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

Posted: 13 May 2009

See all articles by John E. Akoten

John E. Akoten

Institute of Policy Analysis and Research (IPAR)

Keijiro Otsuka

National Graduate Institute for Policy Studies (GRIPS)

Date Written: August 2007

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.

Keywords: L23, L67, o14

Suggested Citation

Akoten, John E. and Otsuka, Keijiro, From Tailors to Mini-Manufacturers: The Role of Traders in the Performance of Garment Enterprises in Kenya (August 2007). Journal of African Economies, Vol. 16, Issue 4, pp. 564-595, 2007. Available at SSRN: https://ssrn.com/abstract=1401803 or http://dx.doi.org/ejl047

John E. Akoten (Contact Author)

Institute of Policy Analysis and Research (IPAR)

P.O. Box 45843-00100
Nairobi
Kenya

Keijiro Otsuka

National Graduate Institute for Policy Studies (GRIPS) ( email )

7-22-1 Roppongi,Minato,
Tokyo 106-8677
Japan

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