The dynamics of local innovations among formal and informal enterprises: Stories from rural South Africa

Abstract

Exploiting the developmental potential of innovation for marginalised communities requires a context-specific understanding of the features and mechanics of innovation. In this article we explore the nature of innovation with the aid of evidence collected from formal and informal enterprises in rural district municipalities (RDMs) in South Africa. It is a complex socio-economic space which invites rethinking of traditional notions of innovation: the rigid divide between formal and informal innovations, fluid spatial scales of innovation and interactions across actors and sectors. The findings contribute to our understanding of innovations, innovation activities and their place in our society by illustrating that narrow views about the origin and formality of innovators and innovations obscure the reality. Informal innovations occur within and are undertaken by actors in the so-called informal and formal sectors of the rural economy and, despite their location in different parts of the local economy and the possible differences in complexity of the outputs, the innovation characteristics are similar and resemble those of informal innovation. These findings identify four areas for policy action.

Keywords:

• informal innovation
• diffusion
• agriculture
• marginalization
• dualism
• learning capabilities

JEL classification::

• I39
• J24
• O10
• O33
• O39
• Q16

Acknowledgments

The authors acknowledge generous financial support of the Department of Science and Technology in South Africa, and the fieldwork assistance of Kgabo Ramoroka, Brandon Bodenstein and Jabulani Mathebula. We also acknowledge the constructive feedback and suggestions of the special edition editor, Saradindu Bhaduri, and two anonymous peer-reviewers. The views expressed are those of the authors and do not necessarily reflect those of any other party.

Notes

1. This is informal employment as a percentage of total non-agricultural employment, 2004/2010 (ILO/WIEGO 2012).

2. Although ILO takes the credit for developing the term, it has acknowledged in the footnote of the Kenyan report that the idea of informal sector came from local African thinkers and analysts and not from First World development experts (Bangasser 2000).

3. Names of people, companies and property have been changed to ensure confidentiality.