New Forms of African entrepreneurship stand at the center of the project “Japanese Management Techniques and African-Asian Entrepreneurship”, carried out by Cornelia Storz, Ruth Achenbach and Rajesh Ramachandran. During the first phase, the project focused largely on the impact of Japanese lean management techniques on the economic performance of furniture producers in Zambia. In the second phase we look at the establishment of Kaizen Institutes including their proposed management tools and how these contribute to the dissemination and application of Japanese development philosophy. The Kaizen Institutes – unlike the Chinese Confucius Institutes that have been a subject ofboth academic and popular enquiry – are a relatively new Asian institution in Africa whose objectives and effects remain unexplored. The project focuses on institutions of development cooperation, development philosophy and individual practices and imaginations of successful entrepreneurship. It zooms in on recent developments in Japanese Kaizen philosophy (e.g., the importance of distribution parallel to production) and on the perception of Kaizen programs and their appropriation and adaptation by African entrepreneurs. Of particular interest to us here is how Japan's own modernization experience as well as support for the transfer of lessons from the East Asian development experience to Africa have shaped their policy with regard to technical assistance. We analyze goals of development cooperation and their material-institutional manifestation as well as transformations of imaginations and practices of African entrepreneurs from perspectives of political science and economics.
Detailed description of the project by Storz/Ramachandran:
Japanese management techniques and effects on productivity: Evidence from Africa – Phase II Title - Upgrading Firms” in the Face of Demand and Supply Side Constraints: Evidence from Small and Micro Furniture Producers in Zambia
Informal firms are the dominant enterprise form in developing countries accounting for more than one-half of non-agricultural employment in most regions of the developing world – ranging from 82 per cent in South Asia to 66 per cent in Sub-Saharan Africa. These firms exhibit extremely low productivity, are typically run by entrepreneurs with low levels of human capital and produce low quality products for low-income customers using little capital, and adding little value (La Porta and Schleifer, 2014). The large bulk of business training programs that have been implemented find limited or no effects on profits or sales, and provide no clear guidance on how the profitability of these firms can be increased to enable the transition from low productive informal firms to productive formal sector enterprises (McKenzie and Woodruff, 2013).
The current project intends to understand how the school of management techniques influenced by the Japanese school of thought can help improve micro and small businesses. One of the leading lessons distilled by the Japanese through the experience of industrialization starting the 1870s, and then the period of post-war reconstruction, was the need to adapt the advanced technologies, know-how and knowledge gained from the West to its own peculiar social, institutional and industrial setting. This experience has implied the need to understand and implement management practices that are context dependent, and pliable to the institutional constraints present on the ground. The context being faced by the micro and small firms in Zambia is a combination of demand and supply side constraints. The current project influenced by theories of “big push” intends to study how a combination of demand and supply side interventions influenced by Japanese management techniques can help small informal furniture producers in Lusaka, Zambia to help overcome these constraints.
The basic philosophy underlying Japanese management techniques is the notion of small and continuous improvements in day-to-day processes through continuous measurement and monitoring. The micro and small furniture producers in Lusaka face two critical supply side constraints, one, the inability to continuously measure due to the lack of requisite financial and bookkeeping skills, which in turn prevent entrepreneurs from constant monitoring. The second crucial supply side constraint is the lack of proper wood finishing skills, which imply the inability to constantly improve their products, a key feature underlying the Japanese school of practices. As a first step, the project employing a randomized control trial (RCT) intends to study the impact of overcoming the supply side constraints through the provision of a financial and a skill up-gradation workshop. These workshops intend to instill the practice of continuous monitoring, measuring and product improvement, three core elements underlying the Japanese school of management.
The next part of the project will attempt to target the “demand” side constraints. It has been recognized in the literature that improving quality of products sold by informal firms might in fact not been beneficial as the consumers they cater to –informal sector workers – are unable and unwilling to pay for improved products. This implies that targeting only supply side constraints might fail to realize any benefits, and lead to the incorrect conclusion that entrepreneurial skills are not a constraint to business growth. The research is aimed at understanding the importance of complementarities, and the necessity of combining demand and supply interventions in the same package. The demand side intervention is influenced by the extension of the Japanese management practices to the domains of lean retailing and marketing (insert reference). The application of Japanese techniques to the field of retailing will explore the impact of provision of business development services that link entrepreneurs to improved markets through activities like placing products in already existing stores in middle income markets, access to trade shows or fairs, and linking producers with wholesaler purchasers of furniture among others. The intended intervention is motivated by the recent innovations in management practices in Japan, as well as the notion of adaptability of existing techniques to the institutional constraints being faced by the technology adopters.