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From Tailors to Mini-Manufacturers: The Role of Traders in the Performance of Garment Enterprises in Kenya

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  • John E. Akoten
  • Keijiro Otsuka

Abstract

Industrial clusters are believed to play a significant role in the promotion and development of small enterprises. One channel through which industrial clusters enhance enterprise performance is by reducing transaction costs in marketing through traders. Using survey data on clustered micro and small garment producers in Nairobi, this article demonstrates, through a series of regression analyses that take into account endogeneity problem, that tailors, who are family-based shop operators in three industrial clusters in Nairobi, are less likely to use outside workshops to produce standardized garment products and have a lower employment growth rate than mini-manufacturers, who operate factory-like workshops outside the cluster. It is also shown that the well educated and highly socially networked tailors who are capable of producing a certain product quality standard are likely to link up with traders to become mini-manufacturers over time. This suggests that transactions with traders enable mini-manufacturers to outperform tailors, thereby contributing to the transformation of the mode of industrial production in developing economies. Copyright 2007 The author 2007. Published by Oxford University Press on behalf of the Centre for the Study of African Economies. All rights reserved. For permissions, please email: journals.permissions@oxfordjournals.org, Oxford University Press.

Suggested Citation

  • John E. Akoten & Keijiro Otsuka, 2007. "From Tailors to Mini-Manufacturers: The Role of Traders in the Performance of Garment Enterprises in Kenya," Journal of African Economies, Centre for the Study of African Economies (CSAE), vol. 16(4), pages 564-595, August.
  • Handle: RePEc:oup:jafrec:v:16:y:2007:i:4:p:564-595
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    File URL: http://hdl.handle.net/10.1093/jae/ejl047
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    References listed on IDEAS

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    1. T. Sonobe & D. Hu & K. Otsuka, 2002. "Process of Cluster Formation in China: A Case Study of a Garment Town," Journal of Development Studies, Taylor & Francis Journals, vol. 39(1), pages 118-139.
    2. Eiji Yamamura & Tetsushi Sonobe & Keijiro Otsuka, 2003. "Human capital, cluster formation, and international relocation: the case of the garment industry in Japan, 1968--98," Journal of Economic Geography, Oxford University Press, vol. 3(1), pages 37-56, January.
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    Cited by:

    1. Sichilima, Timothy & Mapemba, Lawrence & Tembo, Gelson, 2016. "Drivers of Dry Common Beans Trade in Lusaka, Zambia: A Trader’s Perspective," Sustainable Agriculture Research, Canadian Center of Science and Education, vol. 5(2).
    2. Keijiro Otsuka, 2006. "Cluster-Based Industrial Development: A View From East Asia," The Japanese Economic Review, Japanese Economic Association, vol. 57(3), pages 361-376.
    3. Tetsushi Sonobe & John Akoten & Keijiro Otsuka, 2011. "The growth process of informal enterprises in Sub-Saharan Africa: a case study of a metalworking cluster in Nairobi," Small Business Economics, Springer, vol. 36(3), pages 323-335, April.
    4. Mano, Yukichi & Iddrisu, Alhassan & Yoshino, Yutaka & Sonobe, Tetsushi, 2012. "How Can Micro and Small Enterprises in Sub-Saharan Africa Become More Productive? The Impacts of Experimental Basic Managerial Training," World Development, Elsevier, vol. 40(3), pages 458-468.
    5. Fahd Rehman, 2012. "Human Capital and MultifacetedInnovation: Evidence from the Lahore Knitwear Cluster in Pakistan," Lahore Journal of Economics, Department of Economics, The Lahore School of Economics, vol. 17(2), pages 63-86, July-Dec.
    6. Olivier Walther, 2015. "Social Network Analysis and informal trade," Working Papers 4, University of Southern Denmark, Centre for Border Region Studies.
    7. KUEPIE Mathias & TENIKUE Michel & WALTHER Olivier, 2014. "Small businesses performance in West African border regions: Do social networks pay off?," LISER Working Paper Series 2014-06, LISER.
    8. Sanjay Banerji & Rajesh S. N. Raj & Kunal Sen, 2016. "Monitoring Costs, Credit Constraints and Entrepreneurship," Manchester School, University of Manchester, vol. 84(5), pages 573-599, September.
    9. Hoang Nam, Vu & Sonobe, Tetsushi & Otsuka, Keijiro, 2009. "An inquiry into the transformation process of village-based industrial clusters: The case of an iron and steel cluster in northern Vietnam," Journal of Comparative Economics, Elsevier, vol. 37(4), pages 568-581, December.
    10. Vu, Hoang Nam & Doan, Quang Hung, 2015. "Innovation and Performance of Enterprises: The Case of SMEs in Vietnam," MPRA Paper 70589, University Library of Munich, Germany.

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