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The role of founder experience in industrial development: Firm entry, growth and diversification in Pakistan's textile industry during trade liberalisation.

Cridge, Stella (2009) The role of founder experience in industrial development: Firm entry, growth and diversification in Pakistan's textile industry during trade liberalisation. PhD thesis, London School of Economics and Political Science (United Kingdom).

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Abstract

Firm entry, growth and diversification are central drivers of industrial development. However, firms often perform very differently when facing the same institutional environment. Using original data from field research in Pakistan, I find evidence of diverging firm performance in Pakistan's textile industry during trade liberalisation in which only two thirds of Pakistan's textile firms maintain their pre-liberalisation level of exports and market share is gained by better performers. Using data on firm origins and growth, I show how firm performance is related to pre-founder (or Director) experience which includes education, industry-related employment and industry exposure. Representative case studies show that this experience is manifested in the firm's entry strategy, its initial production and organisational capabilities, and persists via its procedures to improve productivity, quality and marketing. In particular, higher managerial quality results in effective recruitment and incentives which enable workers to improve shop-floor performance. Further, I analyse Pakistan's broader industrial diversification to date and show that an increase in competition during trade liberalisation encouraged firm diversification as profitability of the textile sector fell. However, I find that most textile firms and business groups enter protected domestic industries while, in contrast, the founders of firms in higher value-added sectors such as pharmaceuticals and information technology have greater industry-specific education and experience. This further highlights the role of founder experience in shaping industrial diversification and the firm-level roots of growth. In conclusion, I suggest how policy measures to accumulate industry-related experience and increase firm competition could enable low-income countries to break out of the equilibrium of poor industrial development.

Item Type: Thesis (PhD)
Uncontrolled Keywords: Sociology, Industrial and Labor Relations, Textile Technology, Economics, Commerce-Business
Sets: Collections > ProQuest Etheses
URI: http://etheses.lse.ac.uk/id/eprint/3004

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