Governance and Upgrading Practices in Cloth Production Value Chain: The Case of Micro and Small Enterprises in Addis Ababa

Abstract

This study examines the governance _pal/ern and upgrading _practices of
value chain of cloth _production, focusing on micro and small cloth _producing
entetprises in Addis Ababa. The study is based on a sample of 222 respondents
drawn from various actors of the value chain in the city. The value chain is
found out to be greatly fragmented in terms of linkages between actors. The
governance _pattern between and/or among the different actors in the value chain
is characterised by a varied range if relationships even if the chain is dominated
by arms length transactions. The study also finds out that both micro and small
entetprises are engaged in process and _product upgrading, but they have shown
limited or no fonctional and channel upgrading The study found out that low
demand in the end market, weak vertical and horizontal linkages, weak learning
and information sharing practices, and lack if support and embedded services
hindered the upgrading of micro and small entetprises in Addis Ababa. On the
other hand, increased demand and captive _patterns if governance influenced
_process and product upgrading _positively while _production technique training
and relational patterns of governance _positively influenced product upgrading
It is, therefore, imperative to s timula te demand, strengthen production training,
and closely examine _patterns of governance in order to enhance firms 'upgrading
practices.

Keywords: Micro and small scale enterprises, value chain, value chatn structure
and governance, upgradtng, ltnkages