Collective Action Opportunities for Upgrading the Value Chain of Small-scale Wooden Furniture Enterprise in Hawassa, Ethiopia

Abstract

Ethiopia is challenged with a widening domestic wood supply gap and concurrent rapid population growth. Along with these developments, the population's growing purchasing power is driving the demand for wooden furniture. The majority of this demand is satisfied by small-scale enterprises. Adding to the domestic wood supply uncertainty, such enterprises are exposed to various challenges, such as infrastructural limitations, unfavourable market conditions, weak government support, or skill gaps, thereby hindering their development and often situating them in a subsistent and poor survival state. A development opportunity comes to light when considering that small-scale wooden furniture enterprises are linked to a critical natural resource base, exposed to growing markets, and mostly consist of individuals with an entrepreneurial vision. If guided effectively, this sector has the potential to drive an economic environment of innovative entrepreneurship, create skilful employment, and disseminate propulsive market signals towards wood suppliers. Collective action is a frequently discussed upgrading option for countering development barriers in the context of emerging economies and therefore, is explored as a potential upgrading mechanism. This study aims to develop a potential institutional model of collective action among small-scale enterprises in Hawassa, Ethiopia. The study follows the general procedure of a value chain analysis and frames the collective action model as a potential value chain upgrading strategy. As the target actor is poorly studied, an explorative and descriptive research approach is applied. In-depth interviews were conducted with 54 wooden furniture enterprises to gain insight into their value chain position and condition, cost structures, network ties, as well as challenges. Then, individual enterprises were asked to envision a desired collective action upgrading scenario. Several key informant interviews were also conducted with direct (internal) and indirect (external) value chain actors ...