Social Capability Deficits and Productivity Behaviour of African Entrepreneurs: Evidence From Lesotho Garment Producers

Despite attempts to induce regional competitiveness in industrial manufactures, poor productivity performances continue to plague the ability of African entrepreneurs to compete successfully in international markets. While many plausible explanations can be put forward to explain this failing, we argue in this paper that an analysis of the social and institutional context within which these entrepreneurs are embedded can provide us with useful insights into why they have continued to lag behind in efficiency performance. Adopting the technological catch-up framework proposed by Moses Abramovitz, the paper uses the case of Lesotho garment producers to show how an environment characterised by significant social capability deficits inhibits the ability of resident producers to operate atop their technically feasible efficiency region. Specifically, estimates from stochastic production frontier specifications show that inadequate business support physical infrastructural service deliveries as well as weak national infrastructure of financial intermediation that constrains business access to credit are positively and robustly associated with inefficiency scores of sampled plants. This case thus provides us with a useful example of how the role of African entrepreneurs vis-à-vis technological adoption continues to be shaped by the social and institutional context they face.