The effect of informal competition on the performance of formal firms: a systematic review of the literature

Purpose

The purpose of this paper is to examine the empirical literature on the effects of informal competition on firm performance and provide directions for future research.

Design/methodology/approach

We search the Scopus and Web of Science databases and adopt a specific protocol to perform a systematic review of the literature. We screen 536 documents and apply three inclusion criteria for filtering.

Findings

We identify the impact of informal competition on nine types of formal firms' performance. We assess the findings according to the explanatory and response variables and the data samples of the articles reviewed. We find that five areas of focus are under-researched due to analyses of country or region-specific data, or lack of consensus because of contradicting findings.

Originality/value

To the best of our knowledge, this is the first review of the empirical literature on the effects of informal competition on the performance of formal firms.