From Informality to Formality: The Interplay of Economic Motivation, Future Intention, and Behavioral Control in Entrepreneurial Transitioning

Adebanji Adejuwon William Ayeni ()
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Adebanji Adejuwon William Ayeni: Business School, North West University, Private Bag x6001, Potchefstroom 2520, North West Province, South Africa

Administrative Sciences, 2025, vol. 15, issue 11, 1-19

Abstract: Informal entrepreneurship is a pervasive feature of developing economies, yet the psychological drivers of the transition to formal entrepreneurship remain poorly understood. Grounded in the Theory of Planned Behaviour, this research investigates the mediating role of behavioural control in the relationship between economic motivation and future intentions’ transition to formalisation among informal entrepreneurs in Nigeria. Using a cross-sectional survey design, primary data were collected from 544 informal electronics entrepreneurs across six major marketplaces in South-West Nigeria. The data were analysed using structural equation modelling in the PLS 4 software. The findings showed that behavioural control significantly and substantially mediates the positive direct effect of economic motivation on formalisation intention. This indicates that informal entrepreneurs are more likely to translate financial aspirations into concrete plans for formalisation when they possess a strong belief in their own capabilities to navigate the process successfully. Consequently, we conclude that effective policy must move beyond purely financial incentives to embrace strategies that build entrepreneurial skills, simplify regulatory procedures, and enhance the self-efficacy of informal entrepreneurs, thereby empowering them to confidently transition into the formal economy.

Keywords: economic motivation; future intention; behavioral control (search for similar items in EconPapers)
JEL-codes: L M M0 M1 M10 M11 M12 M14 M15 M16 (search for similar items in EconPapers)
Date: 2025
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