catalytic

lead• Characteristics of catalytic firms are having the resources, vision, incentives, and commitment to address industry-wide constraints and drive upgrading investments

•They can be a VC participant or service provider

•They recognize the crucial role that small firms play

Lead firm has the power to set the terms and conditions of transactions, set product and service specifications, have access to key end-markets, and market information

Lead firm may/may not be catalyst firm

We are interested in working with lead firms when they are also catalyst firms

informal formal

Income Generating Activities

Self employed

No Reinvestment

No fixed assets

Traditional technology

Seasonal employment

Mixed with household

No written records

Microenterprises

1-9 employees

Limited reinvestment

Limited fixed assets

Outdated technology

Part time employment

Limited written records

Small Enterprises

10-49 employees

Reinvestment

Fixed assets

Modern technology

Full time employment

Written records

Medium Enterprise

s

50-250 employees

Large Enterpris

es

250 and up employees

CLEAR INDUSTRY LEADERNO INDUSTRY LEADER(S)

MARKET STRUCTUREM

AR

KE

T C

ON

DU

CT

AT

OM

IST

ICC

OLL

EC

TIV

E A

CT

ION MATURE &

COMPETITIVE• Facilitate industry leadership

through industry leader(s)• Identify win-win strategies from

collective action• Support the formalization of

industry, and/or trade groups and associations

LESS MATURE• Include broader section of

stakeholders• Move from short term to longer

term results activities• Shift facilitation from activities to

vision focused

EMERGING• Use VCA to identify interventions

with the greatest leverage• Bring together subgroups of

stakeholders key to the success of the leveraged intervention

• Facilitate activities with short term win-win results

• Build on positive experience to increase incentives to collaborate

VALUE CHAIN WITH LEADER

• Facilitate lead firm investment in industry upgrading

• Consider marginal gains from working principally with leader

• Support industry leader in increasing competitiveness of MSE-lead firm linkages.

Competitiveness

Competitiveness

ISSUES IN WORKING WITH LEAD FIRMS

• Confidentiality• Ownership of learning • Establishing/honoring

commitments • Ensuring MSEs benefit

(causal model, monitoring, performance contracts)

• Replication beyond lead firm

• Understanding incentives• Market distortions

WORKING WITH LEAD FIRMS: ONE OR MULTIPLE?

One Firm

• When only one lead firm is willing to be a catalyst

• When assisting one “winner” will successfully integrate smallholders

• When intervention will likely result in other lead firms replicating the model

Multiple Firms

• Whenever you can• When one lead firm fails

to offer adequate advantages

• When one lead firm fails to honor commitments

• When progress toward your competitiveness strategy cannot be achieved working with a single lead firm