Upgrading and Allied Impacts on Contract Seafood Producers
12 Pages Posted: 22 May 2017 Last revised: 25 May 2017
Date Written: February 28, 2017
Upgrading is thought to afford an enterprise better opportunities for improving its business prospects. The purpose of this paper is to analyse the upgrading processes that a small-scale enterprise may undertake – for entering a foreign market, and their associated impacts as a mixed-methods study of small-scale contract fishers of Seychelles inter alia reveal. A model and two assumptions were developed based on the Global Value Chain (GVC) literature and the resourced-based view of the firm, respectively. In the study, data from a structured survey helped assign 36 randomly-selected sole-vessel producers to a Managed Value Chain (MVC) – a chain exhibiting deliberate supply-demand alignment processes, and 34 randomly-selected other producers to an Open-market Value Chain (OVC) – a chain displaying no intentional supply-demand alignment processes. Difference of means tests (t-tests) were subsequently undertaken on 5 months’ of production level, capacity and efficiency data of the two independent groups. Four of the highest-producing MVC producers subsequently provided a semi-structured interview on their production-related attributes. The difference of means tests show overwhelming statistical support of a strong impact (at p < 0.01) of upgrading on the production capacity and level of its beneficiary, but no support (at p > 0.10) for a similar predicted impact on its productivity. The semi-structured interviews inter alia suggest that the MVC producer tends to be an expansion venture of a firm from another economic sector and its productivity is shaped by its directly-controlled as well as marine resources. The firm venturing into fishing tends to upgrade its production process to secure supply contracts from MVC buyers, particularly the exporters, by leveraging access to finance, information and market. Later, for reasons partly linked with governance and environmental sustainability threats, the MVC contract producer downgrades its production process to also target native markets too. While the ensuing multi-chain operations help the contract producer to sustain its viability, they appear to subsequently increase both the supply risk of the MVC buyers and their horizontal competition. A practical recommendation is that a seafood chain can make business gains by strengthening its supply-demand alignment and the environmental sustainability of its exploited resources. The study is the first of its kind in small-scale fisheries in Seychelles, and perhaps in the World, to uncover two characteristic business expansion processes, namely, production process ‘scale upgrading’ and ‘scope upgrading’. In response to opportunities and/or threats, small-scale contract producers tend to combine them to seek economies of scale and/or scope gains through intra/cross chain multi-buyer operations.
Keywords: Barriers of Entry; Contract Producers; Process Upgrading; Seafood Chains; Value Chains
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