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Innovation and Small Enterprises in the Third World

Innovation and Small Enterprises in the Third World

New Horizons in the Economics of Innovation series

Edited by Meine Pieter van Dijk and Henry Sandee

Innovation is crucial for small enterprises to become and remain competitive in the global economy. In this book, the authors have combined theoretical insights with comprehensive case studies on innovation among small-scale enterprises in developing countries, paying particular attention to technological change in clusters of small firms.

Chapter 5: Competitive Response, Innovation and Creating an Innovative Milieu in the Manufacturing Industry in Bulawayo, Zimbabwe

A.H.J. Bert Helmsing

Subjects: development studies, development economics, economics and finance, development economics


Chapter 5 15/3/02 9:02 am Page 1 5. Competitive response, innovation and creating an innovative milieu in the manufacturing industry in Bulawayo, Zimbabwe A.H.J. (Bert) Helmsing Innovation is increasingly recognized as a key variable in explaining local industrial growth. On the one hand, innovation has become a critical element in maintaining competitiveness. On the other hand, the capacity of firms to innovate depends not only on firm-level characteristics but also on ‘structure’ and ‘local conditions’. Best (1990) has given a powerful interpretation of the changing nature of competition, with his theory of ‘new competition’. New competition distinguishes itself from ‘old’ competition in four dimensions. First, and at the centre of his theory is the entrepreneurial firm, which is ‘an enterprise that is organised, from top to bottom to pursue continuous improvement in methods, products and processes’. The latter constitutes the basis of strategic advantage, rather than lower production costs per se. Best rejects the notion of the product cycle, according to which technological innovation passes through a sequential process, ultimately leading to a low-cost mass production technology. Instead, a firm would have to pursue continuous improvements, something that has organizational requirements and demands attention to detail. The second dimension is the importance of the production or commodity chain. Competitiveness depends as much on the firm itself as on that of its suppliers. Suppliers are an important source of innovation and improvement. Under new competition conditions, supplier and buyer invest in long-term relationships, consult and jointly establish quality norms and...

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