1 / 17

Networks of Small Producers for Technological Innovation: Some Models

Networks of Small Producers for Technological Innovation: Some Models. Arashdeep Singh CINE – 6th Feb 2008. The Author. Prof. Pankaj Chandra Operation and Technology Management and Centre for Innovation, Incubation and Entrepreneurship (CIIE) Indian Institute of Management, Ahmedabad.

gretchen-griffin
Download Presentation

Networks of Small Producers for Technological Innovation: Some Models

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Networks of Small Producers for Technological Innovation:Some Models Arashdeep Singh CINE – 6th Feb 2008

  2. The Author Prof. Pankaj Chandra Operation and Technology Management and Centre for Innovation, Incubation and Entrepreneurship (CIIE) Indian Institute of Management, Ahmedabad

  3. Abstract Small producers face a variety of challenges - some related to markets and others related to capabilities. Inability to develop technological capabilities has often restricted small firms from growing large. In this paper, we present learning from three global networks , i.e., TAMA in Japan, Wenzhou in China and Rajkot in India, that have adopted a variety of mechanisms of coordination between small producers and has led to both capability enhancement and demand enhancement. We argue that the capability enhancement effects play as significant a role as demand enhancement effects in the growth of small firms. Coordination that allows firms to improve their capabilities enhances both productivity as well as innovative capabilities to develop new products and processes. The paper, with the help of these three case studies, presents a generic model for SME development that is based on acquiring distinctive capabilities and linkages with other small producers or other members of the supply chain. We propose distinctive determinants of a collaborative model for engaging SMEs in technological innovation over a period of time. These are : Focus of the Firm, Interactive Producers, Processing and Product Manufacturing, Innovation Investment, Markets, Market Makers (and market making processes), and Regulatory Support.

  4. The TAMA Network, Japan • Technology Advanced Metropolitan Area • 3,000 sq km, 74 municipalities, home to over 10 million people of which 4 million work in the TAMA network firms • In 1998, the value of goods shipped from TAMA region was $214 billion • The total value-add per worker were $116,447 for TAMA (as compared to $110,184 for all of Japan, $94,970 for USA and US$58,260 for Germany) • In the same year, TAMA had twice the shipment value of the Silicon Valley (TAMA Document, 2004)

  5. Factors • R & D • Government Regulation • Flexible Collaborations • Entrepreneurial Nature • Well fitting elements

  6. Elements • 300 firms • 34 universities • 78 banks / chambers of commerce • 20 city councils • 5/9 loaned entrepreneurs

  7. Services • Platform for financial support • Prepares local talent • New business and incubation support • Information network services • Technology exhibitions, disseminate research findings and provide overseas market support • Tech – Entre interaction using TAMA meetings

  8. The Wenzhou Model, China • 28,430 firms 202,458 household units • 106.1 Billion Yuan Avg. GDP growth rate 20.3 % • Rural Income per person: 1978 -165 yuan -> 1989 -924 yuan

  9. Stages of growth • Stage I (70s – 80s): Local markets for simple imitative products for daily use. Low cost Low quality • Stage II (80s – early 90s): Specialized markets, Volume growth, National market reach, Inspection • Stage III (1990 onwards) : Quality systems, income growth, Low cost high volume, export led growth

  10. Elements • Large number of small producers • Specialized markets for products • Credit • Sales Network • Government as facilitator and coordinator

  11. Elements • Luishi – 10,000 people in 3000 firms. Avg 3.3 people per firm • 10 Billion yuan annual trade • Similar stories for Tiger Lighters, Plastic cluster, Lock cluster etc

  12. The Engineering Network, India • Rajkot region known for its engineering network • 1960 government subsidies for low speed diesel engines. Reserved for SSI • 1990s 8000 factories with 500,000 employees • Annual sales turnover Rs 250 crores • 60% of India’s production and 50% of the exports

  13. Salient points • Policy induced cluster • Intense outsourcing • 350- 400 parts • Reservation for SSI • Technology and Productivity • Inefficient products • Declining market size • Declining trust / cooperation • Diversification

  14. Lessons • Focus of the firm • Interactive producers • Processing and product manufacturing • Innovation Investment • Markets • Market makers

  15. Lessons • Regulatory Support • Incorporation and closure support • Access to markets and market information • Credit • Capability building support • Development of skills • Formation of linkages • Continuous up gradation of tools of production

  16. Conclusions

More Related