Weaving Micro and Small Enterprises Into Global Value Chains: The Case of Guatemalan Textile Handicrafts

This study describes the Guatemalan textile handicrafts value chain, the firms that operate in it, and the nature of the relationships between them. It focuses on micro- and small enterprises (MSEs) and examines the relationships these MSEs have with each other and with other firms in the value chain. In addition, this study explores the factors that influence MSE owners’ decisions to upgrade in order to increase their value-added contributions to the value chain. The paper states that through upgrading, MSEs can help to enhance the global competitiveness of the value chain while, at the same time, improving their own opportunities for deriving increased benefits from their participation.

The report represents the results of a qualitative field study conducted in Guatemala in July and August of 2004. The purpose of the field study was to advance an overall research agenda for supporting economic growth with poverty reduction by working within the context of value chains. Within this overall research agenda, the purpose of the study was to collect empirical information within a specific value chain in order to explore a set of hypotheses about the relationships between MSEs and other firms in the value chain and the factors affecting MSE upgrading behaviour.

Following the introduction the paper begins by describing the research approach used in the study, including the set of research hypotheses, the conceptual framework underlying these hypotheses, and the qualitative methods used to collect the data. The next section presents descriptive information about the Guatemalan textile handicrafts value chain and covers the following features:

  • Overview of the structure of the value chain;
  • Characteristics of MSEs participating in the value chain;
  • Opportunities and constraints affecting MSE upgrading;
  • Vertical and horizontal relationships between firms, including a discussion of governance relationships and how global market information is transmitted through the value chain; and
  • The enabling environments and supporting markets for firms in the value chain.

The next section then looks at the findings compared to the hypotheses before the paper moves onto suggesting a number of possible strategies for improving value chain competitiveness and enhancing the benefits to participating MSEs.

The paper concludes with a brief discussion of the implications for future studies, identifying a number of critical areas where research is needed in order to create a more complete picture of the value chain and gain a better understanding of the opportunities and constraints to MSE participation in the Guatemalan textile handicraft value chain.

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