Structural Barriers and Adaptive Strategies in the Transition of Sawmill Enterprises: Evidence from Nepal

Background: Nepal's sawmill enterprises confront significant structural barriers that constrain their capacity to transition toward sustainable and modernized operations. Despite possessing approximately 3.2 million hectares of forest cover, most enterprises operate with outdated technologies, limited capital access, and fragmented market linkages. Methods: This study employs a mixed-methods design combining quantitative surveys of 150 sawmill enterprises across major timber-producing regions of Nepal (Terai, Hills, Kathmandu Valley) with qualitative case studies of 20 enterprises demonstrating successful adaptation. Data were collected in 2023 using structured instruments administered by trained enumerators, supplemented by semi-structured interviews, operational observation, and document review. Results: Structural barriers operate across five interdependent dimensions: institutional-regulatory (78% of enterprises reported licensing as a significant barrier), infrastructural (88% cited electricity reliability), financial (only 28% held formal bank credit), market (85% of micro-enterprises sold exclusively through informal intermediaries), and human capital (82% of production workers received no formal technical training). Despite these constraints, 58% of enterprises invested in technology upgrades, 42% participated in industry networks, and 28% diversified into value-added secondary processing. Conclusions: Enterprise-level adaptation, while demonstrating significant agency, remains insufficient for sector-wide transformation absent coordinated policy reform. Sustainable transition requires alignment between enterprise-level adaptive strategies and systemic interventions targeting regulatory simplification, infrastructure investment, sector-specific financing, and technical skills development.