Small enterprise in Nairobi: Golden opportunity or dead end?
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This study, based on interviews of 248 owners of small-scale manufacturing businesses in Nairobi, Kenya, explores the potential of small enterprise to contribute to economic development. Set within the context of an ongoing debate which originated in the 1970's in concerns over employment and rural-urban migration, the study addresses issues of profitability, capital accumulation, and the differences between men's and women's businesses. The analysis is informed by a view of economy and society as an organic whole in which economic, social, and political variables interact. The tailors, carpenters, metal-workers, shoemakers, and other artisans who are the subject of the study comprise, not a separate and clearly definable "informal" sector, but rather a subset of businesses clustered at one end of a continuum ranging from least to most formal. The research identifies two patterns of success: the small-and-flexible model and the capital-accumulating firm. In the first and predominant pattern, business owners are risk-averters who adopt flexibility as their main strategy. By working in rent-free quarters, using family labor and little capital, they minimize fixed costs and maximize opportunities for additional income. The strong incentive to be flexible, because it discourages growth into larger enterprises, has serious implications for Kenya's capitalist development. A few firms, following the second pattern of success, tend to be more formalized than others and to accumulate capital. Differences in rural urban linkages and social class appear to explain their ability to expand. Women's businesses, which are heavily concentrated in textile work, are paradoxically less likely to be profitable and more likely to accumulate capital than men's firms. Involvement in straddling and the newness of the women's businesses provide tentative explanations of these differences and suggest directions for further research. The dissertation's final chapter explores the implications of the research for development theory, government policy, and individual artisan's efforts to succeed.