EXAMINING THE EFFECT OF MOROCCAN INFORMAL MICROENTERPRISES’ ATTRIBUTES ON THE DECISION TO TRANSITION INTO A FORMAL STATUS

Abstract

Microenterprises have long been neglected in theoretical debates on the informal sector, receiving limited attention and superficial analysis. The aim of this article is to study the influence of the characteristics of informal microenterprises in Morocco on the decision to move to the formal sector. The article adopts a quantitative approach, focusing on 500 informal microentrepreneurs in northern Morocco. Through descriptive statistics and the use of a binomial logistic regression model, the study focuses on the effects of multiple aspects of these businesses. Data is collected and analyzed using the open-source tool R. The survey results reveal that engagement in a service-providing activity, the availability of business premises, and hiring more than four workers positively affect the propensity to formalize Moroccan informal microenterprises. Similarly, the use of simplified accounting systems, a longer period of existence and recourse to subcontracting are factors that encourage these ventures to opt for formalization. These findings are of key theoretical importance, exploiting the singularity of the Moroccan context and challenging the adoption of the neoliberal approach to explaining informality in Morocco. The conclusions are accompanied by recommendations designed to stimulate the transition to a formal sector. Implications of these findings for policy-makers, practitioners and entrepreneurs are discussed.