The productivity of knowledge mobilisation, knowledge capitalisation and product-related firm transmutation: exploring the case of small-scale garment-makers in Nairobi, Kenya

Abstract

Highlighting the limitations of R&D, this paper champions design activity as the phenomenon that captures knowledge mobilisation at the firm level, especially amongst small firms in developing countries. Still, knowledge becomes a capital (factor input) proper when employed in production. Volumes of new products sold could suggest the market value of utilised knowledge capital the same way the resale value of plant and equipment often approximates the stock of physical capital. Conversely, shares of sales of new products arguably capture an altogether different phenomenon: product-related firm transmutation. Findings suggest that the deeper utilisation of knowledge has significant productivity effects and supersedes mere mobilisation of knowledge. Further, undergoing transmutation towards the production of more of new products relative to incumbent products has no significant relationship with labour productivity. Firms should therefore prioritise the deeper exploitation of given new knowledge rather than potentially prodigal shifts in production towards new products as such.

Keywords:

• Knowledge
• design
• firm performance
• micro and small enterprises
• developing countries

JEL Classifications:

• L25
• L26
• O33

Acknowledgements

Many thanks to Lisa De Propris, Randolph Bruno, Mark Hart, Mary O’Mahony and Stan Siebert for comments on earlier versions of this work and two anonymous referees who provided constructive comments and suggestions. Thanks also to Dorothy McCormick, Paul Kamau Kuria, Isabel Munandi, Caroline Gatimu and Dennis Ndirangu for their assistance with the survey work in Nairobi.

Notes

¹ Many thanks to the reviewer for highlighting this point.

² Although a firm may self-cannibalise in the hope that it may gain a first-mover advantage should the demise of the old products affect the whole market, this is an altogether different question and is hardly the dynamic that is theorised in the pertinent innovation literature.