Some interesting findings
When businesses operate in close proximity, as they do in clusters, knowledge sharing is inevitable. I found this to be true in Otigba. This is mainly because the daily routine of the businesses involves: rotation of tasks and the regular training of employees (mainly apprentices) by highly skilled technical personnel, usually the owner of the business or someone appointed as senior manager.
Most businesses didn’t give preference to employees with relevant experience when hiring. Instead, they used the expertise of qualified technicians to train new employees. As a result apprentices learnt on the job.
By and large, it took new employees less than two years to acquire all the necessary knowledge they needed to do the jobs they were hired for. The result is that apprenticeship has become one of the major channels for skills acquisition and knowledge diffusion within the cluster. Apprenticeship involves on-thejob learning by young employees under the supervision of experts. During this period, tacit knowledge is passed on to the apprentices until they become experts themselves. These apprentices thus graduate, ready to start their own businesses or they secure employment as technicians in the formal sector.
The other channel for diffusion of knowledge within the clusters is the trade association and the unions. These have enabled collaborative innovation in the cluster which has made it possible for firms to compete as a cluster against international players. This is because of the monitoring role played by trade association and unions such as the Computer and Allied Product Dealers Association of Nigeria. The union ensures that new knowledge about new technologies (product and process) are made known to all it members. The union facilitates collective importation of expensive equipment as well as sharing to tools and technicians among its members.
Because of knowledge sharing in the cluster, the majority of new businesses were able to scale up their operations within the first three years of operation. This is remarkable given that research shows that a third of new small business die within two years, and half within five years of starting up. Thus knowledge sharing through clustering is organic incubation – one viable way to survive the first three years as a start-up.
Knowledge sharing also enabled most of the enterprises to increase their capital resources within three years of start-up. They did this either through their own generated resources or through loans. The main source of loans came from commercial banks followed by co-operative societies, business angels and micro-credit organisations.
Most enterprises increased their work force to run their businesses because of good business performance. During the scaling-up period, there was lots of collaboration between firms within the cluster as well as with other businesses, organisations and institutions outside of the cluster. This facilitated the transfer of knowledge among cooperating firms.
Finally, the effects of scaling-up enhanced the ability of businesses to: satisfy customers’ demands, comply with Nigerian regulations and standards, develop more environmentally friendly products/ processes, and improve product quality.
Also, knowledge sharing that happened during the scaling up enabled businesses to extend their product range, deal successfully with new competitors abroad, and lower their production costs.
My research found that openness and proximity increased access to information, customers, new domestic markets, tools and technology, suppliers of raw materials and inputs. In addition, all the enterprises that benefited from proximity in the cluster were involved in at least one form of innovation.
In conclusion, the study posits that knowledge need not be protected in clusters or in the informal sector generally. Instead, it should be shared widely so that other businesses can adopt, or adapt, it. This in turn spurs further innovation and the rapid development of the sector. Openness will also aid the development of other sectors through knowledge spill overs. This, in turn, will create healthy competition among businesses.
Oluseye Jegede is a Senior Researcher, SARCHI Industrial Development Unit, University of Johannesburg