The reviewed literature associates informality with several conditions, including institutional voids, regulatory burdens and limited access to formal financial systems. These are recurring explanations in the literature, not a universal account of why any particular business operates informally. Businesses may face different combinations of constraints and incentives depending on their setting.
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- Institutional conditions: Gaps in public institutions or unclear rules can shape how entrepreneurs establish and run businesses.
- Regulation: Regulatory burdens are identified as one possible driver, but the review does not establish that every informal business avoids formality for this reason.
- Finance: Limited access to formal finance appears among the factors associated with informal entrepreneurship.
How informal businesses connect to the wider ecosystem
Informal entrepreneurs may use formal and informal relationships to find resources, reach markets and build legitimacy. This means ecosystem analysis should look beyond registered organizations and official programs to consider the networks and norms through which business activity actually takes place.
The 2025 review describes an emerging idea of an “informal entrepreneurial sub-ecosystem”: a connected setting with its own actors, norms and logic. It also identifies improved governance, targeted support and ecosystem-level coordination as relevant to transitions toward formality. These are themes in a synthesis of prior scholarship, not evidence that one policy pathway will work in every economy. See the review.
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What a Nigeria study illustrates—and what it cannot prove
A 2020 qualitative study by Paul Agu Igwe and colleagues offers a grounded example. The researchers interviewed 20 business owners and held two focus groups with business association leaders in Nigeria. Its abstract identifies formal and informal rules, market access and family as elements that can support knowledge flows, networking, capital and resource sharing. Read the study abstract.
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This evidence illustrates how ecosystem relationships may work in a particular setting; it is not a representative estimate of informal businesses in Nigeria or elsewhere. The abstract excerpt does not give the number of focus-group participants.
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What the 2026 review claim establishes
An Inderscience publisher search excerpt describes a 2026 systematic review covering 72 papers published from 2009 through 2025 and says its argument is that informal businesses belong within the larger entrepreneurial ecosystem. The 72-paper figure refers to the review’s corpus, not to the number or economic weight of informal businesses.
The accessible publisher record does not establish the review’s full authorship, detailed methods or complete findings. Its reported scope and central argument can be noted, but more specific claims should not be attributed to it without the article itself. View the Inderscience forthcoming-publications page.
Independent reader supportYour contribution helps us test, update, and keep practical guides available for everyone.How to compare ecosystem policies and cases
The reviews and Nigeria example suggest useful questions for comparing cases. These are analytical lenses drawn from the literature, not a validated universal scoring system.
- Rules and institutions: What formal requirements, informal rules or institutional gaps shape business activity?
- Finance and markets: How do businesses access formal finance and reach customers or suppliers?
- Networks and legitimacy: Which formal and informal relationships help entrepreneurs obtain resources, markets or recognition?
- Culture and community: How do social norms, family and community resources affect business activity?
- Transitions to formality: What governance, targeted support or coordination is available, and how does it relate to the local context?
Using these questions keeps the focus on how businesses interact with their environment instead of treating informality as a single, uniform condition.
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