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By Diyamett, Bitrina D.

INNOVATIVENESS AND INSTITUTIONAL LINKAGES IN THE TANZANIAN MANUFACTURING SECTOR WITH REFERENCE TO METAL AND ENGINEERING SUB SECTOR. By Diyamett, Bitrina D.

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By Diyamett, Bitrina D.

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  1. INNOVATIVENESS AND INSTITUTIONAL LINKAGES IN THE TANZANIAN MANUFACTURING SECTOR WITH REFERENCE TO METAL AND ENGINEERING SUB SECTOR By Diyamett, Bitrina D. A Proposal Submitted to Institute of Development Studies (IDS), University of Dar es Salaam (UDSM), as Part of the Registration Process for a PhD Program

  2. Outline • Introduction: background, research problem and objectives • Literature review: theoretical (conceptual framework) and empirical • Hypothesis • Methodology

  3. Background • Immense studies on innovation; yet a universally representative model of innovation is yet to be identified • Available models are based exclusively on the empirical observations from the developed world. • Important question; to what extent are these models also useful to poor countries such as Tanzania • Very little is known about innovativeness of firms in Tanzania • Sizeable studies on linkages and networks, but none is comprehensibly and systematically related to innovative activities.

  4. Research problem The work is a modest attempt to find out the extent to which the interaction between, suppliers, producers and users, result into innovative activities in the Tanzanian manufacturing sector. It is designed to explore the extent and nature of the market linkages in metal and engineering sector, and relate this to innovative activities at firm levels. While the unit of analysis is the firm, the focus is on the linkages

  5. Objectives • To find out the nature of market linkages in the Tanzanian metal and engineering sector (whether long term or arm length) • To determine the extent to which each type of market linkages is accompanied by technological innovation. • To identify factors that work for or against long term relationships in market linkages. • To identify other sources of technological innovation • To determine other channel of information communication about innovation • To identify the role of public R&D institutions and universities in second and fourth objective.

  6. Literature review (Conceptual frame work) • Three degrees of innovation: incremental, radical and fundamental • Since we are dealing with a developing country such as Tanzania, and metal working sub-sector, focus is on incremental innovation • Largely achieved through learning by doing, using and interaction. • Not recognized as component of R&D but overlap with the development. • Receives no direct expenditure • Minimum risk

  7. Boundaries for incremental innovation According to OECD, (1997) incremental innovation should exclude the following: • Making other creative improvements such as those in product differentiation where the novelty does not concern the use or objective performance characteristics of the product in the way they are produced or delivered but rather their subjective qualities. • Stopping doing something is not considered as an innovation, although it may improve a firms’ performance. • The purchase of more machines of a model already installed won’t be considered as an innovation. • A change in a price of a product or of the productivity of a process resulting exclusively from the changes in the price factor of production is not an innovation.

  8. Models of innovation • The concept of NSI will be used • Advantage: -Contextualizes innovation to specific socio economic context -Important gaps to be filled: most literature on NSI does not relate elements of NSI to degrees of innovation. -the way the element interact and their relative importance to a large extent depend on the degree of innovation

  9. Linkages to be tested • Firm-Suppliers • Firm-Users (buyers) • Firm-R&D Institutions and Universities

  10. Empirical Literature review • In Tanzania comprehensive and systematic innovation studies, especially those specific to sectoral and firm levels are lacking. • Only one comprehensive study which is old (1984) and focus was on individual firms. The study however found out that those firms in metal and engineering sub-sector were more innovative. • Evidence of consultancy work for industries by the R&D organizations and universities.

  11. Empirical literature cont. • Evidence of market linkages (in the sample of 74 firms in metal work and food, about 80% of small firms sell their products to large industries • About 60% of the firms in the sector are involved in sub contracting activities • Cooperation in clusters (e g in terms of price negation and sharing of equipments) evident. • However none of these is related to innovativeness of firms.

  12. Hypothesis • Innovative firms will tend to have long term and obligational relationship with their buyers and suppliers. While those which are non-innovative will have short-term and arm length relationships. • There is a significant and positive correlation between firms’ long-term links with buyers and suppliers on one hand and R&D organizations on the other hand. Implying that one of the most significant relationships between R&D institutions and firms is that of mutual solving of technical problems that becomes evident as a result of firms- buyer and supplier interactions. • There is a positive correlation between the level of education of firms’ employees (absorptive capacity) and the intensity of contacts with the consultancy organizations such as R&Ds and Universities.

  13. Methodology • Scope -The study is limited to medium and large category of metal and engineering sub—sector (employing more than 10 people) • Sample size -All firms in the above will be involved. • Research methods -survey and case study approach -the case study will involve those firms that are innovative and those that are not.

  14. Methodology Cont. • Data collection techniques -structured questionnaire -semi structured questionnaire -in-depth interview (for the case studies) • Measurement of innovation -A direct measure will be used

  15. Methodology Cont. • Measurement of market linkages -Degree of product differentiation -production technology -subcontracting activities -buyers characteristics

  16. Measurement of the Factors Affecting Linkages These will be analyzed through detailed case studies of few selectedfirms from the two extremes: those with long term relationships and those with arm length relationships.

  17. THANK YOU FOR YOUR ATTENTION

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