1 / 17

Effects of Technology and Business Networks on Firm Growth in a Tailor Cluster, Ethiopia

presentation at the Development Studies Association Annual Conference 2013. Effects of Technology and Business Networks on Firm Growth in a Tailor Cluster, Ethiopia. 16th November 2013 Ayako Ishiwata PhD Candidate Department of International Studies The University of Tokyo. １． Background.

hume
Download Presentation

Effects of Technology and Business Networks on Firm Growth in a Tailor Cluster, Ethiopia

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. presentation at the Development Studies Association • Annual Conference 2013 Effects of Technology and Business Networks on Firm Growthin a Tailor Cluster, Ethiopia 16th November 2013 Ayako Ishiwata PhD Candidate Department of International Studies The University of Tokyo

  2. １．Background • Industrial Cluster: geographical concentration of related industries and institutions • Most of clusters in Sub-Saharan Africa are "survival clusters". • (Altenburg and Meyer-Stamer 1999, Yoshino 2011) • - micro and small enterprises • compete in low quality products at low cost • - Earnings are small and fragile • Yet, the clusters provide rare nonfarm income generation opportunities • Identifying ways to increase sales/income is vital for poverty alleviation in Sub-Saharan Africa

  3. 2. Research AreaAssela, Oromia, Ethiopia • 166 Km from Addis Ababa • 17.2 km2 • 76,000 people

  4. Locationof tailors Addis Ababa Food Market Bus Station • Approx. 260 tailors • within 0.05Km2 • 16% of tailors operating outside

  5. 3. Research Questions • What factors contribute to improvement in business performance (sales) in • a tailor cluster in rural Ethiopia? • Focusing on roles of • - technology (sewing skills and design • capability) and • - business networks • " How business networks affect increase in sales through technology improvement?"

  6. ４．Methodology • (1) Sample • 136 garment processing tailors • - firstly interviewed in 2011 and • - operated full time in 2012 and 2013 • (2) Data • - Interview in 2011, 2012, and 2013 • - sewing test in 2012 and 2013 • (3) Estimation Method • Three Stage Leased Square Regression (3SLS) and • Seemingly Unrelated Regression (SUR) • 1st stage: Instrumental variable for business network • 2nd stage: business network →　technology • 3rd stage: technology →　Sales

  7. 5. Description of the data • (2) Number of Workers • (1) Annual tailoring sales • excluding material costs • (Dependent Variable) • (converted with mean exchange rate on 30th August 2013, • 18.86345 Birr/$)

  8. (３)Technology Variables • 1) Speed • 2) Accuracy • 3) Other errors (thread tangle, • tension, etc) 56 firms (41%) • 4) Design capacity • (28 firms 21%) • Sewing Skill Index • tangle

  9. Performance in Sewing Skill Test • Total missed area (quality) • Sewing Time (efficiency) Sewing Skill Index →　Normalized average of log of above indicators x -1 (μ=0、σ=1)

  10. (4) Business Network • in-degree centrality: • Number of tailors which give some benefits (information, credit, sales order, procurement, etc.) to the Tailor A • in-closeness centrality: • Inverse of number of steps (d) for other tailors to reach the Tailor A • Tailor A • Tailor B • data (out-degree) • flow of collaboration • (in-degree)

  11. Indegree • Incloseness

  12. 6. Estimation Results (3SLS) 1: Sewing Skill Index

  13. 6. Estimation Results (3SLS) 2: Sewing Speed

  14. 6. Estimation Results 3 (3SLS): Sewing Quality

  15. ７. Results • Higher technology significantly increases sales, but its explanatory power is related more to efficiency (sewing speed) and innovation(design) rather than quality (sewing accuracy or other errors). • ⇒　Infers immaturity of consumers' preference • Centralities (directly and indirectly) in the business networks increase efficiency and innovationaspects of technology, but no effect on quality. • Longer operation years when it is controlled with age is insignificant in technology increase. • ⇒　Infers small learning effects • Rare available trainingopportunities are insignificant in technology improvement.

  16. ８．Conclusion • Illustrates characteristics of the survival clusters whose product quality does not respond to firm growth. • (Both consumers and tailors are not likely to be • conscious of the quality.) • →　do not match the global standards • vulnerable when the markets are developed • - competition with the global products • - mismatch with consumer's preference • once their purchasing power increases

  17. Policy Implications • Contents of trainings need to be reviewed. (technical - managerial) • Strengthening business networks seems immediate ＆ cost effective assistance to sustain livelihood of firms in a survival cluster. • Tailoring business is likely to shrink in the globalization process unless tailors are linked to more quality conscious consumers outside the cluster (external knowledge). • As a growth scenario, successful firms may diversify business after accumulating capital.

More Related