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Open development and scaling-up of clustered enterprises in Nigeria’s informal sector

This study outlined how the microenterprises overcome numerous challenges common to start-up through ‘open development’ characterized by collective sharing of knowledge, tools, equipment and workforce amongst competing microenterprises, and belonging to trade/professional associations that ensure that knowledge becomes a public good that can be accessed by everyone who needs it. The study found that majority of the microenterprises studied experienced scaling-up from between a few months to around three years from inception, while only a few scaled-up after three years. This paper shows strong positive relationships between variables capturing open development activities (internal training programmes within enterprise, knowledge acquisition from competitors within the cluster, intra-family learning and training, open innovations) and incidence of scale-up. Incidence of scale-up was captured using significant increase in the size of the enterprise, capital base, business activity or turnover or gross sales relative to start up. The study concluded that clustering of small businesses in Africa facilitates open development and is a potential avenue to overcoming the financial constraints commonly associated with small firms and can thus be an enabler of industry growth.