Informality as a Continuum: Evidence from Four Furniture Manufacturing Clusters in Kenya

Debates about how to define the term 'informality' have lingered since the early 1970s when the terminology first entered into academic discourse, with the implication that writers have not been able to avoid the use of stipulative definitions. Some recent studies have indicated that the lack of a generally accepted definition arises from the fact that firms that may be collectively described as informal are intrinsically heterogeneous.

This presentation will use data from firms operating in four small furniture manufacturing clusters in Kenya to provide evidence in support of the existence of such heterogeneity. It will argue that as such heterogeneity exists even between firms operating in the same industry and cluster, informality should best be described as a continuum, rather than firms being bifurcated into formal and informal sectors. By exploring the characteristics of the furniture manufacturing firms, the presentation finds that the degree of informality varies between clusters and within clusters with some of the clusters exhibiting relatively high dynamism and growth potentials compared to others.

The findings call for the attention of academics and policy makers to focus on the firms in the middle of the continuum, whose distinctiveness has remained below the radar.