This article outlines a new approach to firm behaviour different from both ‘dichotomist’ and ‘continuum’ formal/informal models. The approach adopts a new heuristic based on the notion of a borderland as space of interaction between dimensions of formality, and creates an umbrella category of trans-formal firms, which are neither purely formal nor informal. Three formality dimensions are adopted: (i) registration of the firm, (ii) existence of a bank account in the name of the firm, and the (iii) presence of an official balance sheet. After elucidating the new approach theoretically, the paper assesses the analytical capacity of the approach with quantitative and qualitative information representing 16 Egyptian and 16 Palestinian firms. The majority of the considered firms are found to be trans-formal moving in a space of decision-making representing our new, broadened notion of borderland showing that policies aiming at formalization processes misrepresent the realities of significant numbers of firms.

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Keywords institutional economics of the firm, informal economy, borderland economy, (trans-formal) firms, Palestine, Egypt
Publisher International Institute of Social Studies of Erasmus University (ISS)
Persistent URL
Series ISS Working Papers - General Series
Journal ISS Working Paper Series / General Series
Floridi, A, Wagner, N, & Cameron, J. (2016). A study of Egyptian and Palestine trans-formal firms – A neglected category operating in the borderland between formality and informality (No. 619). ISS Working Paper Series / General Series (Vol. 619, pp. 1–25). International Institute of Social Studies of Erasmus University (ISS). Retrieved from