Factors Impacting Intention of Formalisation of Egyptian MSMEs: What about Social Media? Rania Miniesy 1 and Hadia Fakhreldin 2 1 Department of Economics, The British University in Egypt, Egypt 2 Department of Business Administration, The British University in Egypt, Egypt rminiesy@bue.edu.eg Hadia.fakhreldin@bue.edu.eg 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. Keywords: Social Media; Informal Economy; Msmes; Theory of Planned Behaviour (TPB); Formalisation; Egypt 1. Introduction MSMEs play a significant role in the Egyptian economy, contributing in 2017 to around 80% of GDP and 75% of employment in the private sector (El-Said and Ahmed, 2017). MSMEs are predominated by microenterprises (91% of the total number of firms), most of which are in the informal sector (El-Said and Ahmed, 2017; Kolster, 2016). Informal enterprises in this study are those unofficial/unregistered enterprises that do not comply with the official rules; however, they perform legal economic activities concealed from the formal system (ILO, 2013). Informal/unofficial enterprises usually result from the desire to escape regulations’ administrative and/or financial burdens (Djankov et al, 2010). Informality has favourable socio-economic outcomes, including reducing poverty levels (Nguyen et al, 2014). Nevertheless, it can have adverse effects both on a macro and micro levels. In Egypt, informality is argued to have negatively affected the productivity of Egyptian MSEs (Hendy and Zaki, 2012), and constrained their growth (Saif and Ghoneim, 2013). This consequently curtails Egypt’s economic growth and highlights the importance of motivating formalisation. This requires identification of the factors that motivate and hinder formalisation. In Egypt, being a female and/or a youth is among the main determinants of informality (Abou-Ali and Rizk, 2015; Hendy and Zaki, 2012). As for formalisation, it has many factors, the most important of which is the need to expand to become eligible for government support services and access to finance, to create formal contractual agreements and to avoid legal prosecution (Saif and Ghoneim, 2013). A recent factor that was added to the literature that supports the expansion and development of MSMEs is the use of information and communication technologies (ICTs), including SM (Adam et al, 2016). However, the effect of ICTs, in general, on the size of the informal sector or on formalisation has been scantly discussed with contradictory results (Molony 2008; Garcia- Murillo et al, 2013; Garcia-Murillo and Velez-Ospina, 2017). Meanwhile, to the best of the authors’ knowledge, no literature has examined the role that SM specifically plays in the informal economy or on formalisation. Regarding Egypt, recent studies have examined the impact of SM use on MSMEs performance (Fakhreldin et al, 2020; authors, forthcoming), on the formation of informal online businesses/digital entrepreneurship (Miniesy et al, 2022) and on women and youth male entrepreneurs’ empowerment (Beninger et al, 2016; Miniesy et al, 2021) but nothing on its impact on formalisation, which highlights a research gap that this study is intended to fill. Using the conceptual framework of the theory of planned behaviour (TPB), this study utilises a logistic regression model to investigate the impact of the factors perceived by informal entrepreneurs to motivate/hinder formalisation on their formalisation intention. SM usage is a new factor whose impact on the intention of formalisation is also investigated. Relevant data were collected from self-assessment questionnaires, carried 191 Proceedings of the 10th European Conference on Social Media, ECSM 2023