The Technological Evolution of Industrial Districts

The industrial district may be logically decomposed in several ways, but the first and fundamental decomposition is to be the one between the productive apparatus and the human community in which it is, so to speak, “embedded”. It is usually said, in fact, that in the industrial district the first and the second are reciprocally interpenetrated, which means that there is, between the two, a continuous, intimate correspondence as they fulfil their roles. What this particular conceptualisation suggests is the idea of a relationship between a block of economic-productive relations, spatially situated in a circumscribed territory, and another block of socio-cultural relations situated in the same territory. A relationship that is on average more intense, on the long term, than the one existing between similar blocks at higher levels (for example, at national or world level). It might also be said that the study of the district typically consists of an in-depth exploration, at local level, of the many interactive connections of that pair: productive apparatus and community.

If Fordism clearly belongs to the past one still finds it difficult to characterise the New Growth Regime of the developed economies. The popularised notion of New Economy was of little help in that respect and its vagueness has been part of its success until the dramatic fall of the shares of the hi tech companies on the stock markets in 2000-2001 badly affected its credibility.

One of the most significant consequences of the present process of globalization is the way in which it continues to turn inputs, previously crucial to the competitiveness of firms, into ubiquities. Globalization has increasingly been associated with the ‘unbundling’ of the previous relationship between sovereignty, territoriality and state power (Ruggie, 1993) and, as a consequence, steadily weakening nation states (Maskell, 2000), but it is arguably the many economic consequences of ‘ubiquitifcation’ that has contributed most in making globalization the favourite business buzzword at the recent turn of the century. Ubiquities are inputs equally available to all firms at more or less the same cost almost regardless of location (Weber, 1909). A large domestic market is, for instance, no longer an unquestioned advantage when global transport costs are becoming negligible; when the loyalty of customers toward national suppliers is dwindling; and when most trade barriers have eroded. Domestic suppliers of the most efficient production machinery are, similarly, no longer a solid competitive advantage, when the sales-and marketing strategies of the suppliers reach across borders, and their equipment becomes available world-wide at essentially the same cost. The omnipresence of organizational designs of proven value makes, furthermore, a long industrial track record less valuable. So when input becomes ubiquitous, all competing firms are, in a sense, placed on an equal footing. What everyone has cannot constitute a competitive advantage.

Localised development is a fact, but is not yet a theory. The empirical evidence of the fact is not sufficient for detecting the causal chain that triggers the growth of a territorial system and determines its pace and direction.

In this study, a research hypothesis on Local Production Systems (LPS) is developed on the basis of theoretical statements introduced in Lombardi (2000a). Starting from the results of empirical inquiries carried out recently by many scholars, we continue the objective of delineating a long-term trajectory of their development (Sections 6.1-6.4) on the one hand, and on the other, investigate potential future trajectories by analysing emerging properties during the ongoing transition process (Section 6.5).

The aim of this paper is to present an overview of the various mechanisms of knowledge creation, diffusion, and assimilation which are visible within the Italian local production systems. The term “local production system” adopted in this paper concerns that class of phenomena related to the spatial concentration of specialised industry, often defined in the economic and business literature as: industrial districts, multi-district areas, system-areas, local systems governed by leading networks firms, “clusters”, “milieux innovateurs”, and so on. The paper discusses the evolutionary pattern of tacit and codified knowledge within the institutional complexity of the Italian local systems, where not only firms are active agents in knowledge producing and distributing, but also local institutions contribute to the process of socialisation of information and knowledge.

In “The nature of the firm” Coase quotes D.H. Robertson who notes that it is possible to find “islands of conscious power in this ocean of unconscious cooperation like lumps of butter coagulating in a pail of buttermilk” (Coase, 1937; p. 386). Coase asks why is it so? As we know, he contends that the balance between the costs of producing in house and the costs of using the market explains the existence of firms “coagulating transactions” within the market.

Vital industrial districts are characterised by, among other complementary conditions, processes of innovation not strictly dependent on strategies of large investment in R&D (Section 9.2). This decentralised industrial creativity is one of the building blocks of a virtuous circle of relations promoting local development. This circle has its limits and threats (Section 9.3), against which mechanisms and agents of possible but uncertain adjustment may be identified (Sections 9.3–9.4). The combination of these conditions enters into the definition of various types of path of local change (Section 9.5). The last section suggests that the circle defines vital industrial districts as a model of learning region. The model may also be applied to the interpretation of some of the learning processes that act in combination within dynamic local economies more or less dissimilar from industrial districts.

Becattini’s (1979, 1989, 1990) “simple” redefinition of the research object from “industry” to “district”, that is from a product/market-based definition to a territory-based one, allowed for an enlargement of the scope of economic analysis which has shown complex interactions between social and economic aspects of regional studies, and specifically of industrial districts, in the realm of industry studies. In order to explain such a complexity and its evolutionary character, many scientific disciplines entered the field, with their theoretical tools and empirical methodologies. In a sort of “snowball effect”, sociologists, management scholars, geographers and historians developed researches or suggested ideas and hypotheses concerning IDs, besides heterodox industrial economists. Consequently, specialists in the field had to progressively take into account the new perspectives and studies which were emerging in an unending body of literature.

The industrial district is one of the theoretical concepts by which Italian economic geography has redefined a large part of its scientific and methodological status. The industrial district has asserted itself in Italian economic geography following rediscovery ofMarshallian external economiesand revaluation of theterritoryas territorial society, and ofplaceas the unit of analysis, and classification, of the economy and society. This has come about through recovery of a tradition of geographical analysis long neglected by geographers themselves since the time when economic geography was recast as spatial economics.

The literature on industrial districts (henceforth: IDs) counts such a wide number of contributions that it has become difficult to denote with only one term a large variety of phenomena. In fact, under the umbrella term of ID, extensively used in various disciplinary fields, different models of (local) development and inter-firm arrangements can be recognised.

This paper sets out to examine how changes to production methods have affected the component manufacturers operating in the area. In other words, we have tried to see what implications the reorganisation of Fiat had on the suppliers and sub-contractors and what the consequences were for the firms which continued to supply Fiat and firms which were excluded. We also wanted to see whether those firms, which were excluded have been able to survive without Fiat. Another purpose was to verify whether the region possessed an innovative/competitive capacity independently from Fiat and, if this did exist, how it had developed and what its decisive elements were. Further, considering these factors, we wanted to show how, in the Piedmont industrial system, from the end of the Second World War to the 1990s, an industrial area had evolved into an automotive technological district.

This chapter presents the results of an empirical research on the Bologna district, specialised in automatic packaging machinery. The Bolognese packaging machinery industry has been studied for the excellence of some companies for a long time (Lipparini, 1995;Lipparini and Lorenzoni, 1994). However, the positive performance of some dynamic firms may be related to the local context, where firms have developed a network of historically path-dependent, locally based, specific interactions: a nexus of productive relationships, and a wide net of social relationships conducive to a fast innovation activity. Within this technological district a clustering of innovations has occurred; in turn, this has led to a self-reinforcing mechanism of industrial growth. The generation and diffusion of knowledge have been promoted throughout specific communication processes which have crossed large firm nets, with suppliers, subcontractors, and local institutions. The empirical study presented aims to show the close relationship existing between the dynamics of localised technological change and the role of local communication processes.

This study furnishes empirical evidence from the biomedical district of Mirandola (Italy) with the aim of offering two distinct contributions to the literature on industrial districts. The first objective is to challenge the stereotyped model of Italian industrial districts whose claimed distinctive features are to be specialized in traditional sectors of the Italian economy, to be relatively self-contained and close productive systems, and to be mainly composed of small and medium size enterprises. The Biomedical Valley contradicts this model, being a successful example of a recent, high-tech, high-wages, and open district led by some medium sized companies, some of which have been acquired by large European and American multinationals. The district emerged in 1963, triggered by a true Schumpeterian entrepreneur, who created the “first firm” of the district, from which many others (the most important) generated through spin-off processes.

This contribution discusses the importance of the spatial dimension of localized knowledge by focussing the analysis on a specific territorial area: the Sophia-Antipolis park, located in the south of France. This chapter establishes how the production of knowledge is closely related to the process of accumulation that has moulded the economic working of companies located in the Sophia-Antipolis park. Economic working refers partly to quantitative aspects, but mainly to the nature of inter-firms relationships, to the physiology of local science-industry partnerships, and, more largely, to the characteristics of the local labour market (Quéré, 1999). In that respect, Sophia-Antipolis is very interesting. Obviously, it starts from scratch in the seventies and progressively appears for some sectoral patterns as one of the most suited locations in Europe where “high-tech” activities have concentrated (mainly information and communication technologies [ICTs]). As this project is only 30 years old, it is possible to have a complete vision of its development and to analyse its transformation toward an actual technopolis-type of economic working. Section 17.2 analyses the role of history in the emergence of localized knowledge for some of the dominant activities. Section 17.3 deals in more detail with the transition toward the technopolis-type of economic functioning. Section 17.4 discusses the necessary conditions to promote the development of localized knowledge by focussing more especially on major requirements for the local institutional infrastructure. Concluding remarks address some related policy implications.

The ever growing uncertainty and variability of the environment impose upon economic operators, and not only on them, a constant re-examination of position and constant profile readjustment based upon the oncoming configurations. In a context of this type an ever more complex entity such as the industrial district¹?, even if successful, cannot evade facing the changes in act. It must constantly re-examine its position on the market, striving to identify and exploit the opportunities which are created and overcome the difficulties as they arise. A re-definition of the district profile is therefore a particularly elaborate process because, still searching for new configurations, it is necessary to keep solid ties with the tradition from which so many efficient elements of local systems are derived.

In the Italian economic scenario the industrial district (ID) represents a successful industrial development model. Arisen as a local productive reality, nowadays it is planning its development processes in accordance with internationalisation approaches in a more and more complex competitive context. There are various reasons for this complexity, such as the globalisation of markets, the continuous socialcultural changes of society, the events of political-financial instability, the development of technology. In this context, the competitiveness of the ID seems to present some shortcomings in efficiency as well as, in some cases, in effectiveness, due to structural and/or contingent causes (Albino and Garavelli, 1996;Ferrucci, 1996;Gottardi, 1997).

Over time the chair district of Manzano has taken on all the distinguishing features of a typical Italian industrial district: a widespread closely-knit production network, large-scale labour division among small and medium-sized firms that control various stages of the value chain, a strong link between production and the local community, a plentiful supply of skilled labour, a wealth of technical knowledge and competence, a wide range of products within the district’s sector of operation and export-driven production (Becattini, 1987).

Geographical areas with a consistent delay in development are characterized by a set of extremely weak links among the places where technical and scientific knowledge are produced, i.e. Universities, Research Centres, innovative large companies, etc., and the places where this knowledge might be utilized, i.e. local SMEs, local Public Administration, etc. (Corti, 1997).