Although the informal economy captures a sizeable share in many countries, a marked gap remains in our understanding of why some entrepreneurs actively operate ventures informally. Informal entrepreneurship is a deviant behavior that departs from formal institutions particularly. Building on anomie theory, we investigate two sources that influence informal entrepreneurial engagement—individual- and country-level factors. Specifically, we delve into the impacts of entrepreneurial motivations and self-efficacy at the individual level and those of government changes at the country level. Given the multilevel nature of informal entrepreneurship, we also investigate their combined effects. We test our theoretical model using a multi-sourced dataset comprising 14,636 ventures in 44 countries and regions. Using multilevel methodology along with several sensitivity analyses, our rigorous findings offer several key insights.
