INNOVATIVENESS AND INSTITUTIONAL INNOVATIVENESS AND INSTITUTIONAL LINKAGES IN THE TANZANIAN LINKAGES IN THE TANZANIAN

MANUFACTURING SECTOR WITH REFERENCE MANUFACTURING SECTOR WITH REFERENCE TO METAL AND ENGINEERING SUB SECTORTO METAL AND ENGINEERING SUB SECTOR

By By Diyamett, Bitrina D.Diyamett, Bitrina D.

A Proposal Submitted to Institute of A Proposal Submitted to Institute of Development Studies (IDS), University of Development Studies (IDS), University of

Dar es Salaam (UDSM), as Part of the Dar es Salaam (UDSM), as Part of the Registration Process for a PhD ProgramRegistration Process for a PhD Program

OutlineOutline

Introduction: background, research Introduction: background, research problem and objectivesproblem and objectives

Literature review: theoretical Literature review: theoretical (conceptual framework) and (conceptual framework) and empirical empirical

HypothesisHypothesisMethodologyMethodology

BackgroundBackground

Immense studies on innovation; yet a universally Immense studies on innovation; yet a universally representative model of innovation is yet to be representative model of innovation is yet to be identifiedidentified

Available models are based exclusively on the Available models are based exclusively on the empirical observations from the developed world.empirical observations from the developed world.

Important question; to what extent are these models Important question; to what extent are these models also useful to poor countries such as Tanzaniaalso useful to poor countries such as Tanzania

Very little is known about innovativeness of firms in Very little is known about innovativeness of firms in TanzaniaTanzania

Sizeable studies on linkages and networks, but none Sizeable studies on linkages and networks, but none is comprehensibly and systematically related to is comprehensibly and systematically related to innovative activities.innovative activities.

Research problemResearch problem

The work is a modest attempt to find out The work is a modest attempt to find out the extent to which the interaction between, the extent to which the interaction between, suppliers, producers and users, result into suppliers, producers and users, result into innovative activities in the Tanzanian innovative activities in the Tanzanian manufacturing sector. It is designed to manufacturing sector. It is designed to explore the extent and nature of the market explore the extent and nature of the market linkages in metal and engineering sector, linkages in metal and engineering sector, and relate this to innovative activities at and relate this to innovative activities at firm levels. firm levels. While the unit of analysis is the firm, the While the unit of analysis is the firm, the focus is on the linkagesfocus is on the linkages

ObjectivesObjectives

To find out the nature of market linkages in the To find out the nature of market linkages in the Tanzanian metal and engineering sector (whether Tanzanian metal and engineering sector (whether long term or arm length)long term or arm length)

To determine the extent to which each type of To determine the extent to which each type of market linkages is accompanied by technological market linkages is accompanied by technological innovation.innovation.

To identify factors that work for or against long To identify factors that work for or against long term relationships in market linkages.term relationships in market linkages.

To identify other sources of technological innovationTo identify other sources of technological innovationTo determine other channel of information To determine other channel of information

communication about innovationcommunication about innovationTo identify the role of public R&D institutions and To identify the role of public R&D institutions and

universities in second and fourth objective.universities in second and fourth objective.

Literature review (Conceptual frame Literature review (Conceptual frame work)work)

Three degrees of innovation: incremental, Three degrees of innovation: incremental, radical and fundamentalradical and fundamental

Since we are dealing with a developing Since we are dealing with a developing country such as Tanzania, and metal country such as Tanzania, and metal working sub-sector, focus is on working sub-sector, focus is on incremental innovationincremental innovation

Largely achieved through learning by Largely achieved through learning by doing, using and interaction.doing, using and interaction.

Not recognized as component of R&D but Not recognized as component of R&D but overlap with the development.overlap with the development.

Receives no direct expenditure Receives no direct expenditure Minimum riskMinimum risk

Boundaries for incremental Boundaries for incremental

innovationinnovation According to OECD, (1997) incremental innovation should According to OECD, (1997) incremental innovation should

exclude the following:exclude the following: Making other creative improvements such as those in Making other creative improvements such as those in

product differentiation where the novelty does not concern product differentiation where the novelty does not concern the use or objective performance characteristics of the the use or objective performance characteristics of the product in the way they are produced or delivered but product in the way they are produced or delivered but rather their subjective qualities.rather their subjective qualities.

Stopping doing something is not considered as an Stopping doing something is not considered as an innovation, although it may improve a firms’ performance.innovation, although it may improve a firms’ performance.

The purchase of more machines of a model already The purchase of more machines of a model already installed won’t be considered as an innovation.installed won’t be considered as an innovation.

A change in a price of a product or of the productivity of a A change in a price of a product or of the productivity of a process resulting exclusively from the changes in the price process resulting exclusively from the changes in the price factor of production is not an innovationfactor of production is not an innovation..

Models of innovationModels of innovation

The concept of NSI will be usedThe concept of NSI will be usedAdvantage: Advantage: -Contextualizes innovation to specific socio -Contextualizes innovation to specific socio

economic contexteconomic context-Important gaps to be filled: most literature -Important gaps to be filled: most literature

on NSI does not relate elements of NSI to on NSI does not relate elements of NSI to degrees of innovation.degrees of innovation.

-the way the element interact and their -the way the element interact and their relative importance to a large extent relative importance to a large extent depend on the degree of innovationdepend on the degree of innovation

Linkages to be testedLinkages to be tested

Firm-SuppliersFirm-SuppliersFirm-Users (buyers)Firm-Users (buyers)Firm-R&D Institutions and Firm-R&D Institutions and

UniversitiesUniversities

Empirical Literature Empirical Literature reviewreviewIn Tanzania comprehensive and systematic In Tanzania comprehensive and systematic

innovation studies, especially those specific innovation studies, especially those specific to sectoral and firm levels are lacking.to sectoral and firm levels are lacking.

Only one comprehensive study which is old Only one comprehensive study which is old (1984) and focus was on individual firms. (1984) and focus was on individual firms. The study however found out that those The study however found out that those firms in metal and engineering sub-sector firms in metal and engineering sub-sector were more innovative.were more innovative.

Evidence of consultancy work for industries Evidence of consultancy work for industries by the R&D organizations and universities.by the R&D organizations and universities.

Empirical literature cont.Empirical literature cont.

Evidence of market linkages (in the sample of Evidence of market linkages (in the sample of 74 firms in metal work and food, about 80% of 74 firms in metal work and food, about 80% of small firms sell their products to large small firms sell their products to large industriesindustries

About 60% of the firms in the sector are About 60% of the firms in the sector are involved in sub contracting activitiesinvolved in sub contracting activities

Cooperation in clusters (e g in terms of price Cooperation in clusters (e g in terms of price negation and sharing of equipments) evident.negation and sharing of equipments) evident.

However none of these is related to However none of these is related to innovativeness of firms.innovativeness of firms.

HypothesisHypothesis

Innovative firms will tend to have long term and Innovative firms will tend to have long term and obligational relationship with their buyers and obligational relationship with their buyers and suppliers. While those which are non-innovative will suppliers. While those which are non-innovative will have short-term and arm length relationships.have short-term and arm length relationships.

There is a significant and positive correlation There is a significant and positive correlation between firms’ long-term links with buyers and between firms’ long-term links with buyers and suppliers on one hand and R&D organizations on the suppliers on one hand and R&D organizations on the other hand. Implying that one of the most other hand. Implying that one of the most significant relationships between R&D institutions significant relationships between R&D institutions and firms is that of mutual solving of technical and firms is that of mutual solving of technical problems that becomes evident as a result of firms- problems that becomes evident as a result of firms- buyer and supplier interactions.buyer and supplier interactions.

There is a positive correlation between the level of There is a positive correlation between the level of education of firms’ employees (absorptive capacity) education of firms’ employees (absorptive capacity) and the intensity of contacts with the consultancy and the intensity of contacts with the consultancy organizations such as R&Ds and Universities. organizations such as R&Ds and Universities.

MethodologyMethodology

ScopeScope-The study is limited to medium and large -The study is limited to medium and large

category of metal and engineering sub—category of metal and engineering sub—sector (employing more than 10 people)sector (employing more than 10 people)

Sample sizeSample size-All firms in the above will be involved.-All firms in the above will be involved.Research methodsResearch methods-survey and case study approach-survey and case study approach-the case study will involve those firms that -the case study will involve those firms that

are innovative and those that are not.are innovative and those that are not.

Methodology ContMethodology Cont..

Data collection techniquesData collection techniques

-structured questionnaire-structured questionnaire

-semi structured questionnaire-semi structured questionnaire

-in-depth interview (for the case -in-depth interview (for the case studies)studies)

Measurement of innovationMeasurement of innovation

-A direct measure will be used-A direct measure will be used

Methodology Cont.Methodology Cont.

Measurement of market linkagesMeasurement of market linkages

-Degree of product differentiation-Degree of product differentiation

-production technology-production technology

-subcontracting activities-subcontracting activities

-buyers characteristics-buyers characteristics

Measurement of the Factors Measurement of the Factors

Affecting LinkagesAffecting Linkages

These will be analyzed through These will be analyzed through detailed case studies of few selecteddetailed case studies of few selected firms from the two extremes: those firms from the two extremes: those with long term relationships and with long term relationships and those with arm length relationships.those with arm length relationships.

THANK YOU FOR YOUR ATTENTION