Factors Impacting Intention of Formalisation of Egyptian MSMEs; What about Social Media?

Abstract

Research on the impact of social media (SM) on the formalisation – switching from the informal to the formal sector – of micro, small, and medium enterprises (MSMEs) is scant if existent; Egypt is no exception.  The need for MSMEs to increase productivity and growth are vital to Egypt’s own growth and development, and formalisation tops the list of prerequisites. This study aims to examine the impact of the factors perceived by informal entrepreneurs to motivate/hinder formalisation on those entrepreneurs’ intention to formalise their MSMEs. SM usage is a new factor whose impact on the intention of formalisation is also investigated. This is accomplished by adopting the conceptual framework of the Theory of Planned Behaviour (TPB). A logistic regression model was used on data collected through questionnaires from a sample of Egyptian female and youth male MSMEs owners, who comprise most informal entrepreneurs in Egypt. Results demonstrate that the factors affecting the intention of formalisation of female and youth male informal entrepreneurs are different. However, for both groups, higher educational levels and SM usage negatively affect their intention of formalisation. The one size fits all policies encouraging formalisation might not work given these differences.