3.4.10. Understanding Knowledge Flows

Introduction

There is often an underlying assumption that the main constraint facing microenterprises and smallholder farmers is a knowledge gap. Taking a value chain systems perspective requires asking additional questions, such as the following:

Why have the microentrepreneurs or farmers not upgraded on their own?
Do they identify production problems as solvable?
Do they seek out information to address problems?
If presented with a possible solution do they adopt it quickly or are there other factors like social norms that limit adoption?
Who has the information to address production constraints, and why have they not provided this information to the microentrepreneurs or farmers?

Through these questions, facilitators can start to understand the underlying factors that have discouraged or limited the willingness of microentrepreneurs or farmers to upgrade in response to production problems or market opportunities. The project can then target the output, input and support market relationships needed to address these factors. Where there is a knowledge gap, facilitators should assess which value chain actor has the most appropriate incentives to address not only this gap but likely subsequent knowledge gaps also. Typically, in a competitive value chain, firms selling to the end market--input providers whose end market is the microentrepreneur or smallholder farmer, or output firms that sell to the final consumer--are best positioned to have and share knowledge as part of their commercial relationships. However, in weak markets there may be opportunities for a range of actors in the middle of a chain to compete by differentiating their service offer. For example, traders have strong incentives to buy low and sell high, which is often achieved by using political tactics and misinformation strategies. Helping traders to move into the role of brokers--who organize a sale for a commission--can have a dramatic affect on the value chain as it redefines incentives: brokers profit from high volumes and to reach these volumes they typically need to invest in upgrading their suppliers.

Ways To Foster Increased Knowledge Flows

The private sector already interacts with a range of firms through which a project can foster increased knowledge flows. Examples include the following:

Promotional events Input and service firms often hold promotional events to demonstrate or explain the benefits of their products and/or services and this presents an occasion at which more and better tools can be used to deliver knowledge and skills.
Internal firm upgrading Firms often train their staff via direct and indirect training and this presents an easy option for projects to inject more knowledge and improve methods employed for delivering that knowledge. In cases where a firm is expanding into rural areas, projects can facilitate greater use of local staff hired via performance-based pay schemes that include intensive training programs.
Service delivery A service provider often can explain what they are doing and why as part of a service. A good service provider will also make sure clients understand their own role in ensuring that a service is effective. For example, a service provider spraying herbicides should provide information on potential problems with the crop to make sure the farmer benefits and buys the service again.
Aggregation points Sales yards, collection centers, input purchase points, etc., provide a specific location where knowledge can be disseminated. To be sustainable, it is important that information is eventually provided by someone within the value chain. Projects wanting to disseminate information via an aggregation point need to understand the incentives of the various actors moving through that point since not all have an interest in promoting upgrading among MSEs or smallholder farmers.
Firm branding strategies Particularly for input firms, branding at the firm rather than the product level provides a firm with options as new technologies become available. To achieve firm-level branding, the firm has to shift its image with clients to that of a solution or knowledge provider in order to foster trust and redirect focus away the product. This requires the firm to demonstrate a capacity to deliver credible solutions rather than simply delivering whatever product is available.
Corporate social responsibility For larger firms, redirecting their corporate social responsibility efforts away from "charitable" initiatives and towards interventions that both support the community and also make good business sense can be an effective way to push knowledge out to target groups that might not have effective commercial relationships. For the larger firm these CSR activities can be used to screen potential clients or suppliers, or to establish trust with a potential client base.

There is a place for more traditional training activities, but facilitators have to think in terms of behavior change, not simple information transfer. Rarely is it a good idea for a program to build a direct relationship with microentrepreneurs or smallholder farmers, as occurs in traditional training programs, since this typically prevents other actors from building commercial relationships with the microentrepreneurs or farmers.