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The Conversion From Informality To A Formal Entity: Links To The Nature Of The Owner-Manager

Author

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  • EL HASSANIA RAHOU

    (Faculty of Legal, Economic and Social Sciences, University Abdelmalek Essaâdi, Avenue Khenifra, Tétouan 93000, Morocco)

  • AHMED TAQI

    (Faculty of Legal, Economic and Social Sciences, University Abdelmalek Essaâdi, Avenue Khenifra, Tétouan 93000, Morocco)

Abstract

Recognizing the heterogeneity of informal microentrepreneurs, this paper assesses the determinants of their willingness to enter the formal sector. Based on human capital theory and social capital theory, we test the hypothesis that firm decision-making regarding formalization is a function of the nature of the informal microentrepreneur. Using data collected from 500 informal microentrepreneurs in Morocco, and employing a logistic regression model, we find that higher education level, motivation by business opportunity, entrepreneurship training, work experience, gender and the importance of social networks have an impact on the desire to formalize. The paper concludes by discussing the theoretical and policy implications.

Suggested Citation

  • El Hassania Rahou & Ahmed Taqi, 2021. "The Conversion From Informality To A Formal Entity: Links To The Nature Of The Owner-Manager," Journal of Developmental Entrepreneurship (JDE), World Scientific Publishing Co. Pte. Ltd., vol. 26(04), pages 1-20, December.
    • Handle: RePEc:wsi:jdexxx:v:26:y:2021:i:04:n:s1084946721500278
    DOI: 10.1142/S1084946721500278
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