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Legitimacy building of digital platforms in the informal economy: evidence from Indonesia

Legitimacy building of digital platforms in the informal economy: evidence from Indonesia This study aims to investigate how digital entrepreneurs develop platforms business models under an unregulated market and what approach they take to address informal economy (IE) activities.Design/methodology/approachThe author used a qualitative method by interviewing sixteen respondents, including founders, Chief Executive Officers, and managers of digital-driven start-ups in Indonesia. I then analysed the interviews into several codes and themes for further discussion.FindingsThis study reveals distinctive approaches performed by startups within three-level institutions, namely, users, market and regulation. Each level represents digital entrepreneurs’ unique behaviour, which the author described as collective, narrative and compliant.Research limitations/implicationsThis paper demonstrates that digital entrepreneurs leveraging informal sectors contribute to the process of formalisation. However, the author emphasise less on how it impacts informality and who receives incentives.Practical implicationsThis study suggests appropriate strategies for entrepreneurs who build and develop a platform beyond immature setting and unveils different directions to comprehend their legitimacy building.Social implicationsThis study also elucidates political implications such as how the dynamics between regulators’ response and entrepreneurs’ reaction shape the new regulative environment. An idea of self-regulate – entrepreneurs as actors instead of a subject of regulation – might be suitable to reflect how they overcome the bottom of the pyramid using technology innovation.Originality/valueWhile previous studies focused primarily on sharing economy, this study provides a different array of discussion on the digitalisation of the informal economy in emerging markets. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Entrepreneurship in Emerging Economies Emerald Publishing

Legitimacy building of digital platforms in the informal economy: evidence from Indonesia

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Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
2053-4604
eISSN
2053-4604
DOI
10.1108/jeee-02-2021-0073
Publisher site
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Abstract

This study aims to investigate how digital entrepreneurs develop platforms business models under an unregulated market and what approach they take to address informal economy (IE) activities.Design/methodology/approachThe author used a qualitative method by interviewing sixteen respondents, including founders, Chief Executive Officers, and managers of digital-driven start-ups in Indonesia. I then analysed the interviews into several codes and themes for further discussion.FindingsThis study reveals distinctive approaches performed by startups within three-level institutions, namely, users, market and regulation. Each level represents digital entrepreneurs’ unique behaviour, which the author described as collective, narrative and compliant.Research limitations/implicationsThis paper demonstrates that digital entrepreneurs leveraging informal sectors contribute to the process of formalisation. However, the author emphasise less on how it impacts informality and who receives incentives.Practical implicationsThis study suggests appropriate strategies for entrepreneurs who build and develop a platform beyond immature setting and unveils different directions to comprehend their legitimacy building.Social implicationsThis study also elucidates political implications such as how the dynamics between regulators’ response and entrepreneurs’ reaction shape the new regulative environment. An idea of self-regulate – entrepreneurs as actors instead of a subject of regulation – might be suitable to reflect how they overcome the bottom of the pyramid using technology innovation.Originality/valueWhile previous studies focused primarily on sharing economy, this study provides a different array of discussion on the digitalisation of the informal economy in emerging markets.

Journal

Journal of Entrepreneurship in Emerging Economies – Emerald Publishing

Published: Dec 1, 2022

Keywords: Digital entrepreneurship; Digital platforms; Informal economy; Strategies; Start-ups

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