Why businesses cluster amidst competition? A case study of Abossey Okai Spare Parts

Jeanette Ohenewa Karikari

Student thesis: Master thesis

Abstract

The incidence of similar firms gathered and operating from the same location remains an interesting paradox even today when technology and communication advancements should have supposedly defeated this occurrence. The popular opinion is that if firms are in competition then they would want to set up as far apart as possible from each other; taking up their own territories and becoming ‘masters’ in the process. However, several examples like the Silicon Valley or the Italian fashion industry provide contrary evidence. This paper is an investigation into the clustering of firms in Ghana, specifically at the Abossey Okai automobile spare parts market. This market which has existed for over three decades became the central focus of the study because it has grown to become the centre of spare automobile parts in Ghana and neighbouring countries. There is a popular saying in Ghana ‘If you can’t find the spare parts you are looking for at Abossey Okai, sell your car to scrap dealers’. The primary literature utilized as reference points to understand this phenomenon was the Resource Based View of The Firm and Porters Diamond of National Advantage. These outlined the basis for identifying the resources used at Abossey Okai by traders and how these resources are used to compete and survive in this market. The findings of this study are based on a six week field work conducted at Abossey Okai including mainly interviews and observations. The main competition driver was found to be price though some of the traders had identified special market segments they sought to serve as their unique factor. Mostly, traders did not collaborate with each other but only chose Abossey Okai to set up their shops because of the goodwill the location has earned for itself over the years. There seemed to be a lack of appreciation for technology and its applications in the trade; from basic record keeping to the use of social media for marketing and other business functions. The study draws to an end with even more ideas for further research; concerning how moving forward, technology could be the competition that traders at Abossey Okai should be concerned about.

EducationsMSocSc in Organisational Innovation and Entrepreneurship , (Graduate Programme) Final Thesis
LanguageEnglish
Publication date2017
Number of pages91
SupervisorsMichael J. Mol