Social Capital in Handicraft Clusters for Business Startup and Growth: The Case of the Luweero Handicraft Cluster in Uganda

Abstract

The Ugandan handicraft sector offers many opportunities for research, due to the high participation of female artisans and widespread agglomeration in clusters. Social capital is present in both the women entrepreneurship, as well as the cluster literature, and promoting women’s social capital is seen as crucial for overcoming resource constraints. However, it is unknown how social capital actually promotes resource acquisition of self-employed artisans, and little literature exists about handicraft clusters in developing countries. Combining women entrepreneurship, clustering and social capital offers the opportunity to investigate how social capital affects female owned businesses in clusters. Thus, this research set out to answer the question of how women entrepreneurs in the Luweero cluster in Uganda use social capital for acquiring key cluster resources for business startup and growth. Using a pragmatic approach, the research question is answered based on data collected during fieldwork in the Luweero handicraft cluster. The data is of qualitative nature and gathered through 12 in-depth interviews with artisans in the cluster. The integrated framework of social capital in clusters and cluster typology revealed both differences across financial, human and physical resources, as well as among the types of social capital used for the mobilization thereof. Specifically, for financial resources, groups in the cluster do not take advantage of existing social capital, which is not true for human and physical resources, where the use of both internal and external social capital is witnessed. However, ambitious women are faced by downward leveling norms and challenges associated with building external social capital for growth. Internal or bonding social capital is identified as crucial for business startup but not sufficient for business growth, where external or bridging and linking social capital is essential for acquiring more resources for growth. The general findings and challenges are lastly used for formulating recommendations and practical implications for the growth-oriented businesses located in the cluster, as well as for an institutional supporting framework.