Discussion Paper No. 51 of 2005 on Towards Technology Models for MSEs in Kenya: Common Principles and Best Practices

Abstract

Global business pressures generated by globalization and liberalization have shifted emphasis from traditional factors of competitiveness (such as price reductions) towards new forms of competitiveness (such as innovation and knowledge creation). Despite this, Micro and Small Enterprises (MSEs) in Kenya operate within restricted levels of technology and most of them use inappropriate technology. They lack capacity for modern technological adoption and absorption. This paper reviews the theories, existing institutional framework and practices of technology acquisition for Kenyan MSEs and a few selected countries with the aim of developing a model for MSEs technology development. The theoretical review reveals the importance of the spatial dimension, supportive infrastructure, market forces and entrepreneurial orientation and synergy in MSEs technology development approaches. The paper finds that MSEs have operated in an environment that lacks a coherent and comprehensive technology and innovation policy framework. Best practices from other countries highlight the need for increased public support; deepening of market forces; promotion of inter-firm linkages; developing mentoring programmes for “techno-preneurs” and promoting intellectual property rights. Further, lessons indicate that MSE associations, metrology and standards, research and development are critical in technology development. On the basis of these arguments, the paper proposes a theoretical model for MSEs technology development. The model is built on a foundation of five pillars that include: the Government ; science, technology and engineering education institutions; innovation and technology markets; financial institutions; and business enterprises. The model should be useful to MSE associations as they lobby for implementation of MSE policies on technology.