Pakistan’s football-making industry is benefitting from a new technology which allows balls to be made more efficiently, thanks to research funded by the International Growth Centre (IGC), based at LSE

South Asia, LSE

LSE Research Online

2014-6-2Pakistan’s football factories score goal for innovationblogs.lse.ac.uk /southasia/2014/06/02/pakistans-football-factories-score-goal-for-innovation/Pakistan’s football-making industry is benefitting from a new technology which allows balls to be made moreefficiently, thanks to research funded by the International Growth Centre (IGC), based at LSE. Researchers found a new way to cut the footballs’ pentagon panels from sheets of an artificial leather, rexine –  themost costly input into football production. The researchers gave the new technology out to football companiesrandomly and watched how they reacted. This allowed the researchers to see what issues prevent firms adoptingnew technologies that could improve their businesses.Football manufacturers were provided with a new cutting pattern – based on the mathematically best way of fitting pentagon shapes on a flat surface – and new cutting tools, or dies, to implement the new design. Skilled cutterswere able to increase the number of pentagon panels per rexine sheet by between 10 -24. This leads, on average,to about a one per cent reduction in total production costs.One of the researchers, Professor Eric Verhoogen, Associate Professor of Economics and International Affairs atColumbia University, said: “A one per cent cost reduction might sound like a small saving but this is significant in anindustry with margins of only about 10 per cent.”Another researcher, Shamyla Chaudry, Assistant Professor of Economics and Business Administration at the LahoreSchool of Economics, said: “This is going to mean more exports for the country because these companies are goingto be more competitive.”In May 2012, the researchers randomly allocated the new technology to 35 of the 135 football firms in Sialkot,Pakistan, the world capital of hand-stitched football production. While one of the largest companies in the city quicklyadopted the new technology for almost all its production, puzzlingly few others followed suit. Based on furtherinvestigation, the researchers conjectured that take-up was slow because employees were resisting the newtechnology. Cutters were paid per piece, with no incentive to reduce waste, and were concerned that the new diewould slow them down and reduce their incomes.To investigate this idea, the researchers offered workers at half of the firms that had originally received the new die alump sum of a month’s salary if, within one month, they could demonstrate that they could use it competently. Half ofthe firms that accepted this incentive subsequently adopted the new die.Professor Verhoogen said, “Incentives for workers may be different from incentives for owners, and workers have tohave an expectation that they are going to share in the gains from innovation in order for innovation to besuccessful.”Azam Chaudhry, one of the researchers and Professor of Economics at the Lahore School of Economics, said: “Justone innovation in one sector can have incredible ripple effects. People’s salaries improve, education levels can goup and the quality of living can go up. Workers can be excited by new technology if you can create a situation wherethey feel they won’t lose out.”Professor Jonathan Leape, Executive Director of the IGC, said: “Innovation is key to improving livelihoods across thedeveloping world. Economists can help understand the barriers that prevent ‘a good idea catching on’ and work withpolicy makers to overcome these challenges.”Copyright © 2016 London School of Economics1/1

Pakistan’s football factories score goal for innovation

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