Daily Times

LAHORE: Pakistan’s soccer ball production is facing serious challenges like increasing production cost and quality issue because of the soccer industry’s workers resistance to new technology, reveals a survey by Lahore School of Economics.

All of Pakistan’s soccer ball production is concentrated in Sialkot, which remains the major source for the world’s hand stitched soccer balls. In recent years the industry has faced increasing competition from East Asian countries, especially China, which has hurt exporters.

Researchers at the Lahore School of Economics (LSE) studying the cluster of soccer-ball producing firms in Sialkot found that workers tend to resist new technology, even if it was given for free. This was despite the fact that the use of a new cutting technology (or “cutting die”) invented by the researchers could achieve more pentagons per sheet of rexine (artificial leather), thus reducing rexine cost per pentagon as compared to the traditional technology.

Adoption of this die could reduce the total cost by approximately 1 per cent and even though this number was smaller in absolute terms, given the low profit margin of around 8% in the industry, the net benefit from adopting this new technology was quite significant for the industry’s competiveness. Studying the reasons for lack of adoption, it was found that workers resisted the new technology because they were worried that their overall wages would fall since the key employees in this sector are typically paid piece rates, with no incentive to reduce waste, and the new technology slows them down.

To further investigate the reasons behind slow adoption, the researchers paid the factory workers Rs 15,000 to practice with the new technology. This modest change in the incentive payment was found to lead to adoption of the technology.

The researchers concluded that to bring technological innovation to life, both technology adoption and organizational changes should go hand in hand. The findings also suggested that the firms should be flexible in accommodating modified organizational structure and workable wage contracts. A mechanism where the employees are expected to share some gains from new adoption was also strongly recommended.

This project was funded by IGC and PEDL and the researchers included Dr Azam Chaudhry, Professor and Dean, Lahore School of Economics, Shamyla Chaudhry, Assistant Professor, Lahore School of Economics along with fellow researchers including David Atkins (Department of Economics, MIT), Amit K Khandewal (Graduate School of Business, Columbia University), and Eric Verhoogen (Department of Economics, Columbia University).