The Politics of the Low-Innovation Trap among Microenterprises

• In Event: 4255 - Section on Economic Sociology Roundtables (1 hour)
  In Refereed Roundtable 60min: 1. Entrepreneurship and Innovation

Abstract

What conditions perpetuate the continued use of inefficient, dangerous, and polluting technologies among microenterprises, in spite of existing regulations against many of them? Scholarship on the politics of microenterprises in developing countries has come to differing conclusions about these enterprises’ capacity to affect the policies that regulate the markets in which they operate. One view is that small firms face barriers to collective action and are incapable of effectively advocating for regulations that they could meet. A countervailing view is that they are politically influential enough at local levels to stymie the implementation of unfavorable regulatory policies. This paper argues that these views are not incompatible with one another. By distinguishing 1) between “reactive” and “proactive” behaviors and 2) between the capacity for collective action at local and national levels, I make the case that clusters of concentrated small enterprises can be both effective at resisting regulation at the local level and incapable of bringing political pressure to bear more proactively on national industrial policy; the consequence is a kind of low-innovation trap, where regulations that might help usher microenterprises toward greater productivity are both poorly designed and unenforced. In contrast, where upgrading in response to regulation is most likely is where microenterprises’ “proactive” efforts are aimed at local officials with discretion to tailor the process of becoming compliant. This distinction helps explain both the strong – but not unvarying – tendency toward technological stagnation and the contradictory findings about the political efficacy of microenterprises in Latin America. I present evidence from three sectors that are dominated by geographically clustered microenterprises in Mexico: brickmaking, leather tanning, and ceramics production. The cases draw on fieldwork and secondary sources.

Author

• Steven Samford, University of Michigan