Governance and Upgrading Practices of Micro and Small Scale Clothing Enterprises in Valne Chain: The Case of Addis Ababa City
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Date
2012-06
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Addis Ababa University
Abstract
In developing countries like Ethiopia, the role of micro and small enterprises in addressing"
poverty reduction and economic growth goals is indisputable. However, in Ethiopia, this
sector is commonly challenged by many constraints such as inadequate working capital,
limited access to market, lack of product diversification, insufficient technical and design
skills, lack of infrastructures, and limited innovation and technological capabilities, among
others. Nonetheless, several studies conduct so far in the areas of micro and small
enterprises in general and in clothe producing enterprises in particular are often overlooked
the analysis of value chain structure and its dynamics in the course of identifYing the
opportunities and constraints faced by these enterprises. It is in light of this that this study is
instigated to look closer into the analysis of value chain with the purpose of identifYing
factors that enhance or hinder upgrading practices of clothe producing enterprises. This
study examines key elements of value chain structure and its dynamics based on survey
covering 121 randomly selected clothe producing enterprises in four " sub cities of Addis
Ababa. For the purpose of data triangulation, 50 buyer firms and 20 input suppliers were
selected by using random and snowball sampling techniques. 34 interviewees were also
purposely selected from different categories of value chain participants and supporting
institutions outside the chain. Data analysis was done using descriptive statistics, a logistic
regression analysis, and content analysis methods. Results show that both micro and small
enterprises adopted some sort of strategies to upgrade their process and product although
their functional and channel upgrading practices are found low. The study also indicates that
value chain in which micro and small scale clothing enterprises have been participating is
highly fragmented in terms of linkages between value chain actors and is challenged by
numerous upgrading discouraging factors. It is recommended that supporting institutions,
policies, and programs that aimed at sustaining clothe producing enterprises; therefore,
need to focus on enhancing collaborative and mutually beneficial linkages between firms
participating in the value chain.
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Keywords
MSEs, value chain structure, value chain dynamics, governance, upgrading, linkages