The bright side of formalization policies! Meta-analysis of the benefits of policy-induced versus self-induced formalization

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Abstract

This paper provides a meta-analysis of the impact of business formalization on performance. We exploit a meta-dataset of 1,271 estimates derived from 20 studies available until October 2019. The analysis reveals that formalization is associated with fairly small benefits that take time to materialize. We then exploited the difference between policy-induced formalization and self-induced formalization investigating underlying effects, publication bias, and sources of heterogeneity. Policy-induced formalization brings large benefits, whereas self-induced formalization only results in medium benefits, suggesting that indeed formalization can be spurred by adequate policy actions. To be most effective, formalization policies should be implemented with information sessions, trainings/workshops, and business development services to unleash the growth potential of newly formalized firms in the most potent way.
Original languageEnglish
Pages (from-to)1807-1812
Number of pages6
JournalApplied Economics Letters
Volume28
Issue number20
DOIs
Publication statusPublished - 25 Jan 2021

Bibliographical note

Publisher Copyright:
© 2021 The Author(s). Published by Informa UK Limited, trading as Taylor & Francis Group.

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