DOI: 10.1002/isd2.12093E D I TO R I A LIT for the informal sector in developing countries: A broader
perspective
Abstract
Although the informal sector's presence in the developed world is by no means meagre, the themes and issues related to
information technology (IT) for this sector in the developing country contexts seem stark and deeply contrasted with those
relating to the informal sector in developed countries. Solutions which attempt to exploit the potential of IT for the informal
sector have thus far been either knee‐jerk, ad‐hoc, or have mimicked those targeted at the formal sector. However, technology
tools available today can accelerate, catalyze, and go beyond the conventional straight‐jacketed technology, economic, and policy
solutions for the informal sector. The papers in this special issue reflect this theme and attempt to present a glimpse of the
possibilities for achieving and the challenges in effecting such solutions.1 | INTRODUCTION
Debates about informality have appeared intermittently in the academic literature since the late 1960s, especially in the field of economics
(Gërxhani, 2004). Two reasons drive this interest among academia and policy makers. First is the very definition of the informal sector; the nature
and size of the sector continues to be debated (ILO, 2014; Tokman, 2007). While one view classifies the sector into subcontracted employees,
self‐employed, working for one's family, and small entrepreneurs (Vanek, Chen, Heintz, & Hussmanns, 2014), another classifies it into three
distinct employment categories in the informal sector, the formal sector, and domestic work sector (Bhattacharya, 2019; Martinez, Short, &
Estrada, 2017). The second reason is the social, political, and economic implications of the informal sector. Governments across the world have
persisted in their attempts to either embrace this sector or in non‐obvious ways bring it into their macroeconomic purview largely for the
purpose of labor safety, economic control, and tax compliance. Yet the informal sector has endured such attempts and may continue to do so
in an increasing number of ways and forms. The conceptual relevance of the sector and its functioning are therefore significantly appealing to both
academic researchers and practitioners, especially in the policy formulation arena.
The rapid proliferation of IT in the last decade or so, combined with the increasing potential benefits of such technologies on individuals,
organizations, and society, demands that academic research in the IS/IT area analyzes the nature, role, and intensity of the consequences of
use of such technologies on the informal sector. It is often hoped that technology support for the informal sector can bring in the much‐needed
increase in efficiency (Johnson & Thakur, 2015). However, the dominant focus of research in this area has been on the use, adaptation, and effects
of mobile phones as communication devices. Extensive reviews of the academic literature on mobile phone use and adaptation by the informal
sector and small‐medium enterprises are available (Donner, 2008). The use of other information technology–based devices and/or applications
including both social‐media–based networking applications or professional work‐related applications such as task schedulers, e‐commerce
platforms, payment systems, and bookkeeping applications now demands discussions in the context of the informal sector (Ilavarasan, 2019;
Rangaswamy, 2019).2 | PAPERS IN THIS SPECIAL ISSUE
Studies on IT for the informal sector can be classified into two central themes. The first focuses on how technology has enabled the fulfilment of
traditional notions of socioeconomic development such as enhanced livelihood opportunities, access to education, healthcare, and credit. This
cluster of studies has quite often seen technology as a black‐box, one that is given and one that users buy, use, and gain benefits from. The second
theme that has garnered space in the Information and CommunicationTechnologies for Development (ICT4D) literature involves a broader view of
technology use by informal sector participants, such as by drawing attention to less insular demographic and livelihood settings.E J Info Sys Dev Countries. 2019;85:e12093. wileyonlinelibrary.com/journal/isd2 © 2019 John Wiley & Sons Ltd 1 of 5
https://doi.org/10.1002/isd2.12093
2 of 5 EDITORIALIn the Hawaii International Conference on System Sciences, we invited authors to present papers as part of a workshop on IT for the
Informal Sector in Developing Countries (HICSS, 2018). During this workshop, the role of information technology in aiding the progress of
the informal sector and mitigating the challenges they face were discussed. A context for further exploration including theoretical approaches,
potential gaps in current literature, and ideas for country‐specific case studies were reviewed. Our idea of this special issue stemmed from that
workshop. Extended versions of two of the papers presented at the workshop also appear as part of this special issue, apart from seven
other papers. In the HICSS workshop as well as in this special issue, we aimed to bring together papers from both central themes mentioned
above.
In this issue, we present nine papers, each focusing on a different facet of IT for the informal sector. While four of the papers discuss
specific initiatives to create and use technology solutions for the informal sector, three others take a broader perspective and present overview
frameworks for different facets of the theme, and two papers debate the state of the informal sector, questioning the assumptions about the
sector's use of ICT while at the same time drawing our attention to new characteristics enabled by ICT.
The first two papers of the special issue present glimpses of an ongoing debate relating to IT for and in the informal economy. Bhattacharya
(2019) in his paper titled “IT solutions for the informal economy in developing economies: What can one expect?” critiques the common myths
about the informal sector while placing forth two significant competing perspectives about the sector: firstly, the notion that informal businesses
can be a transition stage in the course of development as informal labor migrates to the formal urbanized economy; and secondly, the perspective
where the informal sector is seen as a means of survival for the poor who are typically, for reasons of skill and access, excluded from the formal
sector. Bhattacharya also suggests the need to question fundamental assumptions regarding the role of IT in the informal economy, one that
assumes the stance of efficiency‐aiding while relegating the challenges that it imposes on the skills demanded from the labor in the sector to
the background. Rangaswamy (2019), in her paper titled “A note on the Informal Economy,” identifies an alternate “informal” where, in the
internet‐fueled gig economy, freelancing actors who are also technically skilled professionals form the new segment of informal workers apart
from the gamut of service providers relating to technology including those who repair and upgrade ICT devices. Rangaswamy contends that these
have compounded informality in the context of businesses and work practice in general. These may well help fulfil the long‐standing demands of
the informal workforce in attesting greater recognition to their presence and contribution to the economy of different nations, especially the
developing and emerging economies.
In “The Use of ICT in the Informal Recycling Sector: The Brazilian case of RELIX,” Coelho, Hino, and Vahldick (2019) described the Relix project
in Northeast Brazil, which promotes cultural and educational interventions for recyclable waste picking. The project provides a mobile application
to connect the local population to waste pickers. Not surprisingly, the authors show us that the app could not single‐handedly promote any
meaningful changes in the lives of people. Despite this, the app was able to help waste pickers and the population to connect, and the article
describes how ICT can improve working conditions and create more innovative and equitable environments.
The paper by Uduji, Okolo‐Obasi, and Asongu (2019) titled “The impact of e‐wallet on informal farm entrepreneurship development in rural
Nigeria” focuses on the impact of Nigerian government's mobile e‐wallet subsidy programme for farmers in rural communities. The topic is
significant given the socioeconomic role mobile technologies continue to play for rural and farming communities in developing countries. Based
on a survey, the study argues that the success of e‐government mobile money subsidy for rural farmers depends on their mobile network access
and ICT literacy. The paper therefore calls on developing country governments to promote mobile network access for farm entrepreneurship in
rural communities.
An approach to understand the benefits that ICT can provide the unbanked is also dealt with in the paper titled “Computing for Social Good:
Supporting Microfinance Institutions in Zambia” by Wakunuma, Siwale, and Beck (2019). They investigate the link between ICTs, micro‐finance
institutions (MFIs), and provision of social goods for the unbanked in Zambia. Specifically, the study finds out whether ICT in MFIs leads to social
goods, defined as the broader benefits for communities beyond immediate economic advantages for firms and their customers. The topic is
relevant given the growing ICT potential for financial inclusion for the unbanked in rural communities in the developing world. Using evidence
from interviews, the paper argues that beyond direct economic gains of increased revenues and reduced costs, ICT in MFIs can promote proximal
access to financial services and improved living conditions for remote and rural communities.
Digital divide is the focus in Siqueira, Souza, and Barbosa's (2019) article on “Using a Digital Divide Index among Enterprises in the Context of
Public Policies in Brazil,” where the discussion presented is the relevance of an index capable of measuring digital divide among small and medium
enterprises (SMEs) and its importance in the context of public policies. In Brazil, and we could extend this argument to the developing world, the
digital divide mainly affects microenterprises and SMEs. The classification of informal, micro, and small enterprises can largely vary in different
countries and world regions, but an ICT indicator of digital divide among these enterprises can be useful for managers leading public policies
for economic development.
Ilavarasan's (2019) paper “Present and future of use and impact of Information and communication technology in the informal
microenterprises: Insights from India” extends the focus on digital divide and argues, based on the Indian case, that usage of information and
communication technologies (ICTs) in informal microenterprises in the developing world is still in the nascent stages. The informal
microenterprises have not (yet) received the desired and expected impact of ICTs. The authors argue that the future pathways of linkage between
ICTs and informal enterprises can be reshaped by the emerging automation technologies, an avenue for future studies.
EDITORIAL 3 of 5The next paper by Tabassum, Kulathuramaiyer, Harris, and Yeo (2019) titled “The Indirect and Intangible impacts of a Telecentre on a Rural
Community” focuses on indirect and intangible impact of telecentres on nonusers in Bario, a rural community in Malaysia. This focus is significant
given the limited ICT infrastructure and literacy level in developing country rural communities. Drawing on Sen's capability model for human
development and qualitative impact methodology, the paper provides insights on how telecentres can promote connectedness, belongingness,
social ties, and psychological empowerment for nonusers.
We conclude the special issue with Kaba's (2019) paper titled “Identifying an analytical tool to assess the readiness of aid information and
communication technology projects” where he presents an interesting conceptual analysis of readiness to successfully implement IT projects
targeted towards creating benefits and aiding the informal sector in developing countries and the factors that are important in assessing such
readiness. The paper presents these in the context of aid‐projects in Africa where policy makers and implementers can use the factors
recommended to increase the likelihood of success in such IT projects.
Some broad questions continue to interest information systems researchers in the area of informal sector. What is the nature of use of IT by
the informal sector? Are IT applications enabling greater chances of survival, increasing efficiencies and effectiveness of the informal sector? Can
IT help socioeconomic development of the people employed in the informal sector? Will the increasing availability and access to cost‐effective IT
applications encourage the informal sector to equip themselves with higher capabilities? Do participants of the informal sector fear that adopting
IT tools and platforms will force formality on them?3 | SOME FUTURE DIRECTIONS
The universalist best practice view of information technology for development has been questioned by one stream of literature in the area, which
argues for a more context‐sensitive approach to understanding the drivers for and consequences of adoption, use, and adaptation of information
technology–based tools and applications by individuals and organizations in developing countries (Avgerou, 2010). In further emphasizing the
need for a contextualized approach to understanding, studying, and promoting technology use by actors in the informal sector, we need to draw
upon some basic tenets from the academic literature in development economics and other socioeconomic disciplines of thought. One such
fundamental understanding is the notion of the informal sector as a stop‐gap arrangement, providing people with an opportunity to accumulate
skills while allowing prospective employers to use the opportunity to screen potential employees and assess their ability (Cano‐Urbina, 2016). A
second related aspect, which may help abstract the affordances offered by ICTs for the informal sector and their adaptation, is that of technology
use beyond utilitarian purposes such as entertainment, gaming, and other forms of leisure (Arora & Rangaswamy, 2014). Technology taken to the
masses through the presence of the “mobile‐shop‐around‐the‐corner” (Lugo & Sampson, 2008) and the slow and gradual reframing of users who
otherwise see themselves as nonusers (Oreglia, 2014) help accelerate this. Taken together, these two tenets help us understand the potential for
using ICTs, especially mobile‐based application platforms, as a means of supporting informal sector participants in enhancing their capabilities,
access to resources, and productivity while at the same time refraining from attempting to view technology as a means of forcibly converting
the informal to the formal.
A vast majority of the literature, barring a few exceptions, on information technology use by the informal sector attempts to understand the
phenomenon through arguments that compare the possibilities that IT offers formal organizations in their quest for efficiency, profitability, and
growth, drawing upon them to see potential parallels for the informal sector. The fundamental frames prevalent in the informal sector, on the
contrary, are small scale, social embeddedness and reciprocity, which demand altogether different perspectives than those usually applied to
the formal organization. In a similar tone, theoretical lenses that are predominantly created for IT adoption and use in the formal organizational
environments cannot suffice to abstract the nuances that exist in the contexts of the informal. The inadequacies of these seem starker
when one attempts to articulate the finer details of technology appropriation, such as those visible in Coelho et al. (2019) when they talk about
technology app as a link between the waste pickers and the population in Brazil, although it is unable to transform their lives in any meaningful
way, or from the complementarities whose presence is seen to be essential in order to ensure that beneficial effects of ICT are felt, as is seen in
Uduji et al. (2019) in the use of mobile phones by rural farmers in Nigeria. A means of resolving this inadequacy is to draw from diverse theories
such as those from human development as has been highlighted in Tabassum et al. (2019) where the authors use Sen's Capability Approach to
understand the impact of telecentres in Malaysia.
The distinction between the informal sector in the developed and the developing countries is often not accorded sufficient importance
(Gërxhani, 2004). This distinction is relevant for a meaningful discussion on the potential of ICT for the informal sector, given that the primary
reasons for the very existence of the informal sector in these two contexts differ, “possibilities for growth” in the developed and “survival” in
the developing world. Interestingly, while some informal sector initiatives, especially those that are bordering on the formal and informal, lend
themselves well to such forms of theoretical abstraction, others that are more fragmented and scattered in their efforts to adapt ICT‐based
applications do not. We therefore see the need to draw upon innately interdisciplinary lenses to help information systems researchers grasp
the true nature and evolution of technology use appropriation and through that the changing nature of the informal sector itself.
4 of 5 EDITORIALPriya Seetharaman1
Maria Alexandra Cunha2
John Effah3
1Management Information Systems Group, Indian Institute of Management Calcutta, Kolkata, India
2Escola de Administração de Empresas de São Paulo Fundação Getulio Vargas (FGV), São Paulo, Brazil
3University of Ghana Business School, Accra, Ghana
Correspondence
Priya Seetharaman, Management Information Systems Group, Indian Institute of Management Calcutta, Diamond Harbour Road, Joka, Kolkata ‐ 700104, India.
Email: priyas@iimcal.ac.in
REFERENCES
Arora, P., & Rangaswamy, N. (2014). From the guest editors ICTs for leisure in development: A case for motivation, exploration, and play in the
Global South. Information Technologies & International Development, 10(3), 1–3. Available at http://itidjournal.org/index.php/itid/article/viewFile/
1279/486
Avgerou, C. (2010). Discourses on ICT and development. Information Technologies and International Development, 6(3), 1–18.
Bhattacharya, R. (2019). ICT solutions for the informal sector in developing economies: What can one expect? The Electronic Journal of Information Systems
in Developing Countries, 85(3), e12075. https://doi.org/10.1002/isd2.12075
Cano‐Urbina, J. (2016). Informal labor markets and on‐the‐job training: Evidence from Wage Data. Economic Inquiry, 54, 25–43. https://doi.org/10.1111/
ecin.12279
Coelho, T., Hino, M. R., & Vahldick, S. (2019). The use of ICT in the informal recycling sector: the Brazilian case of Relix. The Electronic Journal of Information
Systems in Developing Countries, 85(3), e12078. https://doi.org/10.1002/isd2.12078
Donner, J. (2008). Research approaches to mobile use in the developing world: A review of the literature. The Information Society, 24, 140–159. https://doi.
org/10.1080/01972240802019970
Gërxhani, K. (2004). The informal sector in developed and less developed countries: A literature survey. Public Choice, 120, 267–300. https://doi.org/
10.1023/B:PUCH.0000044287.88147.5e
HICSS (2018). Detailed Program and Schedule. Available at http://hicss.hawaii.edu/wp‐content/uploads/2016/09/hicss51‐program‐180104.pdf
[Accessed 26 March 2019].
Ilavarasan, P. V. (2019). Present and future of use and impact of Information and communication technology in the informal microenterprises: Insights from
India. The Electronic Journal of Information Systems in Developing Countries, 85(3), e12091. https://doi.org/10.1002/isd2.12091
ILO (2014). Transitioning from the informal to the formal economy. International Labour Conference. Geneva. Available at: https://www.ilo.org/wcmsp5/
groups/public/‐‐‐ed_norm/‐‐‐relconf/documents/meetingdocument/wcms:218128.pdf [Accessed 24 March 2019].
Johnson, S. C., & Thakur, D. (2015). Mobile phone ecosystems and the informal sector in developing countries—Cases from Jamaica. Electronic Journal of
Information Systems in Developing Countries, 66(6), 1–22. https://doi.org/10.1002/j.1681‐4835.2015.tb00476.x
Kaba, B. (2019). Identifying an analytical tool to assess the readiness of aid information and communication technology projects. The Electronic Journal of
Information Systems in Developing Countries, 85(3), e12072. https://doi.org/10.1002/isd2.12072
Lugo, J., & Sampson, T. (2008). E‐informality in Venezuela: The ‘other path’ of technology. Bulletin of Latin American Research, 27(1), 102–118. https://doi.
org/10.1111/j.1470‐9856.2007.00259.x
Martinez, L. M., Short, J. R., & Estrada, D. (2017). Street vending and informal economy: Survey data from Cali, Colombia. Cities, 14, 132–137.
Oreglia, E. (2014). ICT and (personal) development in rural China. Information Technologies & International Development, 10(3), 19–30.
Rangaswamy, N. (2019). A note on informal economy and ICT. The Electronic Journal of Information Systems in Developing Countries, 85(3), e12083.
https://doi.org/10.1002/isd2.12083
Siqueira, E. S., de Souza, C. A., & Barbosa, A. F. (2019). Using a digital divide index among enterprises in the context of public policies in Brazil. The Electronic
Journal of Information Systems in Developing Countries, 85(3), e12088. https://doi.org/10.1002/isd2.12088
Tabassum, G., Kulathuramaiyer, N., Harris, R., & Yeo, A. W. (2019). The indirect and intangible impacts of a telecentre on a rural community. The Electronic
Journal of Information Systems in Developing Countries, 85(3), e12087. https://doi.org/10.1002/isd2.12087
Tokman, V. E. (2007). Modernizing the informal sector. DESA Working Paper, (42), 1–15.
Uduji, J. I., Okolo‐Obasi, E. N., & Asongu, S. A. (2019). The impact of e‐wallet on informal farm entrepreneurship development in rural Nigeria. The Electronic
Journal of Information Systems in Developing Countries, 85(3), e12066. https://doi.org/10.1002/isd2.12066
Vanek, J., Chen, M., Heintz, J., & Hussmanns, R. (2014). Statistics on the informal economy: Definitions, regional estimates and challenges. WIEGO Working
Paper on informal migrant entrepreneurship and inclusive growth migration policy series, 68, Available at: http://www.wiego.org/sites/wiego.org/files/
publications/files/Vanek‐Statistics‐WIEGO‐WP2.pdf [Accessed 24 March 2019].
Wakunuma, K., Siwale, J., & Beck, R. (2019). Computing for social good: Supporting microfinance institutions in Zambia. The Electronic Journal of Information
Systems in Developing Countries, 85(3), e12090. https://doi.org/10.1002/isd2.12090
EDITORIAL 5 of 5AUTHOR BIOGRAPHIES
Priya Seetharaman is currently an Associate Professor of Management Information Systems at Indian Institute of Management, Calcutta. She
is a Fellow of IIM Calcutta (Ph.D.). Her primary research areas include Adoption, Use and Evolution of IT in Organisations, IT Governance,
Healthcare IT and IT in the Developing Countries Context. She has published in journals including Technological Forecasting and Social
Change, Journal of MIS, Information & Management, Computers in Human Behaviour and Online Information Review among others. Her
papers have also appeared in proceedings of the various leading information systems conferences including ICIS, AMCIS, HICSS, ECIS, ACIS,
DSI, etc.
Maria Alexandra Cunha holds a Doctorate degree in Business Administration from São Paulo University (USP) and she is a Professor at Escola
de Administração de Empresas de São Paulo (Sao Paulo Business School), Fundação Getulio Vargas (FGV), where her line of research is
information technology management. She has been leading academic research and professional projects in ICT governance, e‐government,
e‐governance and e‐democracy, and initiatives on computerization in governments. More recently, her research interests are in ICT for
development and in the area of smart cities. Her research has appeared in journals such as Information Polity, Information and Organization
and Information and Software Technology, apart from others. She is a member of editorial boards of multiple Brazilian academic journals in
Business Administration. Alexandra has been active in promoting information systems research in Portuguese especially research from and
focused on Latin America. She was earlier the coordinator of the ADI (Information Management) division of the Association of Graduate
Studies and Research in Management (ANPAD) in Brazil.
John Effah holds a PhD in Information Systems from the University of Salford at Manchester. He is the immediate past Head of Department
for Operations and Management Information Systems at the University of Ghana Business School in Africa and Ag. Director of Institutional
Research and Planning for the University of Ghana. Prior to joining the University, he worked as a Senior ICT consultant with Deloitte &
Touche. John's research interests include technology entrepreneurship, e‐business and technology‐related challenges in developing countries.
John's prior research has appeared in Information Technology for Development; Journal of Enterprise Information Management; Electronic
Journal of Information Systems in Developing Countries; Journal of Internet Banking & Commerce, among others. John currently serves as
an ICT consultant for the Government of Ghana on ICT Policy and Planning, advising the National Development Planning Commission on
ICT related issues. He is the lead consultant for Ghana's ongoing long‐term ICT Planning and Policy Development. John also serves as ICT
consultant for the National Accreditation Board for Higher Education in Ghana and the Institute of Chartered Accountant of Ghana.