UNU-MERIT Working Papers Series
Innovation performance and embeddedness in networks: evidence from the Ethiopian footwear cluster
Mulu Gebreeyesus & Pierre Mohnen #2011-043This study focuses on innovation in a cluster of informal shoemaking
firms in Ethiopia - namely the Mercato footwear cluster. It examines how
differently those firms are embedded in networks and how heterogeneous
they are in absorptive capacity, and how this heterogeneity affects
their innovation performance. Business interactions with buyers,
suppliers and other producers are the major channels through which
knowledge flows into the cluster. These business networks are mainly
built on trust and long-term relationships and tend to be selective. The
study reveals that despite homogeneity in social background the firms in
the cluster behave and perform differently. Based on econometric
analysis we document a positive and strong effect of local network
position and absorptive capacity on innovation performance.
Key words: industrial clusters, networks, innovation performance,
informal sector, Africa, Ethiopia
JEL: O31
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