Commercial subcontracting linkages between small scale manufacturers and large business enterprises in Nairobi, kenya
Abstract
Small scale sector development is one of the
major government strategies for combating unemployment
and bringing about economic growth. The concern of
this study is to look into ways that its growth could
be fostered through the promotion of a beneficial
commercial subcontracting linkage between Small scale
manufacturing enterprises and the Large business
enterprises that deal in their products.
Commercial subcontracting involves bulk selling
of finished products from the manufacturer to business
enterprises. In the Newly Industrializing Countries
(NICs) the commercial subcontracting market has
rapidly become an important outlet for products from
small scale enterprise (SSE) manufacturers and by
extension encouraged their growth both in productive
capacities and employment generation.
However, since the commercial subcontracting <,
market is not as developed in Kenya it's potential in
the development of the SSE sector may not be
appreciated which has brought about an informal
linkage which is parasitic in terms of the benefits to
the SSE manufacturer. What emerges therefore is the
fact that the SSE manufacturer could be disadvantaged
in commercial subcontracting linkages given their low
capital reserves and weak bargaining position.
Using a stratified random sample of sixty small
scale textile and furniture manufacturers from the
Eastern sector of the city of Nairobi where small
manufacturing enterprises predominate, the study set
out to understand their background characteristics,
the commercial subcontracting linkage between them and
the Large businesses and the conditions under which
these relations are established.
Applying both quantitative and qualitative
analytical data techniques, on the collected data, it
emerged that both the SSE manufacturer and the large
business operators find the linkage important. The
main complaint from the SSE manufacturer is that they
do not get a fair deal in commercial subcontracting
which was blamed on, the lack of adequate capital, cooperation,
market information and stiff competition
from large manufacturers.
To make the relationship more beneficial, it is
recommended that the SSE manufacturer be made
accessible to market information and assistance to
make his position stronger. Co-operation will also be
important to provide a channel to set out guidelines
and root out cut throat competition.
Citation
Master of arts in PlanningPublisher
University of Nairobi Department of Urban and Regional Planning