Economic inclusivity through networked SME production : a case study in Kenya

Abstract

As global manufacturing systems shift towards flexible and small-batch production, product developers and policy-makers have an opportunity to encourage more inclusive industrialization strategies. It is hypothesized that networks of informal-sector producers can provide an effective and ethical model for production; yet, due to a lack of research into these possibilities, both product developers and policy-makers are unaware of the latent potential. This thesis addresses the gap by analyzing a globally-competitive firm comprised of informal-sector producers, and making comparisons with other manufacturing models across both the developed and developing world. The author develops a categorization system for better understanding the costs and benefits of each model, and creates a framework to explain how new product developers evaluate key tradeoffs in making manufacturing decisions. The author then explores the prospect of creating a "virtual factory" of distributed microfactories through a case study of the ethical jewelry producer Soko in Nairobi, Kenya. Soko coordinates brass, horn, and bone jewelry production across 2500 craft microfactories, and its wares are cost-competitive with mid-tier jewelry brands in major retail stores worldwide. Soko's overall effectiveness is analyzed through quantitative analysis of the company's finances and impact reports, in-depth interviews with the company's co-founder, and field research in Nairobi. The tradeoffs inherent in Soko's production model are evaluated through the lens of the aforementioned decision-making framework. Key questions include, can artisanal microfactories compete with large-scale automation and industrialization? In what cases might smaller-scale production have an advantage over larger-scale models? Under the right circumstances, the case of Soko proves that networked microfactory production can be both cost-competitive (especially when handmade qualities are accentuated) and ethical; Soko creates opportunities for advancement across its network of artisans, who maintain ownership over their means of production. It is concluded that systems such as Soko's can provide a model for socially-inclusive production strategies that build upon informal infrastructure. Even if Soko itself only impacts a small number of full-time artisans, a series of ethical, aggregating producers like Soko could collectively provide a larger-scale benefit.