Determinants of employees' participation in decision‐making in developing countries: Does a firm's formal versus informal status matter?

Abstract

Prior studies on the determinants of employees' participation in decision‐making have ignored the sector dualism (formal sector vs. informal sector) in developing countries, despite the differences in the characteristics of formal and informal firms. This paper tests the idea that a firm's formal versus informal status matters, using firm‐level data from Côte d'Ivoire. It emerges that a firm's formality status influences positively its probability to involve employees in decision‐making. This result holds after controlling for manager‐, firm‐, and sector‐level factors. Ultimately, the paper contributes to sending the signal that formalization of informal firms in developing countries should be beneficial to their decision‐making process and thereby to their performance.