Garment firms are typical of the poor state of Kenyan industry. Production
has declined and, with it, employment. New investment is minimal, so firms
are producing inefficiently using outdated equipment. Many larger firms hav
e closed, while small and micro enterprises have proliferated. Only the tin
y minority of enterprises that is capable of producing for export seems to
be doing well. Why should this be so? And what can be done about it? To ans
wer these questions, this article develops and applies a simple model that
incorporates two theoretical perspectives: value-chain analysis and the bus
iness systems approach. The value-chain approach first enabled us to descri
be several distinct garment chains with production facilities in Kenya. It
also highlighted the differences between these chains and enabled us to dis
tinguish issues affecting each of the stages within a given chain. We found
, for example, that production issues dominate the main export chain becaus
e their other functions - design, supply, and distribution - take place out
side of Kenya. The business-system perspective supplemented and complemente
d the value-chain analysis by pinpointing the institutional causes of many
of the problems facing the industry. Not surprisingly, given its continued
dominance of the economy, the state is held responsible for many of the ind
ustry's difficulties. Also important are the technology system, the labour
system, and firm-level institutions in the textile industry Since the study
is ongoing and, therefore, incomplete, the analysis was able to identify o
nly a few areas that are ready for immediate policy intervention; others wi
ll require further investigation.