3.4.6. Leverage Through Lead Firms
Lead firms can be an easy option for gaining leverage in a value chain. Lead firms can be sellers of inputs or buyers of value chain products and are targeted because of their potential to shift the norms of behavior in an industry. Systemically, as a project evolves and time and resources begin to shrink, it is important to maintain a focus on the end goal of inclusive industry competitiveness. Provided below are some considerations for why and how to work with lead firms that have a track record with the project:
| Project Intervention Premise | Why: Increased Competitiveness | How: Crowd in Others | How: Foster Ownership |
|---|---|---|---|
| Working with high-performing lead firm | Does the firm present a case where other firms are trying to adjust to their lead to remain competitive? | If yes to “why,” is maintaining project support required for the competitive pressure to achieve industry-wide behavior adoption? Low-level support may be appropriate to maintain the perception of project backing if the project is well respected. (A project removing support from a firm may indicate to others a failure of that firm, thus making exiting counterproductive.) | If project support is perceived as needed, firm ownership should be assessed: a high performer should own the target behavior.
Is there a way to provide indirect support such as public recognition or industry or international awards that can promote ownership of the behavior? |
| Working with a medium-performing lead firm | Does the firm present a case where a deepening of ownership would further industry-wide adoption of the behavior as a norm via competitive pressure? | If yes to “why”, is project support important to maintaining the competitive pressure on other firms to conform? | If yes to “why”, is project support important to increasing the depth of the firm’s belief in the behavior? Using self-selection and wait-and-see tactics might be required to ensure ownership. |
| Working with a low-performing lead firm | Does the firm present a holding place so that others can see the potential of entering the market? Does the firm show any signs of taking on and owning the desired behavior? | If yes to “why,” does the firm present a case of maintaining some energy in a high-potential market such that removing project support could reduce or eliminate the potential of new entrants? Moving to a wait-and-see strategy may be an option with a diversion of resources from this firm to lower the entry barrier of other firms that have a better track record. | If yes to “why,” given the firm's track record, any additional resources beyond those needed to crowd in other firms would require a high self-selection standard. The cost of crowding in should be weighed against the unwillingness to own the behavior and the perception of that firm receiving project support. Perceived backing of the firm's very poor behavior by the project may not be worth the potential holding place the firm is providing. |