1. The marble mining industry in NW Pakistan: an analysis of
low-tech innovation in a developing country
Muhammad Nouman, IMSciences, Peshawar
Lorraine Warren, university of Southampton
BAM Conference, Liverpool, September 2013

2. Background
• Origins in split-site agreement with IMSciences,
Peshawar INSPIRE project, http://ihe-
pakistan.blogspot.co.uk/2012/09/supporting-smes-in-
khyber-pakhtunkhwa.html, funded by British Council,
Higher Education Commission in Pakistan (60k)
• TEDxSouthampton http://www.youtube.com/watch?
v=ia2uLqif-_M

3. INSPIRE
• www.blog.soton.ac.uk/inspire
• www.soton.ac.uk/inspire
• Research – International Research Group
• Project – SME Development, extend ongoing work
• 2 split site students, Javed Iqbal and Adnan Javed
• International Research Methods Seminar Series
• Curriculum Development
• Outreach
• Exchanges
• International profile -> Going Global (Dubai) (British Council,
Internationalising Higher Education), Conference in Dubai in 2014

4. Research Aim, Objectives and Justification
• Pakistan government wish to improve performance in SME
sector
• Low innovation, high natural resource wastage
• RO1: To understand the phenomenon of innovation within a
low-technology sector (the marble industry in NWP), in terms
of its constituents, key contextual factors stakeholders and
actors, and
• RO2: through better understanding of the industry, develop
recommendations for improvement, in line with Pakistan’s
national policy.

5. Setting the Context
The North-West Regions (N-WFP & FATA) of Pakistan

6. Setting the Context
The North-West Regions of Pakistan

7. Setting the Context
• What is Marble Stone?
• Two sub-sectors (a) marble mining & (b) marble
processing
• Up to 70 % resource wastage due to poor mining
and processing technologies; exports are only 10%
of total production, $ 60 – 70 million losses per
year in exports only (SMEDA, 2007; IMS, 2007)
• Sector characterized by ‘low-technologies’
• ‘Non-dimensional’ stone extracted through
indiscriminate blasting
• One of Pakistan’s three SME-based industries with
‘new potential for growth’ (Zia, 2007)
• A sector characterized by competitive
disadvantage where policy/institutional actions
can have the greatest positive impact (WB, 2006)
The Marble Sector of North-West Pakistan
A Marble Mine Blocks being transported from mine
Non-dimensional block/stone being shifted in
processing factory using mechanical crane

8. Setting the Context
In order for the marble sector to improve and
prosper we need to find out and explain
how firms in the sector can innovate. What
is the current situation? How can things
improve? What needs to be done to reduce
wastage and increase profitability?
Improvement of the sector in
line with a regional development
agenda for the north-west
regions of Pakistan that seeks to
enhance local industries by
exploiting the area’s natural
resources.
A horizontal marble cutting machine
A worker operating on vertical cutter
A vertical marble cutting machine
Thin marble tiles Marble slabs used in flooring & stairs
Marble slab
with rough
edges
Mosaic
decorative
items

9. Reviewing Literature: The Approach
1. Placing Low-Tech (LT) on the Innovation Landscape
2. Developing the Conceptual Framework
3. Innovation in LT & LMT Sectors: Disciplinary Debates
and Key Insights

10. Reviewing Literature:
Placing Low-Tech on the Innovation Landscape
• Growing criticism of ‘high-tech myopia’ (von Tunzelmann & Acha, 2005)
• Even in developed countries low-tech (LT) and low- and medium-tech (LMT)
comprise dominant portion of the economy (more than 90% of growth output),
economic growth not possible only through HT innovation (Robertson et al. 2009;
Hirsch-Kriensen & Jacobson, 2008; Bender, 2004)
• LT (R&D intensity 0 – 0.9 %), LMT (R&D intensity 0.9 – 5 %); LT the ‘forgotten
sector’ (Hirsch-Kreinsen, 2008a)
• Innovation also possible in LT and LMT sectors; incremental product
improvements, customer focus, ‘optimisation’ of processing technologies, tacit &
experiential knowledge (Heidenreich, 2009), design, advance machinery, training,
external sources (Santamaria et al., 2009)
• LT sectors mostly comprise of SMEs, have incremental innovation, process
innovation more common (Hirsch-Kreinsen, 2008b)

11. • Difficult to develop conclusive list of innovation determinants; Innovation type,
industry sector, firm size & firm’s context main causes of variation; Process &
incremental innovation more common (Souitaris, 2002, 1999; Wolfe, 1994;
Pavitt et al., 1989)
• Various characteristics of owner/manager influence innovation indirectly
through mediating role of entrepreneurial processes within firm (Entrialgo et
al., 2000); more direct influence (Akgun et al., 2009); very limited insights on
individual-level as compared to firm-level and contextual determinants
• More studies needed from SI perspective to understand determinants (Edquist,
2005)
• Country-specific institutional frameworks affect labour markets thus influencing
relative affect of innovation determinants (Casper & Whitley, 2004)
• More research needed to understand role of institutions (Faulkner, 2009;
Malerba & Orsenigo, 1995)
Reviewing Literature:
Innovation in LT & LMT Sectors: Disciplinary
Debates & Key Insights

12. Reviewing Literature:
Developing the Conceptual Framework
• Innovation approaches; milieu, networks, clusters, systems (Todtling et al.
2009)
• Systems of Innovation (SI) – focus on relationships/interactions amongst
firms, other organizations & institutions; include determinants of innovation
including social, political, economic, institutional, organizational and other
factors (Edquist, 2005, 1997; Freeman, 1987)
• SI – National (NSI) (Nelson, 1993; Lundvall, 1992); Regional (RSI) (Asheim &
Gertler, 2005; Cooke, 2001, 1992); Sectoral (SSI) (Malerba, 2005, 2004,
2002; Breschi & Malerba, 1997)
• Sector: ‘a set of activities that are unified by some linked product groups for
a given or emerging demand and which share some common knowledge.
Firms in the sector have commonalities and at the same time are
heterogeneous’ (Malerba, 2005, pp. 385)
• Elements & Structure of SSI: Products, agents (firms & non-firms),
knowledge & learning processes, technologies, demand, institutions,
interactions (Malerba, 2004)

13. MAJOR LT & LMT SECTORS STUDIED
(Predominantly Manufacturing)
COUNTRY CONTEXTS
Agriculture, Food, Beverages, Chemical, Machinery and
Equipment, Pharmaceuticals, Building Materials, Biotechnology,
Semiconductor, Mineral (Metallic), Mineral (Non-Metallic), Steel,
Metal Packaging, Wood, Medical Equipment, Rubber, Leather,
Plastic, Paper, Food Machinery, Construction, Textile,
Electronics, Tobacco, Housing, Furniture, Ferrous Ore mining,
Non-Ferrous Ore Mining, Glass, Footwear, Printing/Publishing,
By-Products, Graphic Arts, Bedding Mattress, Mechanical
Engineering, Ceramic, Electronic Games, Games Software,
Integrated Circuit, Vehicles Equipment, Transport, Fertilizer,
Office Equipment
United Kingdom, Germany,
France, Belgium, Portugal,
Austria, Italy, Norway,
Sweden, the Netherlands,
Spain, Denmark, Finland,
Ireland, Greece, Australia,
USA, Canada, Brazil, Chile,
Mexico, China, Japan, Korea,
Taiwan, Turkey, India,
Kazakhstan, Vietnam,
Jamaica
o Many sectors studied including minerals.
o No exclusive research on marble.
o Dominant focus on developed country contexts (Europe, USA, Canada,
South America, Far East).
o Very limited work in developing country context.
Reviewing Literature:
Innovation in LT & LMT Sectors: Disciplinary
Debates & Key Insights

14. The Conceptual Framework
Sectoral System of Innovation (SSI)
SSI Elements SSI Structure (Interactions)
Firm Non-Firm
Knowledgebase Technologies
Learning ProcessesDemand Institutions
Firm Owner or Manager or
Entrepreneur
Representative of
Non-Firm Organization
Micro-Individual
Level
Micro-Individual
Level
Meso-Firm
Level
Meso-Firm
Level
Macro-Contextual
Level
Macro-Contextual
Level
Levels within
the Marble Sector
• Traditional SSI approach mainly focuses on firms &
their context
• Marble companies are small firms with limited resources
• Owner/manager a key individual
• Studying his role extremely important also in order to
have a better understanding of innovation

15. Why Sectoral System of Innovation (SSI)?
• Innovation at the centre of the system
• More holistic – includes wider array of determinants
• Focus on non-linear nature of innovation – an essential characteristic of LT
innovations, focus on interactions/relationships
• Greater focus on understanding role of institutions (national, regional, sectoral
components)
• Focus on ‘product groups’; Focus on firm
• Suitable for studying innovation within a sector or industry
• More flexible – ‘level of aggregation’ concept used to determine sector boundaries
& level of analysis applied by researcher (Malerba, 2004)
• Focuses on industry/sector-specific nature of technological regimes; appropriate
for studying innovation in LT/LMT sectors (Evangelista and Mastrostefano, 2006)
• Downside = neglect of entrepreneur/individual (Radosevic)

16. Deciding the Methodology & Methods
Case Study – Multiple (Two) Case Design (Embedded Type 4)
CONTEXT
Peshawar-Mohmand Sectoral System
Product groups, technologies,
knowledgebase, learning processes,
demand, institutions, non-firms,
interactions/relationships
CASE 1
PESHAWAR & MOHMAND AGENCY
Unit of Observation:
Owner/Manager/Entrepreneur
Embedded Unit of Analysis 1
‘Marble Mining Firm’
Embedded Unit of Analysis 2
‘Marble Processing Firm’
CONTEXT
Buner Sectoral System
Product groups, technologies,
knowledgebase, learning processes,
demand, institutions, non-firms,
interactions/relationships
CASE 2
BUNER
Unit of Observation:
Owner/Manager/Entrepreneur
Embedded Unit of Analysis 1
‘Marble Mining Firm’
Embedded Unit of Analysis 2
‘Marble Processing Firm’
A Marble Sector
Processing
Unit
Processing
Unit
Mining UnitMining Unit
Mining UnitMining Unit
Mining UnitMining Unit
SupplierSupplier
Intermediary
or
Middleman
Intermediary
or
Middleman
Public-oriented
Sector Support
Organization
Public-oriented
Sector Support
Organization
Private
Sector Support
Organization
Private
Sector Support
Organization
Mining UnitMining Unit
Other Stakeholder
Organization
Other Stakeholder
Organization
Processing
Unit
Processing
Unit Processing
Unit
Processing
Unit
Processing
Unit
Processing
Unit
SupplierSupplier
Intermediary
or
Middleman
Intermediary
or
Middleman
SupplierSupplier
Public-oriented
Sector Support
Organization
Public-oriented
Sector Support
Organization

17. Deciding the Methodology & Methods
Data Collection (using Case Study Protocol) & Analysis
PHASE
STATUSPreliminary Phase: Semi-structured In-depth Interviews (April – May 2009)
Sample & Number of Respondents (Purposive Sampling - Heterogeneous) Total, Location, Time/Interview
•Owner/Manager Processing Unit (4 Interviews; 2+2, Case1 & Case2)
•Owner/Manager Mining Unit (3 Interviews; 1+2, Case1 & Case2)
•Supplier & Middleman/Distributor (2 Interviews; 1 supplier+1 distributor for Case1&2)
•Sector Expert (1 Interview from consultant/academician)
•Representative of Support Organization (2 Interviews; 1 SMEDA, 1 PASDEC)
12 Interviews, Peshawar (Warsak
Rd., Industrial Estate, GT Road,
Cantonment, Hayatabad), Buner
(main city), Islamabad (main city)
(1 - 1.5 hrs)
Complete
Data Analysis – Step I: Create Case Study Database, Translate & Transcribe Interviews, Conduct Initial Analysis,
Inform & Formulate Structured Interviews & Questionnaires (June – December 2009)
Complete
Build-Up Phase: Questionnaires and Structured Interviews (January – March 2010)
Sample & Number of Respondents
(Purposive Sampling – Homogeneous within each Sub-sector)
Total, Location, Time/Interview
•Owner/Manager Processing Unit (35+35 Questionnaires, Case1 & Case2)
•Owner/Manager Mining Unit (6+12 Structured Interviews, Case 1 & Case
2)
70 Questionnaires, 18 Interviews
Peshawar (Warsak Rd., Industrial Estate, GT
Road), Buner (main city, Chamla & Sunigaram,
Dewanbaba, Karakar) (35 - 50 mins)
Complete
Data Analysis – Step II: Further Build Case Study Database, Conduct Data Analysis (April – July 2010) Complete
Closing Phase: Structured Interviews (August – September 2010)
Sample & Number of Respondents (Purposive Sampling – Heterogeneous) Total, Location, Time/Interview
Owner/Manager of Processing Unit (2 Interviews; 1+1. Case 1 & Case 2)
Owner/Manager of Mining Unit (1 Interview, Case 2)
Supplier/Middleman/Distributor (1 Interview)
Sector Expert (1 Interview)
6 Interviews, Peshawar (Warsak
Rd., Hayatabad, Cantonment),
Buner (main city)
(35 - 50 mins)
Complete

18. Deciding the Methodology & Methods
• Creating Codes (influence from Research Questions &
Conceptual Framework)
• Splitting and Splicing
• Descriptive Codes, assigning units of data, Pattern Coding
• Memos
Description Code Research Question
Existing Marble Product Ex-Prod RQ1.1.1
Existing Marble Process Ex-Proc RQ1.1.2
Product Innovation Prod-Inn RQ1.2.1
Marketing Innovation Mark-Inn RQ1.2.3
Informal Learning Process Inf-L-Proc RQ2.3.2
Formal institution Form-Inst RQ2.4.1
Interaction b/w firm & non-firm Int-F-NF RQ3.1
Individual Innovation Determinant Ind-Inn-Det RQ3.5.1
Firm Innovation Determinant F-Inn-Det RQ3.5.2
FORMAT OF CASE STUDY REPORT
CASE TITLE
1. Introduction
2. General Scenario in the Sector: Firm and non-firm context (RQ1.1)
I. Nature and types of products
II. Nature of production processes
III. Nature of marketing practices
IV. Nature of organizational structure
V. Role of stakeholder organizations
3. Existing Innovation Scenario in the Sector (RQ1.2)
I. Manifestations of innovation: Firm-context
4. The Sectoral System of Innovation: Elements
I. Role of Agents (RQ2.1)
A. Individuals & Firms
A1.Mining Units
A2. Processing Units
B. Non-Firms
B1.Suppliers
B2. Middlemen/Distributor
B3. Sector Support Organization
II. Nature of Knowledge and Technologies (RQ2.2)
III. Learning Processes (RQ2.3)
IV. Nature of Demand (RQ2.3)
V. Institutions and their role (RQ2.4)
5. The Sectoral System of Innovation: Structure
I. Interactions amongst Firms and Non-Firms (RQ3.1)
II. Interactions amongst Firms and Institutions (RQ3.2)
III. Interactions amongst Firms and Knowledge and Technologies (RQ3.3)
IV. Interactions amongst Firms and Learning Processes (RQ3.4)
V. Interactions amongst Firms and Demand (RQ3.4)
VI. Logic Models and Discussions (RQ3.1-RQ3.4)
6. Determinants of Innovation in the LT Sector: Categorization (RQ3.5) and
Relative Importance (RQ3.6)
I. Logic Models and Discussions (RQ3.5-3.6)
7. Concluding Thoughts
Example
(Yin, 2003; Miles & Huberman, 1994; Dey, 1993)
• Replication Logic
• Matrices & Networks, Logic Models
• Within-Case Displays
• Cross-Case Displays & Analysis
• Two Case Study Reports (Case 1 & 2)

19. Outcomes 1
• Dependence of processing sub-sector on mining sub-sector
• All characteristics of SSI (elements & structure) found in the marble sector
• Products: More than 20 main varieties of stone
• Mining Phase: Irregularly shaped boulders & blocks, cracks
• Processing Phase: Slabs, tiles, decorative items, mosaic, flooring
pebbles ‘chips’, poor quality (rough edges, small cracks)
• Processes: Mining – indiscriminate blasting, limited use of mechanized
extraction (loader & extractor), no wire cutting, no dimensional stone
extraction
• Processing – cranes for off-loading, vertical & horizontal cutters,
some gang saws, polishers
• Marketing: Most finished product does not meet international standards, focus
on domestic market, better understanding of local customer needs but not the
case for international markets, limited evidence of packaging & labelling
• Organization: typical small enterprise structure (mostly 1 owner/manager, 10-
12 employees, informal delegation of authority & responsibilities), leasing in the
case of mines

20. Outcomes 2
Zero R&D intensity
Context-specific manifestation of innovation
Incremental product & process innovation only, no significant
improvements (inline with LT sector characteristics)
Some marketing innovation, targeting new markets at
national level (mainly Punjab), no international focus
No innovation at firm’s organizational level
Innovation supplier-driven (in line with Pavitt’s taxonomy)
especially supply of modern technology, improved imported
machinery and better quality / dimensional raw marble
Process innovation strongly influencing product innovation
Innovation in mining sub-sector (excavation processes)
strongly influencing innovation in processing sub-sector,
importance of sub-sectoral linkages

21. Outcomes 3
Technology changes very slow within the sector, most technologies
in use since last 15-20 years
Knowledge search common at individual level (owner/manager) but
not at firm level
Technologies are spillovers from LMT sectors like locomotives
Weak absorptive capacity due to unskilled workers
Knowledge of domestic market only & not international market,
knowledge gained informally by learning about local customer’s
requirements/tastes
Incremental knowledge accumulation but formal on-job training
non-existent
Low knowledge appropriability as product too simple & easy to copy
by competitor
Technologies used with a priority for production efficiency,
compromise on product quality

22. Outcomes 4
Formal
National
Formal
Regional
Formal
Sectoral
Weakening
Effects of
Formal
Institutions
Policy
Inconsistency
Marble Sector
Strong Informal
Institutions
Lack of Clarity
Weak Match

23. •Risk-taking by owner/manager
•Innovations set by other businesses as examples to follow
•Skill-level and training of worker (s)
•Education and awareness of owner/manager
•Owner’s formal business experience
•Owner’s perception of and response to change
•Owner’s satisfaction level with current sales/business performance
•Owner’s focus on day-to-day survival versus long-term planning
•Owner’s perception about profitability of innovations
•Risk-taking by owner/manager
•Innovations set by other businesses as examples to follow
•Skill-level and training of worker (s)
•Education and awareness of owner/manager
•Owner’s formal business experience
•Owner’s perception of and response to change
•Owner’s satisfaction level with current sales/business performance
•Owner’s focus on day-to-day survival versus long-term planning
•Owner’s perception about profitability of innovations
•Stone/material wastage during blasting and cutting processes
•Locally manufactured machinery resulting in quality problems during processing
•Equipment/machinery maintenance
•Availability of finances and low profit margins
•Small size of business
•Nature of formal business planning and implementation
•Lack of ownership due to separation between mine lease holder and mine operator/manager
•Stone/material wastage during blasting and cutting processes
•Locally manufactured machinery resulting in quality problems during processing
•Equipment/machinery maintenance
•Availability of finances and low profit margins
•Small size of business
•Nature of formal business planning and implementation
•Lack of ownership due to separation between mine lease holder and mine operator/manager
•Nature of excavated marble (dimensional vs. irregularly shaped stone blocks)
•Uniqueness of marble stone varieties
•Nature of linkages among mining and processing sub-sectors/firms
•Availability or otherwise of machinery (local and/or imported) and with features that
allow flexibility in product designs
•Quality of available machinery components such as blades, cutters, others
•Presence of experts/technicians in the market who can install machinery properly
•Infrastructure support such as electricity, roads
•Leasing and loan services from banks and other organizations
•Quality issues with excavated stone (impurities, hardness)
•Transportation costs of shipping stones from mines to processing units
•Cost of fuel for mining units and electricity/taxes for processing units
•Nature of excavated marble (dimensional vs. irregularly shaped stone blocks)
•Uniqueness of marble stone varieties
•Nature of linkages among mining and processing sub-sectors/firms
•Availability or otherwise of machinery (local and/or imported) and with features that
allow flexibility in product designs
•Quality of available machinery components such as blades, cutters, others
•Presence of experts/technicians in the market who can install machinery properly
•Infrastructure support such as electricity, roads
•Leasing and loan services from banks and other organizations
•Quality issues with excavated stone (impurities, hardness)
•Transportation costs of shipping stones from mines to processing units
•Cost of fuel for mining units and electricity/taxes for processing units
•Access (direct/indirect) to national & international markets
•Awareness & knowledge of international customer preference
•Nature of product demand in local market (stagnant vs. dynamic)
•Demand for substitutes like ceramic & porcelain products
•Demand for marble products from Balochistan region of Pakistan
& China in national & international markets
•Access (direct/indirect) to national & international markets
•Awareness & knowledge of international customer preference
•Nature of product demand in local market (stagnant vs. dynamic)
•Demand for substitutes like ceramic & porcelain products
•Demand for marble products from Balochistan region of Pakistan
& China in national & international markets
•Role of marble support organizations (government & private sector)
•Role of marble union or association
•Interactions among firms, non-firms & formal institutions
•Market distortion due to presence of non-professional individuals
•Geographical location of business and distance from markets
•Nature of informal institutions (collectivist culture, social pressures, tribal social system)
•Complexity of banks’ lending procedures
•Exploitative role of middlemen fetching greater profit margins
•Nature of application of formal institutional frameworks by government regulatory bodies
•Uncertainty about law & order, economic situation & government credibility
•Role of marble support organizations (government & private sector)
•Role of marble union or association
•Interactions among firms, non-firms & formal institutions
•Market distortion due to presence of non-professional individuals
•Geographical location of business and distance from markets
•Nature of informal institutions (collectivist culture, social pressures, tribal social system)
•Complexity of banks’ lending procedures
•Exploitative role of middlemen fetching greater profit margins
•Nature of application of formal institutional frameworks by government regulatory bodies
•Uncertainty about law & order, economic situation & government credibility
Micro-Individual Level
Meso-Firm Level
Macro-Contextual Level
Others
Demand-oriented
Supply-oriented
*Internal
Determinants
*Contextual
Determinants
Schematically
87 Determinants (46 processing, 41 mining) of LT
Innovation in marble sector of north-west Pakistan
*Becheikh et al. (2006)

24. Continuing…
• At the micro-level, no overarching climate for innovation in the
industry in the community of firm owners; though entrepreneurial
individuals can be influential, overall, there is a lack of role models
• At the meso-level, limited and informal interactions between firms
in relation to knowledge and learning processes
• Meso-micro interactions between individuals and firms are role-
dominated, often with weak connections between investment in
innovation and reward
• At the macro-level, weak institutions combined with sector support
organisations with a lack of trust, direction and purpose within a
conflictual region result in non-existent access to international
markets
• Macro-meso interactions result in the inability of firms to trigger
new demand and weak knowledge creation and learning.

25. Conclusion
• The concept of innovation in a low-technology sector has been
poorly understood especially within the context of a developing
country
• This research addresses the lack of an exclusive and all-encompassing
SSI perspective that focuses on innovation in a low-technology sector
and integrates conceptual/theoretical aspects of SSI with empirical
work conducted in a developing country
• The SSI approach has traditionally focused on the role of firms and
their context explained through sectoral elements and structure.
However, the understanding of sectoral structures is still weak. Also,
using micro-meso-macro framework this research brings into focus
not just the role of firms and context but also the role of individual
within firm (a key component of small firms that has been ignored) in
influencing LT innovation

26. Thank You