Industrial districts and interfirm cooperation in Italy

1
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries
Industrial districts and inter-firm co-operation
in Italy
2
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Content
• Introduction (Frank Pyke and Werner Sengenberger)
• The idea of the Industrial District Its genesis
  (Sebastiano Brusco)
• The Marshallian industrial district as a
  socio-economic notion (Giacomo Becattini)
• The quantitative importance of Marshallian
  industrial districts in the Italian economy
  (Fabio Sforzi)

3
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries
Whilst economies all over the world in the late
1970s and 1980s set into recession and
stagnation, some regions prospered. ?
Industrial Districts i.e. Silicon Valley,
Baden-Württemberg and North-East Italy.
4
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• What are industrial districts?
• The districts are geographically defined
  productive systems, characterized by a large
  number of firms that are involved at various
  stages, and in various ways, in the production of
  a homogeneous product. A significant feature is
  that a very high proportion of these firms are
  small or very small.

5
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• What are industrial districts?
• Most of the districts can be found in North
  Central or North-Eastern Italy
• Industrial districts should be conceived as a
  social and economic whole ? interdependence of
  the firms
• Flexible specialization
• Organization and leadership has developed from
  small, often family owned businesses

6
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Policy Implications
• Why are these small firms so successful?
• Characteristics of the industrial structure and
  the context in which it is implanted is
  important
• Offering opportunities to the creation of
  organizational forms
• Industrial districts contain the organizational
  forms that provide the appropriate kind of
  environment for small firms

7
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Labour standards
• What are the labour standards, working
  conditions, practices, and wages to be found in
  industrial districts like?

8
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Labour standards
• Wages are on average comparable to what large
  firms pay
• Greater degree of autonomy and space
• High degree of social mobility
• Skilled workers find their skills and knowledge
  better appreciated in the district
• The districts themselves are dynamic and so are
  conditions for labour
• No sharp split between working and
  non-working spheres of life

9
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Content
• Introduction (Frank Pyke and Werner Sengenberger)
• The idea of the Industrial District Its genesis
  (Sebastiano Brusco)
• The Marshallian industrial district as a
  socio-economic notion (Giacomo Becattini)
• The quantitative importance of Marshallian
  industrial districts in the Italian economy
  (Fabio Sforzi)

10
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• The traditional artisan model
• 1950s and early 1960s
• The South was thought to be characterized by
  very small, inefficient firms working for the
  local market
• Small firms were destroyed during this period by
  the large firms of the North which were
  building a national market

11
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• The dependent subcontractor model
• End of the 1960s
• Paci (1973, 1975), Graziani (1975) and Brusco
  (1973, 1975)
• Skills of workers in small firms alike to those
  in large ones
• Model of oligopsony (Paci, Graziani)
• Although oligopsony considerable competition
  (Brusco)

12
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• The model of the industrial district Mark I
• Mid 1970s
• Product
• Standard of technology, wages and conditions of
  work
• Skill and the relation between firms
• Balance between co-operation and competition

13
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• The model of the industrial district Mark II
• Large firms have already undergone an important
  process of restructuring ? now small firms are
  involved in a similar process
• Problem of how social districts are to be
  endowed with the new technologies
• Real services

14
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Content
• Introduction (Frank Pyke and Werner Sengenberger)
• The idea of the Industrial District Its genesis
  (Sebastiano Brusco)
• The Marshallian industrial district as a
  socio-economic notion (Giacomo Becattini)
• The quantitative importance of Marshallian
  industrial districts in the Italian economy
  (Fabio Sforzi)

15
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• The Marshallian Industrial District
• Business structure is dominated by small,
  locally owned firms
• Scale economies are relatively low
• Substantial intra-district trade
• Long-termed commitments and contracts
• Low degrees of co-operation
• Labour market internal to the district, highly
  flexible
• Workers committed rather to the district than to
  the firms
• Evolution of local cultural identity

16
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• The Marshallian Industrial District
• Italianate variant
• High degree of co-operation among competitor
  firms
• Strong local government role in regulating and
  promoting core industries
• Disproportionate shares of workers engaged in
  design and innovation

17
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Definition of the industrial district given by
  Becattini
• I define the industrial district as a
  socio-territorial entity which is characterized
  by the active presence of both a community of
  people and a population of firms in one naturally
  and historically bounded area. In the district,
  unlike in other environments, such as
  manufacturing towns, community and firms tend to
  merge. (Becattini, G.)

18
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Definition of the industrial district given by
  Becattini
• The local community of people
• The population of firms
• Human resources
• The market
• Competition and co-operation
• An adaptive system
• Technological change
• A local credit system
• Sources of dynamism

19
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Content
• Introduction (Frank Pyke and Werner Sengenberger)
• The idea of the Industrial District Its genesis
  (Sebastiano Brusco)
• The Marshallian industrial district as a
  socio-economic notion (Giacomo Becattini)
• The quantitative importance of Marshallian
  industrial districts in the Italian economy
  (Fabio Sforzi)

20
Figure 1 Pattern of local systems in Italy, 1981
21
Table 1 A 15-fold classification of local labour
market areas, 1981
22
Figure 2 Pattern of light industrialisation
local systems, 1981
23
Figure 3 Marshallian industrial districts within
the pattern of light industrialisation local
systems, 1981
24

• Study by Fabio Sforzi
• Distinguishing employment characteristics
• The way in which the industrial districts
  changed
• The quantitative importance in the Italian
  economy

25
Table 4 Employment in dominant manufacturing
industries of Marshallian Industrial Districts,
1981
26
Table 10 Change of percentage employment in
industries and services by categories of local
systems, 1971-1981
27
Universität Konstanz summer term 2005,
12.05.2005 course Governance of local production
systems in Europe lecture Dr. Jürgen
Grote speaker Dorothee Kries

• Literature
• Pyke, F., Becattini, G., Sengenberger, W.
  (1990) Industrial Districts and Inter-Firm
  Cooperation in Italy. Geneva International
  Institute for Labour Studies.
• lthttp//www.clubdistretti.itgt Rev. 05/05/2005.

28
Table 2 Employment of Marshallian Industrial
Districts (DIMs) by thei dominant manufacturing
industries, 1981
29
Table 5 Employment in industries and services
for Marshallian Industrial Districts and Italy,
1981
30
Table 6 Percentage shares of employment in
district-dominantmanufacturing industries by
categories of local systems, 1981
31
Table 7 Average size of establishment in
district-dominant manufacturing industries by
categories of local systems, 1981
32
Table 8 Local quotients of employment in
district-dominant manufacturing industries by
categories of local systems, 1981
33
Table 9
34
Table 11 Location quotients of employment in
industries and services by categories of local
systems, 1971-1981
35
Table 12 Change of employment in
district-dominant manufacturing industries by
categories of local systems, 1971-1981
36
Table 13 Change in percentage of employment in
district-dominant manufacturing industries by
categories of local systems, 1971-1981
37
Table 14 Location quotients of employment in
district-dominant manufacturing industries by
categories of local systems, 1971 and 1981
38
Figure 4 Marshallian industrial districts,
according to dominant manufacturing industries,
1981
39
Figure 5 Pattern of northern and central urban
systems, 1981
40
Figure 6 Pattern of southern urban system, 1982
41
Figure 7 Pattern of northern manufacturing local
systems, 1981