Abstract

Microentrepreneurs represent the most common type of business in the world, and marketing is a primary means by which they earn their livelihoods. They are especially numerous in emerging markets, and many live precarious lives characterized by poverty and potentially devastating exogenous shocks. This paper examines the marketing practices of microentrepreneurs by studying grocery retailers in a large slum in Cairo, Egypt. Employing detailed data on the marketing practices of these retailers, the paper examines why some microentrepreneurs engage in innovation in their marketing practices (and perform better), whereas others fail to do so. We highlight the causal effect of an important, but rarely studied, factor—informal property rights—on innovation in marketing practices among microentrepreneurs. Because few microentrepreneurs in the context we study have access to formal property rights, the threat of expropriation looms large in their lives. We show that those microentrepreneurs who possess their stores (without actually owning them) are substantially less likely to innovate in their marketing practices than those who lease their stores. We make use of an exogenous shock to property-rights laws to assess the causal impact of informal property rights on innovation in marketing practices.