High-Technology Entrepreneurship in Emerging Economies: Firm Informality and Contextualization of Resource-Based Theory

Abstract

High-technology entrepreneurship in emerging economies takes place in a context very different from that of developed economies. In large measure, this difference is due to greater resource constraints and higher levels of firm informality in emerging economies. In this study, we examine formal versus informal young high-technology ventures, assessing the extent to which firm informality moderates the relationship between technology investments and firm performance in an emerging economy. We find that technology investments are positively related to firm performance. Yet, firm informality positively moderates the relationship between resources and firm performance. The effect of resources tends to be contingent on the level of firm informality in an emerging economy. Greater resource constraints and higher levels of firm informality not only represent critical factors in emerging economies, but also are essential for contextualizing resource-based theory.