Network Proximity and Business Practices in African Manufacturing

103 Pages Posted: 20 Apr 2016

See all articles by Marcel Fafchamps

Marcel Fafchamps

Stanford University - Freeman Spogli Institute for International Studies

Mans Soderbom

University of Gothenburg

Date Written: June 1, 2013

Abstract

Patterns of correlation in innovation and contractual practices among manufacturing firms in Ethiopia and Sudan are documented. Network data that indicate whether any two firms in the utilized sample do business with each other, buy inputs from a common supplier, or sell output to a common client are used for the analysis. Only limited support is found for the commonly held idea that firms that are more proximate in a network sense are more likely to adopt similar practices. Indeed, for certain practices, adoption decisions appear to be local strategic substitutes: if one firm in a given location uses a certain practice, nearby firms are less likely to do so. These results suggest that the diffusion of technology and new business practices may play a more limited role in spurring growth in Africa's manufacturing sector than is often assumed in the present policy discussion.

Keywords: E-Business, Microfinance, Small Scale Enterprise, Labor Policies, Technology Industry

Suggested Citation

Fafchamps, Marcel and Soderbom, Mans, Network Proximity and Business Practices in African Manufacturing (June 1, 2013). World Bank Policy Research Working Paper No. 6474, Available at SSRN: https://ssrn.com/abstract=2274589

Marcel Fafchamps (Contact Author)

Stanford University - Freeman Spogli Institute for International Studies ( email )

Stanford, CA 94305
United States

Mans Soderbom

University of Gothenburg ( email )

Viktoriagatan 30
Göteborg, 405 30
Sweden

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