International Development Planning Review

How do micro- and small-scale enterprises respond to global competition? An example of the textile survival cluster Gamarra in Lima

International Development Planning Review (2018), 40, (2), 203–222.

Abstract

Micro- and small-scale enterprises (MSEs) in many regions provide the only job opportunities for large parts of the population and ensure the survival of numerous families. However, the existence of MSEs is increasingly threatened by an increasing global competition reaching previously local markets. This article gives an overview of general aspects of clustered MSEs in the global South and the effects of global competition. It emphasises the importance of considering the diversity of clusters as well as the socio-cultural context of entrepreneurs in order to understand entrepreneurial behaviour. The empirical qualitative analysis of the actual adaptation behaviour of MSEs in South America’s largest textile cluster, Gamarra in Lima, reveals that strong competition forces entrepreneurs to concentrate all resources on maintaining the business, leading to a fatalistic participation in the price war on local markets. It further shows how the absence of public regulation together with socio-cultural barriers prevents entrepreneurial cooperation, and suggests rethinking the laissez-faire strategy of public actors.

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Israel, Alena

Hitzeroth, Marion