An investigation into clustering/linkages as a strategy to enhance the competitive performance of small, medium and micro furniture manufacturing firms in Kwa-Zulu Natal

Abstract

It has been largely accepted that Small, Medium and Micro Enterprises (SMMEs) are principal driving forces in economic development (UN-ECE, 1999; Istomina, 1998; Lalkaka, 1996). However, many small, medium and micro enterprises are constrained by an array of problems such as a lack of access to finance, training services and physical infrastructure. Also, small, medium and micro enterprises are forced to operate in highly competitive environments and transition economies and this limits the ability of small, medium and micro enterprises and even large organisations to operate successfully and efficiently. Consequently, a strategy focused on inter-firm linkages and collaboration could alleviate the problems faced by small, medium and micro enterprises. Research indicates that inter-firm linkages or clustering can lead to the emergence of collective efficiency, which facilitates the industrialisation of SMMEs and has the potential of contributing to economic development (Schmitz, 1995). A cluster would involve interaction between enterprises or networks of enterprises that produce identical or similar products. These linkages create 'collective efficiency' which is critical in sustaining a competitive edge. The ability of small, medium and micro enterprises to maintain this competitive edge will ensure greater success and opportunities for specialisation and differantion.