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Diffusion of cleaner production innovation among MSMEs- case study of brick sector in India

Student Name: Mr Sachin Kumar
Guide: Prof. Prateek Sharma
Year of completion: 2020

Abstract:

The Micro, Small and Medium Enterprises (MSME) is an important sector of the Indian economy. The sector makes significant contributions to the social and economic development of the country. The Indian MSME sector is a blend of traditional and modern enterprises and produces a diverse range of products and services to meet the demands of domestic as well as international markets. With the presence of micro businesses traditionally known as village and cottage industries, the Indian MSME sector boasts ancient heritage. The MSMEs have led to entrepreneurial development and provide depth to the industrial base of the economy. After independence, and more noticeable after the opening up of Indian economy in the early 1990s, the MSMEs have grown in significance due to their unique ability to respond to changes in market and innovation, in both the domestic and global spheres.

The management of MSMEs in India is generally small and multi-functional. The entrepreneurs mostly run the enterprises single–handedly, in addition to their function as the general interface with the outside world. The Indian MSME sector is characterized by the presence of a large number of sub-sectors that continue to operate with conventional technologies. Despite the presence of many innovations in technological domains, a majority of units in these sub-sectors prefer to operate with conventional technologies.

The clay-fired brick manufacturing is one such MSME sub-sector in India that is still continuing with the Bulls Trench Kiln (BTK) as the main brick firing technology across major brick producing regions of the country. The BTK technology was introduced in India during the late 19th century. The brick manufacturing process in the country is highly resource (clay, water) intensive and polluting in nature. Despite many cleaner production innovations in the brick manufacturing process at global level, the brick manufacturing process in India has not adopted these innovations. The Zig-zag firing technology—an energy efficient and environment friendly process that also results in better product quality as compared to prevailing BTK technology was introduced to the Indian brick manufacturing sub-sector by the Central Building Research Institute (CBRI) around 1970. Upon introduction, the brick kiln entrepreneurs in the country had not shown much interest in the zig-zag firing technology. However, after almost four decades of its introduction, a large number of brick kiln entrepreneurs in major brick manufacturing clusters in the country are increasingly adopting this technology.

This study has been undertaken to identify the factors, and their relative importance, that help an MSME entrepreneur take a decision in adopting a cleaner production innovation. The study has focused on the brick manufacturing sub-sector, which is a key MSME sub-sector in India due to its geographical spread, and aspects related to energy and resources consumption, greenhouse gas (GHG) emission, and employment generation. Limited work has been undertaken to understand the innovation diffusion processes within a traditional, resource-intensive MSME sector, like brick manufacturing, particularly within the developing country context.

A detailed field study was carried out in two representative brick manufacturing clusters located in the major brick producing regions of the country. Using Focused Group Discussion (FGD), with brick kiln entrepreneurs association, the progressive brick kiln entrepreneurs in these two clusters were identified. Using structured questionnaires, each of the identified brick kiln entrepreneurs was approached to understand their views on innovation adoption aspects and identify the factors that facilitate the decision making process. The identified factors were categorized using the Delphi technique, which is a group knowledge acquisition method to acquire the most reliable consensus of a group of experts’ opinion. To prioritise the factors, in terms of their relative importance, in helping the MSME entrepreneurs take a decision for adoption of cleaner production innovation, the Analytic Hierarchy Process (AHP), a multi- criteria decision making technique was used.

Analysis of the collated data and information clearly brought out that the financial benefit of an innovation is the main driving force that motivates an MSME entrepreneur in adopting an innovation. The study shows that it is important to clearly demonstrate and highlight the benefits of an innovation to ensure its large-scale adoption by MSMEs. The study also highlights that the enabling environment also plays a decisive part in motivating the MSME entrepreneurs in adopting an innovation. In a mature cluster, the ‘network effect’ plays a positive role in shaping the attitude of potential adopters towards an innovation. Whereas, in a cluster that is being introduced to an innovation, the individual entrepreneur characteristics play a key role. The potential adopters in a cluster wait for the bridging of technical, financial and market gaps associated with innovation adoption by the early adopters. The study clearly demarks the domain in which policy interventions should be aimed to facilitate the adoption of an innovation by MSMEs.