What we do

Description:

To date, few studies have sought to explain the role of digitalization in the formalization of informal companies (Korwatanasakul, 2022). Some scholars have argued that a degree of success accrues when there is institutional support inn the formalization process. However, case studies are isolated and there remains little understanding of the formalization process (Cavotta et al., 2022). There is still a need for an integrating framework of analysis in order to elucidate the key variables in the success or failure of formalization by informal companies.

Our proposal seeks to facilitate the development of a theoretical framework with which to understand this phenomenon, identifying the interactions between digital connectivity and other strategic variables that affect company behavior. These include resources and capabilities, the external environment, and institutions. Digital connectivity can be regarded as a disruptive new variable that accelerates and encourages the formalization of informal businesses.

To this end, this research applies a qualitative methodology to the study of eight business cases in China and Peru (two case studies in the manufacturing industry and two case in the service industry for each country). Although both countries are characterized as emerging economies, their economic, political, and cultural systems are quite different. A comparative approach is therefore important. China’s academic output and practical experience on digitalization exceed that of Peru (Lee & Huang, 2014). We aim to bridge this gap by analyzing the connection between the adoption of digitalization—whereby companies can take advantage of technology available on the market—and the transition towards the formalization of informal companies in the Peruvian context.

Participating institutions:

• Center for China and Asia-Pacific Studies

Main researchers: