Information flows and adaptation in Tanzanian cottage industries

Abstract

The aim of this research is to identify channels of information flows and their impact on business adaptation and survival. The analysis is set within a theoretical framework of information market failure and information flows. The paper draws on empirical data from a survey comprising approximately 400 small-scale entrepreneurs in dressmaking and woodworking industries at different levels of centrality in four regions in Tanzania. The data reveal that half of the businesses are growing and one-third have increased profitability by significant adaptations last year. Most changes occur in products and design. Customers and the media represent the most important sources of business information, followed by family members and business partners. Independent variables that significantly influence adaptability include customer relations, education, media exposure, social networks, and mobility. Associations are strongly modified by the entrepreneurs’ age and gender and by businesses’ size and location. The paper concludes that cottage industries in Tanzania have a remarkable ability to survive. Garment and woodwork markets are still predominantly local and competition from external businesses is limited. Access to business information and new ideas should be improved, however, to counteract growing competition from the modern sector.