Explaining process innovation in developing countries: The role of a firm's status, formal or informal

Process innovation has been shown to influence positively firms' productivity. This has led to a fruitful literature on its determinants. However, in the context of developing countries, the potential role of firms' formal versus informal status as a determinant has been overlooked. The objective of this paper is to fill this gap in the literature by analyzing the effect of firms' formal versus informal status on the introduction of process innovation using data from Côte d'Ivoire. Econometric estimations show that formality status positively influences the introduction of process innovation. This result remains unchanged when the industrial, services, and trade sectors are considered separately. Policy implications are discussed.