Table Of Contentpal grave
macmillan
Acquisition of Technological
Capability in Small Firms in
Developing Countries
Henny Romijn
ACQUISITION OF TECHNOLOGICAL CAPABILITY IN
SMALL FIRMS IN DEVELOPING COUNTRIES
Also by Henny Romi}n
SMALL-SCALE PRODUCTION: Strategies for Industrial Restructuring
(co-author)
Acquisition of Technological
Capability in Small Firms in
Developing Countries
Henny Romijn
Senior Research Officer
Queen Elilftbeth House
University of Oxford
and
Development Research Illstitute
7ilburg Ulliversity
The Netherlands
First published in Great Blitain 1999 by
MACMILLAN PRESS LTD
Houndmills. Basingstoke. Hampshire RG21 6XS and London
Companies and representatives throughout the world
A caralogue record for this book is available fmm the British Library.
ISBN 978-1-349-40691-3 ISBN 978-0-230-38980-9 (eBook)
DOI 10.1057/9780230389809
First published in the United States of America 1999 by
ST. MARTIN'S PRESS, INC.,
Scholarly and Reference Division.
175 Fifth Avenue, New York, N.Y. 10010
ISBN 978-0-312-21773-0
Library of Congress Cataloging-in-Publication Data
Romijn, Henny.
Acquisition of technological capability in small firms in
developing countries 1 Henny Romijn.
p. cm.
Includes bibliographical references (p. ) and index.
ISBN 978-0-312-21773-0 (cloth)
I. Small business-Technological innovations-Developing
countries. 2. Aglicultural machinery industry-Pakistan-Punjal>
-Case studies. 3. Fanll equipment-Pakistan-Punjab-Cose studies.
I. Title.
HD2346.D43R65 1998
658.5'14'09 I 724-<1c2 I 98-21907
CIP
© Henny Romijn 1999
Softcover reprint of the hardcover 1st edition 1999 978-0-333-73219-9
All rights reserved. No reproduction. copy or transmission of this publication may be made
without wlillen permission.
No paragraph of this publication may be reproduced, copied or transmilled save with
wrillen permission or in accordance with the provisions of the Copyright. Designs and
Patents Act 1988. or under the tenns of any licence pemlilling limited copying issued by
the Copyright Licensing Agency, 90 Tottenham COUl1 Road. London WI P 9HE.
Any person who docs any unauthorised act in relation to this publication may be liable to
climinal prosecution and civil claims for damages.
The author has assel1ed her right to be identified as the author of this work in accordance
with the Copyright. Designs and Patellls Act 1988.
This book is printed on paper suitable for recycling and made fmm fully managed and
sustained forest sources.
10 9 8 7 6 5 4 3 2 I
08 07 06 05 04 03 02 01 00 99
Contents
List of Tables viii
List of Figures and Illustrations x
Acknowledgements xi
1 Introduction 1
PART I: CAPABILITY BUILDING IN THE EXISTING
LITERATURE
2 Technological Capability and Its Importance in
Economic Development 11
1. Introduction 11
2. The capability concept and its origin 12
3. Theoretical underpinnings 13
4. Main findings of the capability literature 19
5. The one-sided focus on large modern firms 26
6. The lack of rigorous measurement and testing 39
7. Directions for new research 44
3 The Limits of a Focus on the Large-scale Sector 46
1. Introduction 46
2. The problem of prolonged labour surplus 47
3. The need for a focus on small firms -
A general argument 52
4. The special role of small-scale machine
manufacturers 60
5. Conclusions 68
v
VI Technological Capability in Small Firms
4 Development of Capability in Small Firms:
A Review of Secondary Literature 71
l. Introduction 71
2. Introducing the studies in the review 73
3. Indicators of capability increase 79
4. The extent of capability increase 91
5. Economic impact 97
6. How firms learn 99
7. What makes firms learn 107
8. Conclusions 116
9. Limitations of the existing literature 118
PART II: CAPABILITY BUILDING IN SMALL FIRMS
A QUANTITATIVE STUDY
Introduction to Part II 125
5 The Research Design 129
l. Introduction 129
2. The importance of farm equipment manufacturing
in early industrialization 129
3. The choice of the Pakistan Punjab as the fieldwork
location 133
4. The historical development of the farm equipment
industry in the Pakistan Punjab 134
5. The research methodology 143
6. Recapitulation 150
6 Measuring Technological Capability and
Mechanisms of Learning 153
l. Introduction 153
2. A technical profile of small-scale farm equipment
manufacturing 153
3. Measuring the manufacturing complexity of
products 158
4. Measuring the other indicators of technological
capability 179
Contents
VII
5. Measuring the mechanisms through which
firms learn 188
6. Summary 200
7 Technological Learning in Small Firms:
A Quantitative Analysis 203
1. Introduction 203
2. Analysis of correlations 204
3. Introducing the regressions 217
4. Determinants of unadjusted product complexity 221
5. Determinants of adjusted product complexity 229
6. Determinants of product quality and diversification 237
7. Conclusions 239
8 Conclusions 245
1. The importance to economic development
of capability building in small firms 245
2. Summary of the findings 247
3. Methodological reflections 253
4. Implications for technology policy 257
Appendices 265
Notes 313
Bibliography 339
Index 355
List of Tables
2.1 Share of small establishments in total manufacturing
employment, 1980s 27
2.2 Indicators of firm size in major capability studies 28
2.3 Focus of the book 45
3.1 The employment problem in developing countries -
some empirical estimates 50
4.1 Information about capability increase and technological
learning generated by the studies in the review 76
5.1 Use of major farm equipment items in the Pakistan
Punjab, 1968-84 138
5.2 Origin of farm equipment sold through the ADBP,
1982/3 140
5.3 Number of farm machinery manufacturers in the
Pakistan Punjab, by district, 1989 142
5.4 The sample design of the field study 147
5.5 Actual distribution of sample enterprises 150
6.1 Classification system for grading the manufacturing
complexity of farm equipment 162
6.2 Grading product-manufacturing complexity: an
example 164
6.3 Calculation of the unadjusted scores: an example 168
6.4 Calculation of the adjusted scores: an example 172
6.5 Product-complexity variables constructed for
the sample firms 175
6.6 Variables other than product complexity used for
measuring the indicators of technological capability 186
6.7 Variables representing technological learning
and their measurement 198
7.1 Correlations between capability and determinant
variables 206
7.2 Variables used in the regl,'ession analysis 219
7.3 Determinants of technological capability: regression
coefficients 222
viii
List of Tables ix
C.l Distribution of sample firms by date of
establishment 276
C.2 Distribution of sample firms by number of people
employed 277
C.3 Types of farm equipment made by the sample firms 280
C.4 Number of firms owning various machines and
equipment 284
C.S Distribution of sample firms by highest level of
general education of entrepreneurs 287
C.6 Information acquisition activities of the sample firms 290
C.7 Sources of technical assistance 291
