Abstract
The purpose of this research was to explore the potential benefits of industry cluster formation for improving the performance of small and medium-sized enterprises (SMEs) operating in the light manufacturing sector. It explored the idea that clustering can lead to increased productivity and competitiveness of SMEs through collaboration, knowledge sharing, and resource pooling among firms located within the same geographic area and industry. A mix of qualitative and quantitative research techniques were utilised to gather and analyse data on a sample of 300 firms represented by 10% and an additional 5 institutions to pinpoint factors contributing to the slow implementation of clusters in Zambia.
The research investigates how SMEs are affected by different factors influencing their productivity and competitiveness. These factors include networking, market access, technology transfer, and shared infrastructure. The research employs two classifications to evaluate these factors: Classification 1 examines productivity through variables like production, capital (both physical and intangible), human capital, technology advancement, and institutional support. Classification 2 assesses competitiveness through variables including infrastructure quality, education, market efficiency, access to affordable financing, and the overall business environment. Furthermore, Classification 3 identifies obstacles that contribute to cluster implementation.
The research's findings indicate that clustering positively impacts SME productivity and competitiveness through knowledge sharing, resource pooling, and collaboration among firms in the same geographic area and industry. Despite facing challenges like power outages, limited access to finance and the COVID-19 pandemic, noticeable improvements in productivity and competitiveness are observed. However, obstacles to cluster implementation are identified, including prolonged government procedures, inadequate machinery and factory space, and insufficient capabilities at the enterprise level.
The study adds to the understanding of how cluster development impacts the productivity and competitiveness of SMEs in the light manufacturing sector in Zambia. It provides valuable insights for policymakers, industry professionals and researchers interested in fostering economic growth and development through cluster-based strategies.
Keywords: cluster development, collaboration, competitiveness, light manufacturing sector, productivity, small and medium enterprises.