Knowledge Diffusion In The Tegal Metal Working Industry

The two main sources of knowledge diffusion in the Tegal metalworking industry are private enterprises subcontracting to local business and the local government. The large private enterprises provide technical training to a limited number of larger workshops who, in turn, provide limited learning benefits to smaller subcontracting workshops. Limitations to this kind of knowledge diffusion are that smaller workshops are largely excluded from this training and that the training does not enable larger workshops to improve their skills or use of technology more broadly to produce more complex and/or higher added-value components. Though well-intentioned, government training has produced minimal measurable results to date and many firms complain that it does not target their needs. The local government's training has had a limited positive impact in the sense that it provides assistance to firms that will otherwise not receive any help at all and that it covers areas not addressed by private sector enterprises such as management. Efforts to lower information costs and promote marketing linkages have achieved limited tangible results to date, though some metal workshops have received subcontracting orders due to government assistance. Government efforts to develop supporting institutions, including a laboratory and a polytechnic, have had some promising results though it is too early to draw conclusions regarding the success of this approach.