The Democratic leadership style is a medley of both the authoritative and delegative and usually the most effective form of leadership.
Participative Leadership Style at a Glance
Works Best When:
The leader has exemplary communication and superior negotiation skills
The leader is capable of accepting both positive and negative input
The leader has a great deal of physical energy
Challenges with This Style:
To stay motivated, some team members may require a more authoritarian leadership approach
Danger of leader becoming too detached
Danger of leader getting stuck in consensus-building mode and becoming indecisive.

Fits for Democratic Leadership:
Creative groups (advertising, design): ideas need to flow in creative environments to find create new concepts and designs.
Consulting: when paid to explore problems and find solutions, your role will be to explore the possibilities in depth, and that means there has to be a great deal of exploration and open discussion.
Much of the Service industry: new ideas allow for more flexibility to changing customer demands.
Education: few places need to be open
While democratic leadership has been described as the most effective leadership style, it does have some potential downsides. In situations where roles are unclear or time is of the essence, democratic leadership can lead to communication failures and uncompleted projects. In some cases, group members may not have the necessary knowledge or expertise to make quality contributions to the decision-making process.