The decline of a model? Challenge and response in the …jw2212/Writing/Main/11-jwEandS2001.pdfthe Italian industrial districts Josh Whitford Abstract The article presents an extensive

The decline of a modelChallenge and response inthe Italian industrialdistricts

Josh Whitford

Abstract

The article presents an extensive critical review of recent debates on the restructur-ing of Italian industrial districts in the 1990s It shows that despite consensus on theempirical lsquofactsrsquo of district restructuring there remains extensive disagreement overappropriate public policies This debate fundamentally turns on analystsrsquo interpre-tations of how or indeed whether strong institutions and localized subcultures allowterritorial networks of small rms to compete successfully with larger and more highlycapitalized multinational corporations But perhaps the most crucial and contentiousissues are questions about the past adequacy of the districtsrsquo regulatory and serviceinstitutions in overcoming structural difficulties of the model and more importantlyabout further innovations that may be required given recent changes in the externaleconomic context

Keywords Italy industrial districts industrial restructuring interorganizational net-works institutional innovation regional development

Introduction

Already by the late 1970s Italian academics were touting the industrial districtsof north-eastern and central Italy as an example even an exemplar of a possibleproduction model for the future The big splash in the Anglophone literaturecame in 1984 when Piore and Sabelrsquos book The Second Industrial Divide sang

Copyright copy 2001 Taylor amp Francis LtdISSN 0308-5147 print1469-5766 onlineDOI 10108003085140020019089

Economy and Society Volume 30 Number 1 February 2001 38ndash65

Josh Whitford Department of Sociology Social Science Building 1180 Observatory DriveUW-Madison Madison WI 53706 USA E-mail jwhitforsscwiscedu

the praises of the lsquoEmilian modelrsquo of exible-specialization Suddenly Italy wasno longer Europersquos poor backwards relative to the south1 Attention focused onthese dynamic regional economies as academics and policy makers sought toexplain how systems of small and medium-sized rms could successfullycompete in world markets As is now well known they returned to the work ofAlfred Marshall and used the concept of the lsquoIndustrial Districtrsquo or in Becat-tinirsquos (1979 1987) terms the lsquoMarshallian Industrial Districtrsquo Finally itseemed Italy had a production model to go with its cathedrals something theworld could envy

The initial international interest was extremely optimistic lled with some-what idyllic descriptions of small rms with high labour standards in com-munities where co-operation was king However many of the districts includingone often seen as the canonical example Prato experienced difficulties in themid to late 1980s leading some prominent lsquonay sayersrsquo to say essentially asCooke and Morgan (1998) put it the lsquobig rms must winrsquo In the Anglophonedebate the late Bennett Harrison (1994) argued that (at the very least) hisaccount of changes in Emilia-Romagna should take some of the bloom off therose while Amin and Robins (1990) reminded us that (lsquoneed it really be saidrsquo)multinational corporations remain the real lsquoshakers and shapers of the worldeconomyrsquo Perhaps due to such lsquodebunkingrsquo or perhaps due to the problemsencountered by many of the districts that made them no longer seem a solutionthe Emilian model does not get the same press it once did

Nevertheless in Italy a law enacted in 1991 to de ne and support industrialdistricts formally moved them into national industrial policy2 and there con-tinues to be extensive study of the industrial districtsrsquo evolution with consider-able discussion of the modelrsquos future as well as arguments over what shouldlsquocountrsquo as a district In English interesting recent work includes a 1996 ILOvolume (their third edited by Pyke and Sengenberger) and a 1995 three-articlesymposium in the Journal of Industry Studies (now Industry and Innovation)looking at developments in the late 1980s and early 1990s Cooke and Morgan(1998) used Emilia-Romagna as one of their cases in The Associational EconomyRichard Locke (1996) compared developments in Prato and Biella in the pagesof this journal Finally the lsquoEmilian modelrsquo is often discussed in World Develop-ment by a group of scholars (associated particularly with Hubert Schmitz) inter-ested in the clustering of production who keep an eye on the Italian debate

Critics like Amin and Harrison were on to something ndash new pressures didemerge in the 1980s that changed and continue to change Italian local industrialsystems ndash but the Italian literature has developed a sophisticated debate that goesbeyond simple claims that large rms will either buy up or hollow out the dis-tricts or that they will remain what Amin and Thrift (1992) called lsquoMarshalliannodes in global networksrsquo The Italian debate is sporadically cited in the Anglo-phone literature but there has been to date no extensive critical treatment inEnglish of what the Italian-language literature has deemed an extremely import-ant series of questions What are the pressures of the late 1980s and 1990s thatled the districts to experience difficulties and need to restructure How are the

Josh Whitford The decline of a model 39

districts restructuring How should the districts be restructuring Is there a uni-linear trend Should there be a unilinear trend In 1990 Pyke and Sengenbergercould (relatively) honestly write that lsquothe whole question of de nition is notwithout controversy Most of the controversy however appears to relate toissues outside of Italy There seems to be broad agreement on the basic shapeof Italian industrial districtsrsquo (Pyke and Sengenberger 1990 2) That same state-ment could not honestly be made today

A changing external economic context coupled with different districtsrsquoquite variant evolutionary trajectories has led some analysts often associatedwith business schools (lsquoaziendalistirsquo) to argue that while the districts litera-ture has taught us something it is time to move on refocusing attention onthe strategic capacities of the firms in the district These same developmentsare differently interpreted by the lsquoclassicrsquo theorists who recognize that the dis-tricts do face new problems but see the solutions in the creation andorstrengthening of institutions that can formalize co-operation and co-ordina-tion giving strategic capacity to the system of firms rather than to the firmsthemselves This seemingly trivial quibble over the proper unit of analysis thelsquosystem of firmsrsquo or the lsquofirms in the systemrsquo has big implications for thepolicy prescriptions that follow with the one leading to a relatively laissez-faireattitude and the other leaving space for strong supply-side intervention by thelocal and regional state

The classic model and the classic debate

Although there is no universally accepted de nition of either the elements thatmake up an industrial district or the underlying mechanisms that allow the dis-tricts to compete in export markets one does nd agreement on a core lsquothinrsquomodel (Zeitlin 1992) and to varying degrees on some features of a lsquothickerrsquode nition

In the thinnest of de nitions the unit of analysis is no longer the single rmbut an area that includes many rms in a vertically integrated sector The prod-ucts sold on the nal market are made entirely (or almost entirely) in the dis-trict but not in a single factory They can be consumer or investment goods easyor hard to produce and involve at times relatively sophisticated technology butmost importantly their manufacture must be readily separable into stages toallow production to be carried out across multiple rms3 Historically the lineshave not been tightly drawn between lsquo nal rmsrsquo and lsquostage rmsrsquo but that maybe changing (as we will see) Individual companies are usually quite small butthe district itself is not and can capitalize on what Marshall called externaleconomies of scale Firms generally have very exible production methods areable to produce quickly whatever is asked of them and concentrate on being ableto turn a pro t on a very short production run The combination of each rmhaving a wide production range and the extreme ease with which the subcon-tracting arrangements can be rearranged allows those with nal market access

40 Economy and Society

to produce (or have produced) exactly what is required and quickly (Piore andSabel 1984 Hirst and Zeitlin 1991)

Decentralized diffuse and reactive production is an essential dimension ofindustrial districts but is not exclusive to territorial production agglomerationsThe key features differentiating a more lsquothicklyrsquo de ned industrial district fromnetwork production generally are an abundance of local productive knowledgestrong institutions and a culture that facilitates co-operation leading toenhanced information ow and lowered transactions costs A succinct de nitionthat would be accepted by many in Italy as the lsquoclassicrsquo model is offered by Giuliano Bianchi an industrial district is

a territorial agglomeration of small rms normally specialized in oneproduct part of a product or phase of production held together by inter-personal relationships by the common social culture of workers entrepre-neurs and politicians surrounded by an industrial atmosphere whichfacilitates the diffusion of innovation generating in this way important owsof external economies that are still internal to the local productive system

(Bianchi 1994 19)

North-eastern and central Italy (the lsquoNECrsquo) has been favoured by a history ofpolitical subcultures said to have fostered high amounts of trust both amongsmall rms and between workers and management The lsquowhitersquo Catholic cultureof the Veneto and the lsquoredrsquo communist culture of Tuscany and Emilia-Romagnaideologically quite different have in common an emphasis on the value of thelocal (Trigilia 1986 1990) Rates of associationalism are high and productionnetworks are embedded in a dense network of institutions that provide sharedconventions and understandings Reputations are known facilitating thepunishment of rogue elements and somewhat softening the prisonerrsquos dilemmadynamic inherent in contracting Workers are more likely to share their know-ledge of the production process in the less con ictual situations typical of indus-trial districts (Brusco 1994)

Historically contingent cultural factors can be overemphasized howeverobscuring the important role played by formal institutions and local govern-ment4 The industrial districts did not just lsquohappenrsquo fortuitously and while Ishall not document here the historical circumstances that led to their emergenceit is important to note the importance of subjective choice in their developmentfrom proto-industry to major players on world markets (Alaimo 2000) It wasrecognized relatively early in both the districts and the literature surroundingthem that a non-hierarchical decentralized regional economy dominated bysmall rms faced certain structural difficulties especially with respect to theproduction of collective goods and thus required the establishment of a formalinstitutional underpinning5

Regional and local institutions that have been essential include entrepreneur-ial artisan and worker associations providing services to their members localtechnical schools that provide needed skills credit co-operatives in which localartisans underwrite each otherrsquos loans to lower interest rates by reducing default


risk and strong networks of local banks closely tied to the community able tolend cheaply based on an extensive knowledge of clientsrsquo trustworthiness(Brusco and Righi 1989 Capecchi and Alaimo 1992 Ferri 1997 Padoa-Schioppa 1997) Additionally regions in the NEC have helped establishdevelopment agencies to provide small rms with the technical advice and busi-ness services that are available to their larger competitors Small artisanal rmsare often unused to scanning the horizon regularly for emergent possibilities andoften need to be convinced to take on innovative practices to enter into newmarkets ahead of the curve Hence at their best these service centres are proac-tive nding the lsquohidden needsrsquo (bisogni nascosti) of their constituencies (Brusco1990 1992 Bellini et al 1990)

In understanding the role of institutions in the districts Trigilia (1990) cau-tions that although the local state does provide some collective goods mostmunicipal intervention is not strictly lsquoeconomicrsquo but consists of providing infra-structure and social services and importantly brokering compromise betweenthe players in the local economy Policies vary from district to district with sig-ni cant differences in approach between the Catholic administrations of theVeneto (less active in land use delegation of social services to associations) andthe lsquoredrsquo regions (considerably more interventionist) but both approaches havebeen able to engender successful industrial districts at least for certain periods

Foreshadowing the current debate the lsquoclassicrsquo literature was well aware thatthe district model needed to go beyond the informal cultural norms and con-ventions that gathered so many of the headlines that it needed to build formalinstitutions to provide collective goods Discussing the strengths and weaknessesof the model Brusco wrote that lsquoindustrial districts ndash when they are successfulndash are creative display originality are often able to discover new markets con-tinuously introduce incremental innovations some of which may prove import-ant and enhance social mobility and worker participationrsquo (1992 196) Howeverthey also are lsquoslow to adopt new technologies lack expertise in nancial manage-ment have little of the know-how required for basic research and are unable toproduce epoch-making innovationsrsquo Hence lsquothe district has to be viewed notonly as a unit of analysis but also as a unit of initiative as a fully- edged andorganically uni ed organisation whose development is slowed down or impededby bottlenecks that public action must turn into opportunitiesrsquo to resolve problems the private sector would be unable to solve alone (Brusco 1992 195)Trigilia (1990 182) recognized that as the districts grew their lsquostrong localistaspect could change status from a past source of strength to a menacingfuture constraintrsquo He argued that both the districtsrsquo historical reliance on local(municipal) regulation and the institutional weakness of the regional level ofgovernment in Italy were challenged by emerging external economies and dis-economies exceeding the range of action and competence of local authoritiesDifficulties in technological research marketing training and export servicescould not be solved locally nor could dis-economies of traffic congestion pol-lution and waste disposal Already by the late 1980s if not earlier problems ofscale were becoming apparent


Calls for more conscious and strategic action anticipated what has become thekey issue in the industrial districts literature today how successful have the dis-trictsrsquo regulatory and service institutions been in overcoming the structuraldifficulties of the model and more importantly what further innovations arerequired given a series of changes in the external economic context The vigor-ous debate in Italy over the appropriate public policy for industrial districtsturns fundamentally on the details of analystsrsquo interpretations of how or indeedwhether strong institutions and localized subcultures allow territorial networksof small rms to compete successfully with larger and more highly capitalizedmultinational corporations Before turning to this question however it is neces-sary to get a handle on the ways in which the districts and their world havechanged in recent years

New challenges in the 1990s

In a 1982 article in the Cambridge Journal of Economics Brusco wrote that lsquosolong as demand continues to expand this social and productive structure willface only the problem of integrating into itself only those who declare them-selves to be outside itrsquo but should there be a decline in demand he suggestedlsquounless the local entrepreneurs could quickly copy and improve on the new styles(which could well happen) the dynamic interaction of the parts of the indus-trial district which guarantee a exible response to the product market couldquickly deteriorate in a competitive scramble for ordersrsquo This would in turn hewrote lsquocause a reduction of prosperity and a dismantling of the productivestructure upon which that prosperity is basedrsquo Even in early formulations of themodel there was a recognition that its success was dependent on external con-ditions Recent changes are more complicated than a simple decline in aggre-gate demand but they do have implications for the viability of small rmproduction networks

The altered competitive context

Because so many of the Italian industrial districts are specialized in so-calledlsquomaturersquo products they are susceptible to competition from lower-wage coun-tries6 Quality upgrading is recognized as a strategy that can prove effectiveagainst cost competition but it often has effects that somewhat mimic an overalldecline in aggregate demand higher end markets tend to be smaller If develop-ing countries continue to improve their own quality and if (a big if) they manageentry into the fashion-conscious markets in which Italian producers specializethis will become an increasingly pressing challenge There are indications inshoe production for example that quality improvement is the strategy of choicefor mid-level producers like Brazil (Schmitz 1999)

Beyond the low-wage threat to districts competing in lsquomaturersquo sectors there


are other changes that potentially affect all industrial districts Small rm clus-ters have enjoyed a relative exibility and reactivity relative to larger competitorsbut this advantage has been weakened by large rmsrsquo discovery of lsquoleanrsquo and net-worked production Furthermore small rmsrsquo relatively greater labour exibilityndash in large part due to the weaker presence of unions in the smaller rms and tothe less stringent labour regulation for those classi ed as artisanal ndash has been nar-rowed as labour relations have been restructured to become less con ictual evento the extent that Italian unions will set rules at a national level that are lsquointer-preted exiblyrsquo at the plant and engage as well in regional lsquomicro-concertationrsquofocused less on wages than on questions of labour use (Regini and Sabel 1989Regini 1995) Technology and labour exibility were never the whole story of dis-trict vitality but some of the competitive advantage of productive decentraliza-tion did lie in niches created by the relative prevalence of a production methodtoo rigid for the demand it was trying to service Even Regini and Sabel (1989)while critical of attempts to explain big rm recovery in terms of neo-Fordismargue that rms seek a mix of productive decentralization and single-roof restruc-turing aimed at combining the exibility gains of productive decentralizationwith scale advantages where they are really needed That is large rms are attack-ing the traditional turf of their small networked competitors7

Adjusting to structural change

Dependent on lsquospontaneous coordinationrsquo and an lsquoindustrial atmospherersquo forinformation diffusion the cachet of the industrial district model has longdepended on claims of a differentiated product market in which rms competenot just on price but also on being lsquo exiblersquo and lsquospecializedrsquo However we nowread statements like that of Paniccia (1998) that lsquoit is well known that nal cus-tomer demand has become more sophisticated and differentiated which hasresulted in the demand for higher quality and wider varietyrsquo Greater demandfragmentation the continuous seeking of new niches and the closing off of low-price markets by low-wage competition pushes rms to seek a higher intrinsicquality of production8 In fashion industries particularly pronto moda a generalincrease in the assortment of models and the shrinking of product runs meansthat delivery times are tighter than ever9

Notably such lsquochangesrsquo are largely intensi cations of economic conditionsthat have historically favoured exibly specialized industrial districts capable ofrapid product and process innovation However there is no reason sufficientquantitative change in external conditions cannot require qualitative changes inthe districts the claim is not that the exibility of the districts is a problem butrather that an excessively fragmented productive structure may be hamstrungby an inability to be consciously strategic to co-ordinate action

Higher quality and quicker delivery times require more stable relationshipsbetween rms as do practices of concurrent engineering and product co-development (especially relevant in mechanical engineering districts) This is


noted by Guidalberto Guidi (1996) a representative of the regional employersfederation of Emilia-Romagna who suggests that lsquosweeping changes in produc-tion process technologiesrsquo were one of the many lsquoeconomic stormsrsquo weatheredby the districts in the 1980s Sometimes held out as an example of lsquoinnovationwithout RampDrsquo (Camagni and Capello 1997) industrial districts specialize inincremental innovation and cannot necessarily compete with big steps producedelsewhere These lsquobig stepsrsquo are often scale intensive and require connections tointernational networks of codi ed scienti c knowledge areas in which the tra-ditional district structure is notoriously weak (Bianchi 1994 Balloni et al 1998Camagni and Capello 1997)

Brand promotion and commercialization strategies often require that a few rms specialize in the lsquonoblersquo aspects of production and perhaps co-ordinateenough rms to overcome scale disadvantages while not necessarily verticallyre-integrating Mistri (1994 see also Crestanello 1997) argues that in the 1980scommercial and marketing rms grew in importance leading to an externaliza-tion of elements once in the district ceded in a sort of lsquorationalizing of infor-mation by third parties who strengthen their bargaining power vis-agrave-vis thesmaller district rmsrsquo Minimum efficient size in many products is quite lowbut active commercialization and internationalization strategies have returns toscale To reduce their information-gathering costs small rms turn to inter-mediaries and large distributors with connections outside the districts thoughthis results in a decrease in the number of nal rms Balducci et al (1992) saythat in Prato lsquothe number of nal rms is shrinking as a result of the growingcomplexity of the process of creating and commercializing a productrsquo In theliterature there is virtually unanimous agreement that the classic district struc-ture faces dramatic scale disadvantages in marketing even as brands increasinglybecome guarantors of both intrinsic quality and pro t margins10

Questions about the ability of the present system of formal institutions ndashassociations and real service centres ndash to play their historic role in solving prob-lems of scale strengthen the claim that continued district viability requires quali-tative transformation Mistri (1994) argues that public mechanisms of marketinformation such as export consortia are now insufficient since they lsquomovelargely on a traditional promotional plan based on accenting the price factorsthat are the primary means of competition for a part of the universe of small rmsrsquo They fail because many small rms compete by developing qualitativefactors to get into niche markets and for such non-price competition the con-ditions of building a successful sales consortium are restrictive requiring thateach rm specialize differently11 Paniccia (1998) asserts that looking retro-spectively at co-operatively established service centres we can see that they havegenerally worked only when they serve rms by supplying relatively homo-geneous goods (eg administrative services) Sectoral associations are also ham-pered as a general solution ndash their ability to follow a long-term logic in theproduction of the sorts of strategic goods that might speak to lsquohidden needsrsquo isconstrained by the need to respond to direct requests from the base (Burroni1999a)


The strength of the service centres in improving collective good provision isthat (at least in theory) they are truly public in the sense of being open to all dis-trict rms Their partial budgetary detachment and professional staff allow themto take a forward-looking view to aim for Bruscorsquos lsquohidden needsrsquo However ina context in which rms and districts must increasingly differentiate themselvesthis can become a weakness Individuating needs presupposes the careful moni-toring of each local economy coupled with an analysis of market tendencies butthis can outstrip the capacities of the centres and lead to irrational institutionalisomorphism ndash the imitation of solutions from other local systems regardless oftheir effective exportability (Burroni 1999a) Amin contends that at least inEmilia-Romagna the lsquolegacy of institutional innovation is being threatened byboth the rise of a new professional technocracy across the regionrsquos public insti-tutions and bureaucratic governance within individual organizationsrsquo (1999citing personal communication from Vittorio Capecchi)

Perhaps the clearest recognition of the limitations of and pressures on theservice centres is found in the recent experiences of Emilia-Romagnarsquos histori-cally successful ERVET system of business service centres Quoting Amin(1999) lsquoin 1993 after considerable pressure from the regionrsquos Confederation ofIndustry which was seeking greater policy in uence the regional authorityintroduced a series of reforms to change ERVET into a more market-drivenorganization away from its traditional role as an intelligence gathering regionaldevelopment agencyrsquo Some local centres were closed down in favour ofregional-level centres and their funding became more dependent on project-based initiatives This was intended to improve efficiency and accountability butit also reduces the lsquoscope for programme-based and strategic policy making(owing to cuts in capacity project-driven fragmentation commercial legit-imization)rsquo Cooke and Morgan no spokesmen for neo-liberalism write that lsquobythe mid-1990s the recognition was beginning to become widespread amongpolicy-makers and their advisers that the service-centre idea may have served avaluable interim function in enabling micro rms to survive in the hostile inter-national environment of the 1980s and early 1990srsquo After that however lsquogroupsof lead rms that had been forming to seek internal economies of scale to matchexternal economies of scope were clearly in need of access to a more full-bloodedregional or even national system of innovationrsquo (1998 128ndash9)

Another institution under pressure is the system of local and regional bankswhich has been somewhat undermined by the consolidation of the nancialsystem Their ability to lend cheaply based on information about trustworthinesshas been important in the growth of the districts and according to Padoa-Schioppa (1997) lsquothe cooperative credit bank remains for the economy a formulathat is more vital and necessary than everrsquo However these banks tend to have weakinternal organization and difficulties competing with larger rivals who are enter-ing their previous markets at a rapid rate eliminating an important provider ofcredit to small district rms whose primary asset is a reputation likely to be lessvaluable with a more distant bank (Ferri 1997 Padoa-Schioppa 1997) On balancethis new competition may be good for these regions but it is not without costs


The threat that wasnrsquot ndash the entry of foreign capital

Readers who have kept a sporadic watch on developments in the industrial dis-tricts may be surprised by the absence thus far of discussion of foreign capitalentry feared in the early 1990s as a potential death knell When Bianchi andGualtieri reported on the large number of mergers and takeovers in the Emilia-Romagna manufacturing sector between 1983 and 1988 alongside evidence thatlarger rms were acquiring smaller ones in similar sectors concentrating owner-ship and taking some strategic control one fact really raised eyebrows foreigncapital was present in 28 per cent of operations and in addition to the buyingof Emilian rms by foreign groups many Emilian companies bought rmsoutside the region (Bianchi and Gualtieri 1990 1992 Leonardi and Nanetti1990)

The lsquothreatrsquo of ownership concentration and hierarchy generally must be sep-arated conceptually from that of foreign (or at least external) capital entry theeffects of the former remain the subject of intense debate while the latter seemsto have been a false alarm and has largely dropped out of the literature as dis-cussion of control dominates that of ownership A blurring of this distinctioncan be found in the oft-cited Lean and Mean (Harrison 1994) which argues thatwhile the jury is out on whether or not they will negatively affect the Italianeconomy in the long-run takeovers by outside multinational corporations arean lsquoinvasionrsquo that qualitatively transforms lsquothe nonhierarchical collaborativelycompetitive nature of inter rm relations within the districtsrsquo There are cer-tainly plausible reasons why the rise of powerful actors in the districts mighthave major implications for the lsquocollaboratively competitiversquo aspect of the dis-tricts but it is not clear how it matters (in this respect) if these rms are foreign

For foreign entry alone to undermine the districts external rms must beswooping in to steal the districtsrsquo jewels uninterested in connections to suppli-ersrsquo and local partnersrsquo wealth of contextual knowledge This is rst challengedby the wealth of evidence (discussed below) that leader rms endogenous to thedistrict can become signi cant players in world markets and are perfectly capablelsquoscanning globallyrsquo for contracting partners one need not be foreign ndash Benettonis a very powerful rm and hardly came from abroad12 It is further dismantledby case studies ndash for example Biggiero (1999) in Mirandola biomedical and Corograveet al (1998) in Montebelluna sport system ndash showing that at least in someinstances multinational entry is designed precisely to get access to the skills andknowledge of the local system rather than to control it

New problems new solutions

Foreign capital may not have destroyed the districts but very real changes areoccurring Firms are focusing on their core activities and externalizing irre-versibly other productive stages The fashion and furniture districts especiallyhave seen a specialization of some in relationships to the nal market with a


concomitant vertical dis-integration of productive activity In general district rms are creating stable relationships with a more restricted number of sup-pliers and increasing the levels of supply Vertical co-operation is intensifyingin an effort to co-ordinate production more quickly to ensure adequate qualityat all stages of the production process and to safeguard investments in capitalgoods required for product diversi cation strategies (Innocenti 1998) Whereonce contracting rms were content to leave agreements implicit and informalthey are now more likely to formalize them and use written contracts tieringsuppliers and maintaining lsquopreferredrsquo relationships with some of them (Inno-centi 1998)

Beyond simple formalization of inter- rm relationships there is clear evi-dence that more groups (gruppi) are forming in the districts lsquoGroupsrsquo in the dis-tricts literature refers to rms held together by ownership relations ndash throughcross-shareholding or by all belonging to a single subject or family ndash whileremaining juridically distinct Although a point of contestation among Italianswriting about the districts for many the group form implies more hierarchicalrelations between rms with nal rms in a leadership role co-ordinating theproduction and investment behaviour of the others (Dei Ottati 1995 Balloni andIacobucci 1997) For example in the furniture production district of Livenzaand Quartiere del Piave Paola Guerra (1998) nds the widespread formation ofgroups some with strategic capacity Nuti and Cainelli (1996) suggest thatlsquotodayrsquos districts are forced to reorganize themselves in hierarchies in order toexploit a different sort of division of labor from that which existed in the pastrsquobecause lsquopredictable relationships among partners can be an effective weaponagainst an unpredictable marketrsquo privileging voice over exit13

The precise prevalence of groups in the industrial districts is extremely hardto identify with available statistical data though the most comprehensive surveyto date (Barca 1994 see also Balloni and Iacobucci 1997) found the group formto be extremely common at least among rms with more than fty employees(the surveyed population) Dei Ottati (1995) notes that in Prato several of thehistorically important district rms are involved implying that we can expectthem to have an orienting importance for other rms despite the relative lack ofstatistical data on their frequency

Different solutions in different places

Characterizations of a relatively homogeneous industrial district model nolonger apply The degree of hierarchy in relations between supplier and nal rms varies from district to district not all areas are equally specialized in asingle product and rm-size distributions vary Even depictions of the NEC asthe exclusive cultural home of the model are undermined by the rediscovery of(neglected cases of) similar regional economies in Lombardy and the emergenceof industrial district-like phenomena in lsquoFordistrsquo Piedmont and in the lsquoback-wardrsquo south14 This confusion has led Alessandro Innocenti (1994) to suggest


that the lsquoindustrial districtrsquo itself is a lsquocategory to rethinkrsquo meaning that there istoo much within-category variation to assign functional attributes to industrialdistricts by virtue of their classi cation so they should be treated only as a usefulunit of investigation

As discussed some of the important early work on industrial districts by Bag-nasco and Trigilia (Bagnasco and Trigilia 1984 Trigilia 1986 1990) showed aregional variation in the subcultures that sustained the industrial districts butemphasized that strong localisms made the different institutional con gurationsinto functional substitutes capable of undergirding a common lsquothird Italianrsquoproduction model Recent writings have begun to focus instead on the variationacross districts Panicciarsquos (1998) comparative study of twenty-four Italian localproductive systems using statistical data going back forty years and interviewsof local leaders concludes that lsquothe ldquocanonicalrdquo features can be found in only afew local systems and at certain periods of timersquo More importantly the red andwhite institutional con gurations that once provided slightly different paths toa similar outcome are now seen to favour signi cantly different productionmodels In knitwear Brusco and Bigarelli (1997) nd that in Tuscany small nal rms are not integrated and buy processing from subcontractors who often workon a single production stage putting together new lsquoteamsrsquo every year In theVeneto medium and large rms are integrated and outsource to relatively largeand multi-stage contractors in signi cantly longer production runs In betweenthey nd an lsquoextraordinary variety of regional productive systemsrsquo

This variation is clearly shown by Burroni (1999a 1999b) Analysing data on rm size location and specialization he nds that manufacturing systems ofmedium and large rms characterized by the presence of several related pro-ductive specializations play a particularly important role in the Veneto15 Tuscandistricts on the other hand approximate the lsquoclassicrsquo model in which localsystems are dominated by small rms and specialize in a single productFurthermore employment growth patterns point to lsquoa progressive strengthen-ing of the structure of the local systems in the two regionsrsquo (Burroni 1999b 17)16

Overall the Veneto districts have had greater increases in manufacturingemployment especially in the local systems that most characterize the region ndashthose centred around large or medium-sized rms with several related special-izations within the district However Burroni (1999b) cautions that this superiorperformance is probably a statistical artefact caused by restricting the count tomanufacturing employment and shows that if the growth in service jobs relatedto manufacturing is included Tuscanyrsquos performance lags only slightly behindthat of the Veneto

Time for a rm-centred view

Despite agreement on the lsquoempirical factsrsquo of district development theirinterpretation is the subject of considerable debate Positions depend largelyon whether or not one places the firm or the system of firms at the centre of


analysis The industrial districts literature has long been dominated by thosewho focus on the system itself though not without dissension Now somecombination of recent developments ndash the changing external conditions theapparent difficulties of the business service centres the increasing importanceof lead firms (at least in certain areas) and perhaps the arguably better per-formance of the north-eastern (Veneto) districts ndash has led this dissenting voiceto get considerably louder and to gain credibility

The rm-centred view

The foremost proponents of the rm-centred position are undoubtedly LucaFerrucci and Riccardo Varaldo authors of a widely cited 1993 article in Econo-mia e Politica Industriale (republished in 1997) entitled lsquoThe nature and dynam-ics of the district rmrsquo They admit that industrial economists have been unableto use their lsquotoolbox of ideasrsquo to lsquoexamine in profundity and speci city the realityof the district rmrsquo (1993 82) They acknowledge that the district rm is andwas different from a lsquonormalrsquo small rm and much more strongly rooted in thelocal socio-cultural context but argue that the changes in the external environ-ment and the

general loss of dynamism of many district systems is accompanied by adecomposition and recomposition of relations between rms according towhich the rm and its strategies are becoming more relevant while the orig-inal advantages constituted in essence of external economies that could notbe appropriated by single rms are less important especially if not ade-quately regenerated

(Ferrucci and Varaldo 1993 74)

They contended that it was therefore time for a shift in the level of analysis awayfrom the district system lsquothe strategic behavior of the rm becomes therefore afundamental variable for the analysis of local systems and for the comprehen-sion of their patterns of evolutionrsquo (ibid 74) Previous analysis put too muchweight on external agglomeration economies lsquoto the point of considering themto be possibly able to compensate for structural and strategic de cits at the levelof the single operating unitsrsquo For Ferrucci and Varaldo a shift in focus will helpto transform the districts to compensate for declining external economies bypromoting a lsquore-composition of their structurersquo through lsquospeci c and originalevolutionary pathways followed by leader rms who distance themselves inculture means and strategic capacity from other district rmsrsquo (1993 85) Therise of groups suggests a

common tendency in many districts that appears destined to consolidateitself that of a transformation through the contributions offered by a categoryof rms who become points of reference and coagulation for networks of rms with the introduction of elements of coordination and integration in acontext that has traditionally been fragmented and de-verticalized



In short the values and informal norms that were sufficient in the past willbe unable to carry the model into the future with or without a series of publicinstitutions to compensate for its known weaknesses The districts may be anlsquoeffective incubatorrsquo of new entrepreneurs but the extreme embedding in thelocal context and retention of total control in the hands of a dominating indi-vidual entrepreneur ensures that rms remain small de-verticalized extremelyspecialized and unable to look outside the district for solutions Instead the co-ordination of the lsquoheadless beastrsquo in evolving global markets will be found inallowing for and stimulating the emergence of lsquoworld-classrsquo lead rms able to co-ordinate a ring of capable suppliers not in a series of public institutions thatallows the mass of rms to avoid necessary processes of modernization andreorganization Put bluntly market and technological information gathering andorganizing the division of labour are problems best solved privately

A focus on rm strategy leaves ample theoretical space for variation in theevolutionary paths that different districts will follow When not assumed to beordered by an abstract lsquosocio-cultural contextrsquo rm strategy becomes very con-tingent with no guarantee that all districts will see the emergence of leaders themere presence of large rms does not mean that they will successfully co-ordinate a exible ring of suppliers Nonetheless much of this literature doesinsinuate that districts unable to stimulate the emergence of lead rms willexperience difficulties a normative position made particularly explicit byVaraldo et al (1997) in a book on the difficulties of Tuscan small- rm systemsThey lament that

Tuscany has irreparably lost its chance to restructure after the crisis of the1980s While in other regions of the north we saw in that period a process ofrationalization and consolidation of small rm systems around leader rmsnetwork rms and groups in Tuscany the relatively favorable demand con-ditions allowed for an avoidance of this process

(Varaldo et al 1997)

Now they argue the Tuscan economy must become less dependent on tra-ditional industries and Tuscan rms must get bigger and integrate more fullyinto processes of internationalization and capital mobilization rejecting the tra-ditional form of vertical disintegration for something more organized

Like Ferrucci and Varaldo but paying particular attention to the workingsof and importance of groups in the NEC Balloni et al (1998) also place rmbehaviour at the centre of analysis of SME (small and medium enterprises)systems they think must change to survive They argue that although a diffuseproduction system can be efficient and socio-cultural characteristics thatreduce opportunism matter a changing external environment requires some ofthe elements of hierarchy particularly more strategic co-ordination In a dis-trict-like context this implies building groups or networks endowed with lead rms able to exercise some sort of lsquocontrol over the nal market in order toacquire a lasting competitive advantagersquo through internal competition and efficiency in selecting markets without losing the lsquoentrepreneurial tensionrsquo The


retention of juridical autonomy allows the parts to maintain their own relationswith suppliers and generally lsquosafeguards the characteristic operating exibilityof the district systemrsquo while the more structured relationships often withspeci c ownership ties or at least explicit contractual relationships can lsquoelim-inate the weaknesses of a system that requires contemporaneous changesand coordination at different levels of the productive lierersquo (Balloni andIacobucci 1997 60)

Balloni et al hold that in the NEC expansion by group is the only real optionbecause such a loose organization is sufficiently consistent with the traditionallsquoentrepreneurialrsquo direction of rms a Chandlerian M-form divisional corpora-tion would clash with deeply held cultural traits However even as the lsquoentre-preneurial culturersquo contributes to expansion by network it can act as a brake oncontinued development The old model was limited in producing people able tolsquointerpret the new competitive scene and manage the new and more complexorganizational con gurationsrsquo (1998 63) so continued growth can occur only ifthe lsquoentrepreneurial capacityrsquo takes on a much more managerial avour rmsmust co-ordinate sets of actors rather than individualistically taking on theworld invest non-owning managers with real power (quite uncharacteristic fora lsquodistrict rmrsquo) or elevate to partner status employees who show entrepre-neurial talent Only where lead rms are able successfully to impose a quasi-hierarchical model will local systems thrive It can happen but it is notinevitable and depends on lsquogreat coherence in local and central governmentsrsquodecisions to act or not to actrsquo so that reorganization with leader rms can occur17

Although not logically necessary it is unsurprising that putting the rm at thecentre of analysis leads theorists to look rst to the rms themselves for solutionsto the emerging challenges outlined in the lsquoNew challenges in the 1990srsquo sectionabove The belief that a district is ultimately just a set of rms whose interactionmay or may not create positive externalities leads to an explanation of districtweakness couched in the failure of rms to respond adequately to changed con-ditions and the advocacy of policy that can favour the emergence of rms with suf- cient strategic capacity to overcome the co-ordination and scale difficultiesendemic to a diffuse production model without giving up the exibility that sofavoured the districts in the past In their interpretation of groups they see hier-archy and co-ordination under the guiding hand of a strategic actor able to connectthe system as a whole to new knowledge and markets Systemic differentiationdepends on the success or failure of rms in the system to aggregate about a par-ticularly capable lead rm to emulate a localized one best way Policy prescriptionsfollow this line focused on the strengthening of lead rms as they decry the lsquoinsuf- ciency of the community dimension of the districtrsquo (Guidi 1996 117)

The district as a system

Those who take the system itself as the unit of analysis continue to believe that thenorms and institutions once seen as central remain fundamental to understanding


the industrial districts in evolution Different trajectories are explained primarilywith variation in institutions governance and (sometimes) culture while policyprescriptions call for strengthening co-ordination by way of collective activityrather than through the empowerment of lead rms

The rst to revisit the work of Alfred Marshall in the explanation of theanomalous economy of central Italy Giacomo Becattini (1975 1978 1979) is themost prominent proponent of taking the industrial district as an overall systemand productive community In his best-known work in English he de nes it as

a socio-territorial entity which is characterised by the active presence of botha community of people and a population of rms in one naturally and his-torically bounded area

The most important trait of the local community is its relatively hom-ogenous system of values and views which is an expression of an ethic of workand activity of the family of reciprocity and of change It constitutes oneof the preliminary requirements for the development of a district and one ofthe essential conditions of its reproduction

Parallel to this system of values a system of institutions and rules must havedeveloped in such a way as to spread those values throughout the district tosupport and transmit them through generations

This will not mean that there will be no clashes of interests between themembers of the district or no perception of such clashes Rather they areexperienced and de ned in similar forms and within a framework of a sort ofcommunity-like superior interest which becomes an inner principle for thepeople of the district as a whole

(Becattini 1990 38ndash9)

A seemingly powerful criticism of such system-centred work is that it dependson an implied hypothesis of stability that assumes away creativity and change(Bursi et al 1997 Franchi and Rieser 1991) However while some system-centred work is perhaps guilty of such an assumption it is not inherent in con-ceptualizations of industrial districts as coherent systems dependent for theirfunctioning on a set of deeply embedded rules and institutions interacting withthe productive structure Institutional approaches can be quite open to evolutionand change For example the work of the prominent Florentine scholar GabiDei Ottati (1995 1996) combines an emphasis on norms and institutions withinsights from transactions cost economics to explain both how a district couldbe expected to maintain itself at a stable equilibrium and also to understand howthe system as a system will react (and is reacting) to the changes outlined inprevious sections She posits that the high levels of trust sedimented produc-tive knowledge strong social ties and reputation effects in the district form asort of communitarian market with a balancing of competition and co-operationthat mutually reinforce each other in a lsquodynamic equilibriumrsquo able to recreatethe conditions of its success where inter- rm agreements are co-ordinatedthrough lsquocustoms and credible commitmentsrsquo able to permit ex post adaptationwithout threatening ex ante co-ordination (Dei Ottati 1995 87)


Drawing heavily on Tuscan cases and cognizant that the ideal typical form hasnot emerged unscathed from the changes in external conditions that emerged inthe 1980s Dei Ottati also speaks to the increased importance of groups in thedistricts She agrees with an aspect of the rm-centred view ndash that groups formbecause they are a means of more tightly linking rm strategies and safeguard-ing against nal market risk than is possible if production networks re-form eachseason ndash but she differs signi cantly in stressing that lsquothe kind of groupingdeveloped in the districts of Tuscany should be interpreted more as a form ofbilateral governance structure than as a hierarchical or uni ed onersquo in which rms jointly co-ordinate strategic direction but no single rm has the power tounilaterally enforce its will (Dei Ottati 1996 58) Such grouping is greatlyfavoured by being in a district where existing social relationships can be mobil-ized and formalized to protect against the increased returns to opportunism oftodayrsquos more uncertain markets where interlinking transactions and strongreputation effects already push rms into multilateral strategic co-ordinationwhere equity investments serve largely to safeguard reciprocity

The fundamental insight of the lsquodistricts as systemsrsquo perspective is that acomplex of values rules and institutions de nes and explains variation in indus-trial districts Where Varaldo et al (1997) nd a Tuscan lsquodeclinersquo caused by thefailure of strong leader rms to emerge those who see the districts as partiallyintegrated systems argue that the different trajectories are not simply contin-gent on the failure or not of rms to follow the logic of global capitalismRather districts with different institutional legacies react to the developmentsof the 1990s in different ways some better and some worse but the key variableremains the system itself Fundamentally each district has a logic of its own(though there are explainable patterns)

In Brusco and Bigarellirsquos (1997) survey of knitwear producers they nd thatin the Veneto nal rms are often linked by a high degree of lsquoobjectiversquo depen-dency to large subcontractor enterprises The customer saturates the producerrsquosentire productive capacity so that the subcontractor can plan production efficiently The nal rm initially sets prices that can be modi ed lsquoif they do notallow for normal pro ts and are not high enough to provide for the investmentneeded to achieve the highest productivity levels that technological progressallowsrsquo In Emilia-Romagna on the other hand nal enterprises bring shortruns to market and have a much smaller order volume while subcontracting rms strongly prioritize keeping multiple clients As in the Veneto lsquoprice is xedby the customer and the subcontractor can object if this price does not make itpossible for him to remain in the market using the best technology availablersquoThey nd two different logics both in decentralized industrial district produc-tion environments but from the point of the view of lsquodistricts as systemsrsquo whatmatters is that all the players are on the same page and operate according to thelocal version of the lsquohighly structured although unwritten mixture of trustinspections and sanctionsrsquo

Beyond variation in informal institutions and practices there is evidence thatthe different productive structures and variant logics of inter- rm contracting


are also bolstered by formal institutional infrastructures that vary with the pro-duction models Burroni (1999a) shows that the historical interventionism of thesmall- rm dominated lsquoredrsquo Tuscany continues the local and regional stateprovide services to rms and programme economic development favouringdecision processes from below in a sort of local neo-corporatism In the Venetolocal and regional governments are less interventionist often acting principallyto obtain nancing for individual rms which are expected to play an import-ant role and depend on associations to provide other services In the Veneto dis-trict of Thiene (which he suggests is typical of the region) Burroni writes

the local state does not intervene in the local regulation of the economicsphere These actions are nevertheless undertaken by other actors by singlemedium-large rms through particular organizational formulas based onhighly structured productive networks and external hierarchies and throughthe direct internal production of strategic services

(Burroni 1999a 115)

It may strike the reader that the lsquosubjective choicersquo of various state agenciesin the Veneto model to delegate co-ordination where possible to lead rms lookslike the policy advocated by the rm-centred position In a sense this is so butas the Varaldo et al book on Tuscany cited above makes clear those who take a rm-centred approach do not think it should be applied only to the Veneto Like-wise the system-centred approach seeks generality and is not a stylization ofPrato writ large It is quite open taking as its fundamental assumption only thatthere are interdependencies between the actions of rms and local formal andinformal institutions change in the one is likely to require change in the others(and vice versa) This does not mean that strong lead rms cannot be an answerto the sorts of problems districts typically face it implies only that a district withco-ordinating lead rms is still a system and often is not dependent only on thoselead rms It may still need the reproduction of the lsquooldrsquo values and informalmechanisms of co-ordination and there may be some collective goods that lead rms and their networks can create only with difficulty

It is problematic to use the relative success of the Veneto to adjudicatebetween system and rm-centred perspectives The social science literature islittered with articles touting the lsquoobviousrsquo superiority of the model-of-the-month from the most exuberant observers of the industrial districts to pur-veyors of the Japanese model but it is not obvious that one way will be betterthan others in all conditions or that the solution of the month can be pro t-ably emulated by all given their initial institutional endowments There arefunctionally equivalent solutions to the common problems encountered byregions competing in the same global economy but the lsquoone best wayrsquo is torecognize what you have and react drawing selective lessons from others insimilar situations The single clearest message of the initial work on Italianindustrial districts is that there is more than one way to run a capitalism with exible-specialization usefully counterpoised to mass-production (Piore andSabel 1984 Sabel and Zeitlin 1985) the system-centred variant of the ongoing


industrial districts literature is testimony that there is also more than one wayto run a decentralized capitalism A district with strong lead rms may not needequally strong public institutions but that does not necessarily mean it isimpossible for those industrial districts that more closely resemble the classicmodel to survive a changing world though perhaps contingent on continuedinstitutional innovation

Rebuilding institutions and ensuring system reproduction

By the late 1980s it was already clear that the industrial district model requiredbolstering by a series of institutions formal and informal to compensate forscale and co-ordination inadequacies endemic to a diffuse and decentralized pro-duction model Now product quality improvements in developing countrieslarge rm readjustment a demand for a more diverse product range with everquicker delivery times and active product commercialization in many sectorscreate a need for still further institutional adjustment in the Italian industrialdistricts Trigilia (1997) stresses that while we should not overestimate theimportance of formal political institutions in building up the industrial districtsprospectively we should expect an increased salience of politics In the past hewrites lsquothe fundamental resources have been values competencies sedi-mented in particular areas types of social relations and resources which havefavoured co-operation lowered transactions costs and led to innovationrsquo In thefuture however the development of small industry areas will be ever more con-ditioned by their capacity to produce collective goods For Dei Ottati the sur-vival of industrial districts as such requires institutional support for lsquoacceleratedrenewal and upgrading of localized pools of industrial knowledge and know-howrsquo as well as for lsquoensuring a more conscious and predetermined cooperationamong the many competing actors that populate the districtrsquo (1996 61)

Industrial districts that hew relatively close to the classic model with few co-ordinating lead rms are not the only ones that would bene t from renewedinstitutional support Corograve et al (1998) report that in the successful north-eastern lsquosport-systemrsquo district of Montebelluna a district increasingly focusedon marketing and logistics with no shortage of co-ordinating lead rms thespace for new rms requires that entrepreneurs have managerial cognitive andorganizational skills ndash things not necessarily produced by the local contextDespite a description of leader rms as the lsquooriginal economic wealth of thenortheastrsquo Anastasia and Corograve (1996) lament that the region suffers from a lackof explicit collective organization Economic development depends on things asingle rm can produce only with difficulty immaterial resources governed byknowledge while innovation can be greatly favoured by ndash as in the classic dis-trict literature ndash widespread diffusion and circulation of information in rmsrsquolocal context Contrary to the arguments of some of the rm-centred theoristsmentioned above the presence of able leader rms is not in and of itself apanacea


It is easy enough to state in principle a need for collective institutions able toformalize co-ordination and co-operation and contribute to an innovativeatmosphere but it is not always obvious what that means in practice Still thereare relatively concrete proposals that could help to ensure greater collective co-ordination hopefully connecting the districts to the resources required to con-tinue their historically innovative ways Trigilia (1999b) calls for constructingnetworks that include both external and local actors connecting local systems tooutside knowledge because lsquoonly the growth of local subjects learning capacityconstitutes a solid guarantee of development in the epoch of globalizationrsquoCooke and Morgan (1998) argue that the Emilian experience of the early 1990sdemonstrates that even in districts where groups of lead rms formed to seekinternal economies of scale the districts require access to a signi cantly moredeveloped system of innovation one with closer ties to universities and pro-fessional research institutions Amin (1999) advocates a move away from anassociational and governance culture of providing services to one of trying tomobilize intermediaries and stimulate experimental approaches to problemssuggesting that lsquolearning by monitoringrsquo (Sabel 1994) might be a useful template

Proposals to ensure more explicit co-ordination and co-operation aside fromcalls to strengthen leader rms often echo Trigiliarsquos call of ten years ago for anempowerment of the regional (understood as the administrative body) state inmatters of economic governance Bagnasco and Oberti call attention to the bar-riers to regional regulation in the Italian case writing that politics lsquocontinues tobe organised on a local rather than a regional basis and leads local intereststoward the center rather than formulating and rede ning regional interestsrsquoBecause lsquothe regions are only agglomerations of localisms they are unable toprovide a dynamism or to establish a coherence among different actorsrsquo whichis problematic because lsquodevelopment based on small rms requires signi cantinvestment in infrastructure and collective equipment which cities and local col-lectivities are unable to produce alonersquo (1998 161ndash2 164) Rullani (1998) arguesthat the districts must be given more strategic voice as collectivities which is notcurrently possible given the dominance of the local and the central state lsquoTheessential questionrsquo he writes lsquois to as much as possible give representation andcapacity of self-government to productive forces respecting as much as possibletheir territorial strati cationrsquo

The importance of system reproduction

The larger implications of taking a systems perspective go beyond the contin-gencies of the present need for governmental regulation and new collective insti-tutions to ensure co-ordination and innovation The fundamental necessity ofreproducing the lsquooldrsquo institutions and values is embedded in the belief that thedistricts remain partially closed systems dependent to some extent on a series ofpositive externalities derived from their operation as communitarian markets

Corograve and Rullani (1998) caution that the wealth of local productive knowledge


could be at risk from a potential lsquodivision between leader rms continuously insearch of new commercial and productive partners in the many areas of the worldeconomy and the local networks of production and service destined to live a briefphase of uncertainty and possible decline awaiting a difficult process of indus-trial readjustmentrsquo Given a systems perspective fears of a bifurcation of inter-ests between leader rms and the productive hinterland are economic not moralIf the conditions of advantage on which the leader rms have based their successcannot be separated from the institutional context there is a real danger that rmswho co-ordinate large production systems and can scan globally for partners maynot recognize the medium to long-term material and immaterial advantages ofthe local system internationalizing even important phases for short-term costsavings (Corograve et al 1998 Anastasia and Corograve 1996 Conti and Menghinello 1998)

Even in the revamped version of the lsquoclassicrsquo district where groups are under-stood as bilateral governance structures recent and expected developments havean impact on informal institutions and values Dei Ottati (1995) writes that lsquothestructuration of the district though it allows for the coordination and dimen-sions required by the new product strategies and process innovation can elevatethe barriers to entry of new rmsrsquo This in turn reduces the rm rate of birthand generally attenuates the internal mobility of the local system with conse-quences that are certainly not positive for the diffusion of entrepreneurialismBarriers to new rm formation are a genuine threat to the reproduction of theculture of work and the diffuse knowledge of the production process relating aswell to an increasingly documented difficulty in the industrial districts the gen-erational turnover of the workforce Case studies in districts have documentedan increasing mismatch between labour demand and supply high school graduates do not want to work in factories (Blim 1993 Corograve and Rullani 1998Calistri 1994 Guerra 1998)

Becattini and Rullani (1994) remind us that in any analysis of the economylsquothe production of goods includes the social reproduction of the productiveorganism a truly complete productive process must co-produce along withgoods the values knowledge institutions and the natural environment that itrequiresrsquo The Italian industrial districts are clearly changing probably in wayslargely functional to their continued survival but increasingly formal contrac-tual relations grouping external hierarchy and especially the rise to prominenceof lead rms with access to global markets can have enormous consequences ifthe industrial districts really need (or at least greatly bene t from) the wide-spread trust derived from a common social culture entrepreneurialism and adiffuse knowledge of the production process

Conclusion the contingent future of the Italian industrialdistricts

I began this foray into the Italian literature on industrial districts by suggestingthat there was vigorous debate over a series of questions insufficiently discussed


in the English language literature To three of those questions ndash the pressuresleading the districts to restructure the patterns of restructuring and whetheror not there is a unilinear trend ndash the literature provides relatively clear answersCompetition from low-wage countries and large rm restructuring are forcingthe industrial districts to compete almost exclusively in quality-consciousmarkets At the same time changes in demand composition a need for higherintrinsic production quality shorter delivery times and a more active productcommercialization push rms to specialize in their core businesses and developstable relationships with a limited number of suppliers Groups are becomingcommon and at least in some districts there is an increase in external hierarchyThe adequacy of the collective and local governmental institutions so importantin the districtsrsquo past is being challenged There are patterns in the responses tosimilar functional imperatives across districts but it would be misleading to callthem a lsquounilinear trendrsquo as important elements vary signi cantly from district todistrict ndash most particularly the level of external hierarchy the role of lead rmsand types of collective institutions

The answers to the two questions with a normative bent ndash how the districtsshould restructure and whether or not they should all try to follow the samepath ndash are the source of much disagreement The rm-centred position seeksthe emergence of lsquoworld-classrsquo rms able to solve privately the difficulties ofscale and co-ordination endemic to a small- rm-dominated diffuse productionmodel In the system-centred work heir to the initial literature of district dis-covery the bias is to look rst to ways in which the state or associations mightbe able to more closely preserve the lsquoclassicrsquo form of the district with little exter-nal hierarchy and a minimal role for lead rms However this literature is alsoable to provide answers that are general to agglomerated network productionsystems without requiring convergence on a one best way giving as well somegeneral insight into the sociological study of the economy

Beginning with the simple claim that there are interdependencies between theactions of rms local institutions and the values and culture of local actorssystem-centred scholars carefully show that despite particularities the Italianindustrial districts are not an island apart from the rest of the world economyThey may have a culture lsquoconduciversquo to a diffuse production model but theircontinued viability is dependent on sustaining formal institutions that canensure co-ordination overcome scale difficulties and importantly guaranteethe reproduction of the norms and values underlying the system This is truenot just of districts that still approximate the traditional model but also of thosewith strong lead rms There is no single pathway to district success nor is therea single set of institutions that could meet the needs of every industrial districtin Italy but there does need to be a general lsquo trsquo between institutions and the localproductive structure

Intrinsically the future of the Italian industrial districts is neither bright norbleak They nd themselves in a globalizing world pressured from below bycountries with lower labour costs and from above by larger competitors whocontrol distribution and have stronger capital bases Without adjustment and


institutional innovation the likeliest prospect for most districts would be abifurcation into a few lead rms well integrated into the world economy and ahinterland of small rms slowly failing as the local skill base dwindles tonothing But institutional innovation has been a hallmark of the districtsthroughout their history and there are signs that at least in this regard thenext decade may be no different To paraphrase the aristocrat Tancredi ofTomasi di Lampedusarsquos Il Gattopardo everything must change if everything isto remain the same

Acknowledgements

I should like to thank all participants of the UW-Madison economic sociologytraining seminar for their extremely useful comments Most particularly I wouldlike to thank Jonathan Zeitlin Without his numerous readings of drafts insight-ful comments and constant indication (and frequent provision) of books andarticles worth reading I would never have nished this article

Notes

1 The districts had been discussed in Anglophone journals prior to 1984 (see especi-ally Brusco 1982 Becattini 1978) but the Second Industrial Divide was the lsquobig splashrsquo2 The law 31791 de nes industrial districts as lsquolocal territories characterized by anelevated concentration of small rms with particular reference to the relation betweenthe rms present and a resident population and not only to the productive specializationof the set of rmsrsquo The model is also a touchstone for policymakers looking for ways torevive the laggard economy of southern Italy See for example Trigilia (1999b)3 Most Italian industrial districts are in the fashionwear industries ndash textiles clothingfootwear leather goods and tanning ndash but there are also many in metal-goods industriesmechanical and electrical engineering ceramic goods musical instruments woodenfurniture and toys (Sforzi 1989)4 For example people use Putnamrsquos (1993) claim that social capital in these regions isa result of centuries-old traditions to argue that Emilia-Romagna is just differentHowever note that Putnam uses social capital to explain governmental efficiency so eventhere formal institutions matter5 That this was recognized nearly simultaneously in both the policy and academicworlds is probably due to the active role many lsquodistrict scholarsrsquo took in the local andregional policy-making arenas6 The pressures of low-wage competition are particularly well documented (see forexample Alacevich 1995ndash6 Anselmi 1989 Crestanello 1996 Lanzara and Ferrucci 1997Pyke and Sengenberger 1996)7 The idea that there is a sort of lsquodouble convergencersquo (Regini and Sabel 1989) betweenbig and small rms has found some favour in the literature (see also Bianchi 1993 Brusco1994 Franchi and Rieser 1991 Rinaldini 1996)8 See Balducci et al (1992) Carminucci and Casucci (1997) Blim (1989) Balloni andIacobucci (1997) Nuti and Cainelli (1996) Pyke and Sengenberger (1996) Zagnoli(1993)9 Pronto moda means lsquoready fashionrsquo and refers to fashion goods that are produced very


quickly to respond to what is selling at that moment Firms will initially produceordermany small runs and then re-order only when they see exactly what is selling in a givenseason Crestanello (1997) argues that overall the quick turnaround times induced bypronto moda have been signi cant in the defence of local employment This is undoubt-edly true but also represents a real change from the past that could necessitate concomi-tant adjustments in district structure10 See Crestanello (1997) Brusco and Bigarelli (1997) Bellandi (1997) Bianchi (1994)Varaldo and Ferrucci (1997) Possa (1992)11 Mistrirsquos claim is primarily an empirical one that consortia especially public onesare weak in non-price competition because they are open to all comers It is certainlytheoretically possible for consortia to facilitate non-price competition as long as allied rms specialize differently12 In his defence Harrison is certainly aware that Benetton grew from the inside Butgiven that he does not present them as the best of neighbours it remains unclear why thelsquoforeign-nessrsquo of external entrants would make them any worse13 Others who argue with some variation in the details that grouping and formaliza-tion lead to hierarchy and a decreasing importance of social characteristics includeBianchi (1994) Bortolotti (1994) Crestanello (1996) and Tamberi (1999)14 For Lombardy cases see Arrighetti and Seravalli (1999) Bianchi and Enrietti (1999)document the development of a lsquotechnology districtrsquo in Piedmont while DrsquoErcole (1992)(among others) uses the idea of the industrial district to discuss footwear-producing areasin Puglia (see also Trigilia 1999a)15 Anastasia and Corograve (1996) make similar claims about the importance of variedsectoral specializations in the Veneto16 That is in Tuscany employment is growing only in the class of rms with ten ormore employees but employment in the district itself continues to be dominated by rmswith fewer than ten employees17 To give coherence I have chosen to give the details of a limited number of worksHowever arguments that there is a strategic role for co-ordinating lead rms in the NECare common in case studies of districts For a smattering of other examples see Onida(1992) Balducci et al (1992) Possa (1992) Sbrana (1988) Viesti (1992)

References


Alacevich F (1995ndash6) lsquoLe condizioninon economiche della cooperazione fraimprese Il caso dei centri di servizicalzaturierirsquo Sviluppo Locale 2ndash3191ndash206Alaimo A (2000) lsquoSmall manufacturing rms and local productive systems inmodern Italyrsquo in K Odaka and M Sawai(eds) Small Firms Large Concerns TheDevelopment of Small Business inComparative Perspective Fuji FujiConference Series pp 168ndash93Amin A (1999) lsquoThe Emilian modelinstitutional challengesrsquo EuropeanPlanning Studies 7(4) 389ndash405mdashmdash and Robins K (1990) lsquoThe re-emergence of regional economies Themythical geography of exible

accumulationrsquo Environment and PlanningD Society and Space 8 7ndash34mdashmdash and Thrift N (1992) lsquoNeo-Marshallian nodes in global networksrsquoInternational Journal of Urban andRegional Research 16(4) 571ndash7Anastasia B and Corograve G (1996)Evoluzione di unrsquoEconomia Regionale IlNordest dopo il Successo Portogruaro VEEdicicloAnselmi S (1989) lsquoLrsquoindustriacalzaturiera della recente crescita nelleMarche Ipotesi storiogra che problemilinee di svilupporsquo in S Anselmi (ed)Lrsquoindustria Calzaturiera MarchigianaDalla manifattura alla fabbrica FermoUnione Industriale del Fermano pp15ndash37


Arrighetti A and Seravalli G (eds)(1999) Istituzioni Intermedie e SviluppoLocale Rome DonzelliBagnasco A and Oberti M (1998)lsquoItaly ldquole trompe-lrsquoœilrdquo of regionsrsquo in PLe Galegraves and P Lequesne (eds) Regionsin Europe New York Routledge pp150ndash65mdashmdash and Trigilia C (eds) (1984)Societagrave e Politica nelle Aree di PiccolaImpresa Il Caso di Bassano VeniceArsenale EditriceBalducci M Pieri M andVannucchi R (1992) Le Piccole Imprese ele Aree Sistema UnrsquoAnalisi OrganizzativaMilan FrancoAngeliBalloni V and Iacobucci D (1997)lsquoCambiamenti in atto nellrsquoorganizzazionedellrsquoindustria marchigianarsquo EconomiaMarche 16(1) 29ndash66mdashmdash Cucculelli M and IacobucciD (1998) lsquoLe politiche locale nelmodello NECrsquo paper presented at Gliincontri pratesi sullo sviluppo localePratoBarca F (1994) Proprietagrave Modelli diControllo e Riallocazione delle ImpreseIndustriali Italiane Vol 1 Bologna IlMulinoBecattini G (ed) (1975) Lo SviluppoEconomico della Toscana Florence IRPETmdashmdash (1978) lsquoThe development of lightindustry in Tuscany an interpretationrsquoEconomic Notes 2ndash3 107ndash23mdashmdash (1979) lsquoDal ldquosettorerdquo industriale alldquodistrettordquo industriale alcuneconsiderazioni sullrsquounitagrave di indaginedellrsquoeconomia industrialersquo Rivista diEconomia e Politica Industriale 5(1)mdashmdash (ed) (1987) Mercato e Forze LocaliIl Distretto Industriale Bologna IlMulinomdashmdash (1990) lsquoThe Marshallian industrialdistrict as a socio-economic notionrsquo in FPyke G Becattini and W Sengenberger(eds) Industrial Districts and Inter-FirmCo-operation in Italy GenevaInternational Institute for Labor Studiespp 37ndash51mdashmdash and Rullani E (1994) lsquoSistemalocale e mercato globalersquo in G Becattiniand S Vacca (eds) Prospettive degli Studidi Economia e Politica Industriale in ItaliaMilan FrancoAngeli

Bellandi M (1997) lsquoLe logiche delcambiamento nei distretti industrialirsquo inR Varaldo and L Ferrucci (eds) IlDistretto Industriale tra Logiche di Impresae Logiche di Sistema Milan FrancoAngeliBellini N Giordani M G andPasquini F (1990) lsquoThe industrialpolicy of Emilia-Romagna the businessservice centresrsquo in R Leonardi and RNanetti (eds) The Regions and EuropeanIntegration The Case of Emilia-RomagnaNew York Pinter pp 171ndash86Bianchi G (1993) lsquoIndustrial policies forsmall and medium rms and the newdirection of European Communitypoliciesrsquo in M Baldassarri (ed) IndustrialPolicy in Italy 1945ndash1990 LondonMacmillan pp 161ndash88mdashmdash (1994) lsquoTre e piu Italie sistemiterritoriali di piccola impresa e transizionepost-industrialersquo in Bortolotti (1994) pp15ndash44mdashmdash and Gualtieri G (1990) lsquoEmilia-Romagna and its industrial districts theevolution of a modelrsquo The Regions andEuropean Integration The Case of Emilia-Romagna New York Pinter pp 83ndash108mdashmdash and mdashmdash (1992) lsquoI distrettiindustriali in una fase deinternazionalizzazione dellrsquoeconomiarsquo inP DrsquoAttore and V Zamagni (eds) DistrettiImprese Classe OperaiaLrsquoIndustrializzazione dellrsquoEmilia-Romagna Milan FrancoAngeli pp377ndash94mdashmdash and Enrietti A (1999) TheDynamics of Innovation in the AutomotiveTechnology District of Piedmont CREIParis and Department of Economics atthe University of TurinBiggiero L (1999) lsquoThe impact ofentries of transnational corporations inregional innovation systemsrsquoCopenhagen ESRI Thematic ResearchWorkshopBlim M (1989) lsquoPrima e dopo losviluppo Monte San Giusto dallrsquoUnitagrave ad oggirsquo in S Anselmi (ed)LrsquoIndustria Calzaturiera MarchigianaDalla Manifattura alla Fabbrica FermoUnione Industriale del Fermano pp203ndash45mdashmdash (1993) lsquoThe third Italian economiesat middle age problems and prospects for

industrial renewalrsquo Anthropology of WorkReview 14(2) 20ndash8Bortolotti F (ed) (1994) Il Mosaico e IlProgetto Lavoro Imprese Regolazione neiDistretti Industriali della Toscana MilanFrancoAngeliBrusco S (1982) lsquoThe Emilian modelproductive decentralisation and socialintegrationrsquo Cambridge Journal ofEconomics 6 167ndash84mdashmdash (1990) lsquoThe idea of the industrialdistrict its genesisrsquo in F Pyke GBecattini and W Sengenberger (eds)Industrial Districts and Inter-Firm Co-operation in Italy Geneva InternationalInstitute for Labor Studies pp 11ndash19mdashmdash (1992) lsquoSmall rms and theprovision of real servicesrsquo in F Pyke andW Sengenberger (eds) Industrial Districtsand Local Economic Regeneration GenevaInternational Institute for Labor Studiespp 176ndash96mdashmdash (1994) lsquoSistemi globali e sistemilocalirsquo Economia e Politica Industriale84(2) 63ndash76mdashmdash and Bigarelli D (1997) RegionalProductive Systems in the Knitwear andClothing Sectors in Italy IndustrialStructure and Training Needs ESRCCentre for Business Research WorkingPaper Series University of Cambridgemdashmdash and Righi E (1989) lsquoIndustrialpolicy and social consensus the case ofModena (Italy)rsquo Economy and Society18(4) 405ndash23Burroni L (1999a) lsquoLa Terza Italia neglianni rsquo90 una comparazione tra Veneto eToscanarsquo PhD dissertation TrentoUniversity of Trentomdashmdash (1999b) lsquoMutamentinellrsquoorganizzazione produttiva della TerzaItalia una comparazione tra Toscana eVenetorsquo unpublished MS University ofTrentoBursi T Marchi G and Nardin G(1997) lsquoTrasformazioni organizzativenellrsquoimpresa distrettuale alcune premessesulla de nizione dellrsquounitagrave di analisirsquo inVaraldo and Ferrucci (1997)Calistri E (1994) lsquoMercato del lavoro e essibilita nei distretti industrialirsquo inBortolotti (1994) pp 99ndash116Camagni R and Capello R (1997)Innovation and Performance of SMEs in

Italy The Relevance of Spatial AspectsESRC Centre for Business ResearchWorking paper series University ofCambridgeCapecchi V and Alaimo A (1992)lsquoLrsquoindustria delle macchine automatiche aBologna un caso di specializzazione essibilersquo in P DrsquoAttore and V Zamagni(eds) Distretti Imprese Classe OperaiaLrsquoIndustrializzazione dellrsquoEmilia-RomagnaMilan FrancoAngeli pp 191ndash218Carminucci C and Casucci S (1997)lsquoIl ciclo di vita dei distretti industrialiipotesi teoriche ed evidenze empirichersquoLrsquoIndustria 18(2)Conti G and Menghinello S (1998)lsquoModelli di impresa e di industria neicontesti di competizione globalelrsquointernazionalizzazione produttiva deisistemi locali del made in ItalyrsquoLrsquoIndustria 19(2)Cooke P and Morgan K (1998) TheAssociational Economy Oxford OxfordUniversity PressCorograve G and Rullani E (1998)lsquoIntroduzionersquo in G Corograve and E Rullani(eds) Percorsi Locali diInternazionalizzazione Competenze eAuto-Organizzazione nei DistrettiIndustriali del Nord-Est MilanFrancoAngeli pp 11ndash18mdashmdash Gurisatti P and Rossi A (1998)lsquoIl distretto sport system diMontebellunarsquo in G Corograve and E Rullani(eds) Percorsi Locali diInternazionalizzazione Competenze eAuto-Organizzazione nei DistrettiIndustriali del Nord-Est MilanFrancoAngeli pp 57ndash148Crestanello P (1996) lsquoThe industrialdistricts in Veneto changes andtendenciesrsquo in F Cossentino F Pyke andW Sengenberger (eds) Local and RegionalResponse to Global Pressure The Case ofItaly and Its Industrial Districts GenevaInternational Institute for Labor Studiespp 67ndash96mdashmdash (1997) lsquoLe trasformazioni in 10distretti industriali durante gli anni rsquo80rsquoin Varaldo and Ferrucci (1997)Dei Ottati G (1995) Tra Mercato eComunitagrave Aspetti Concettuali e RicercheEmpiriche sul Distretto Industriale MilanFrancoAngeli


mdashmdash (1996) lsquoThe remarkable resilience ofthe industrial districts of Tuscanyrsquo in FCossentino F Pyke and W Sengenberger(eds) Local and Regional Response toGlobal Pressure The Case of Italy and ItsIndustrial Districts Geneva InternationalInstitute for Labor Studies pp 37ndash65DrsquoErcole M (1992) lsquoIl distretto diBarlettarsquo and lsquoIl distretto di Casaranorsquo inF Onida G Viesti and A Falzoni (eds) IDistretti Industriali Crisi o EvoluzioneMilan EGEAFerri G (1997) lsquoIntroduzionersquo in FCesarini G Ferri and M Giardino (eds)Credito e Sviluppo Banche LocaliCooperative e Imprese Minori Bologna IlMulinoFerrucci L and Varaldo R (1993) lsquoLanatura e la dinamica dellrsquoimpresadistrettualersquo Economia e PoliticaIndustriale 80 73ndash97Franchi M and Rieser V (1991) lsquoLecategorie sociologiche nellrsquoanalisi deldistretto industriale tra comunitagrave erazionalizzazionersquo Stato e Mercato 33451ndash76Guerra P (1998) lsquoI sistemi produttivimobilieri del Livenza e del Quartier delPiaversquo in G Corograve and E Rullani (eds)Percorsi Locali di InternazionalizzazioneCompetenze e Auto-Organizzazione neiDistretti Industriali del Nord-Est MilanFrancoAngeli pp 149ndash216Guidi G (1996) lsquoThe views of workersand employersrsquo organizationsrsquo in FCossentino F Pyke and W Sengenberger(eds) Local and Regional Response toGlobal Pressure The Case of Italy and ItsIndustrial Districts Geneva InternationalInstitute for Labor Studies pp 115ndash20Harrison B (1994) Lean and MeanNew York Basic BooksHirst P and Zeitlin J (1991) lsquoFlexiblespecialization versus post-Fordismtheory evidence and policy implicationsrsquoEconomy and Society 20(1) 1ndash56Innocenti A (1994) lsquoI distrettiindustriali una categoria da ripensareuna ri essione sugli studi di casorsquo inBortolotti (1994) pp 361ndash74mdashmdash (1998) lsquoGerarchia e contratti il ruolodei rapporti di subfornitura tra piccoleimprese nellrsquoevoluzione dei distrettiindustrialirsquo LrsquoIndustria 19(2) 391ndash415

Lanzara R and Ferrucci L (1997)lsquoTecnologia e processi di innovazione neidistretti industrialirsquo in R Varaldo and LFerrucci (eds) Il Distretto Industriale traLogiche di Impresa e Logiche di SistemaMilano FrancoAngeliLeonardi R and Nanetti R (1990)lsquoEmilia-Romagna and the EuropeanCommunity evaluations and prospectsrsquoin R Leonardi and R Nanetti (eds) TheRegions and European Integration TheCase of Emilia-Romagna New YorkPinter pp 187ndash99Locke R (1996) lsquoThe compositeeconomy local politics and industrialchange in contemporary Italyrsquo Economyand Society 25(4) 483ndash510Mistri M (1994) Distretti Industriali eMercato Unico Europeo Dal Paradigmadella Localizzazione al ParadigmadellrsquoInformazione Milan FrancoAngeliNuti F and Cainelli G (1996)lsquoChanging directions in Italyrsquosmanufacturing industrial districts thecase of the Emilian footwear districts ofFusignano and San Mauro PascolirsquoJournal of Industry Studies 3(2) 105ndash18Onida F (1992) lsquoIntroduzionersquo in FOnida G Viesti and A Falzoni (eds) IDistretti Industriali Crisi o EvoluzioneMilan EGEAPadoa-Schioppa T (1997) lsquoIl creditocooperativo in Italia realtagrave e problemirsquo inF Cesarini G Ferri and M Giardino(eds) Credito e Sviluppo Banche LocaliCooperative e Imprese Minori Bologna IlMulinoPaniccia I (1998) lsquoOne a hundredthousands of industrial districtsorganizational variety in local networks ofsmall and medium-sized enterprisesrsquoOrganization Studies 19(4)Piore M and Sabel C (1984) TheSecond Industrial Divide Possibilities forProsperity New York Basic BooksPossa M (1992) lsquoLrsquoarea calzaturiera diVigevanorsquo in F Onida G Viesti and AFalzoni (eds) I Distretti Industriali Crisi oEvoluzione Milan EGEAPutnam R (1993) Making DemocracyWork Civic Traditions in Modern ItalyPrinceton NJ Princeton UniversityPressPyke F and Sengenberger W (1990)


lsquoIntroductionrsquo in F Pyke G Becattiniand W Sengenberger (eds) IndustrialDistricts and Inter-Firm Co-operation inItaly Geneva International Institute forLabor Studies pp 1ndash9mdashmdash and mdashmdash (1996) lsquoIntroductionrsquo inF Cossentino F Pyke and WSengenberger (eds) Local and RegionalResponse to Global Pressure The Case ofItaly and Its Industrial Districts GenevaInternational Institute for Labor Studiespp 1ndash14Regini M (1995) Uncertain BoundariesNew York Cambridge University Pressmdashmdash and Sabel C (1989) lsquoLe strategiedi riaggiustamento industriale in Italiauno sguardo drsquoinsieme in chiavecomparatarsquo in M Regini and C Sabel(eds) Strategie di RiaggiustamentoIndustriale Bologna Il MulinoRinaldini T (1996) lsquoThe views ofworkersrsquo and employersrsquo associationsrsquo inF Cossentino F Pyke and W Sengen-berger (eds) Local and Regional Response toGlobal Pressure The Case of Italy and ItsIndustrial Districts Geneva InternationalInstitute for Labor Studies pp 122ndash5Rullani E (1998)lsquoInternazionalizzazione e nuovi sistemi digovernance nei sistemi produttivi localirsquoin G Corograve and E Rullani (eds) PercorsiLocali di InternazionalizzazioneCompetenze e Auto-Organizzazione neiDistretti Industriali del Nord-Est MilanFrancoAngeli pp 19ndash54Sabel C (1994) lsquoLearning bymonitoring the institutions of economicdevelopmentrsquo in N Smelser and RSwedberg (eds) The Handbook ofEconomic Sociology Princeton NJPrinceton University Press pp 137ndash65mdashmdash and Zeitlin J (1985) lsquoHistoricalalternatives to mass production politicsmarkets and technology in nineteenth-century industrializationrsquo Past-and-Present 108 133ndash76Sbrana R (1988) lsquoEvoluzione degliinvestimenti pubblicitari e delle strategiedi marketingrsquo in R Varaldo (ed) IlSistema delle Imprese Calzature Strutturae Strategie Competitive Turin GGiappichelli pp 275ndash97Schmitz H (1999) lsquoGlobal competitionand local cooperation success and failure

in the Sinos Valley Brazilrsquo WorldDevelopment 27(9) 1627ndash50Sforzi F (1989) lsquoThe geography ofindustrial districts in Italyrsquo in EGoodman J Bamford and P Saynor (eds)Small Firms and Industrial Districts inItaly New York Routledge pp 153ndash73Tamberi M (1999) lsquoNel mosaicoeconomico delle Marche origini etrasformazionirsquo provisional version ofpaper prepared for MURST projectmeeting of 29 MayTrigilia C (1986) Grandi Partiti ePiccole Imprese Comunisti e Democristianinelle Regioni a Economia Diffusa BolognaIl Mulinomdashmdash (1990) lsquoWork and politics in theThird Italyrsquos industrial districtsrsquo in FPyke G Becattini and W Sengenberger(eds) Industrial Districts and Inter-FirmCo-operation in Italy GenevaInternational Institute for Labor Studiespp 160ndash84mdashmdash (1997) lsquoObiettivi e condizioni diefficacia delle politiche regionalirsquo in RVaraldo and L Ferrucci (eds) Il DistrettoIndustriale tra Logiche di Impresa e Logichedi Sistema Milan FrancoAngelimdashmdash (1999a) lsquoIl Sud scopre la via delldquolocalismordquorsquo Il Sole-24 Oremdashmdash (1999b) lsquoSud la s da riparte dalleregionirsquo Il Sole-24 OreVaraldo R and Ferrucci L (eds)(1997) Il Distretto Industriale tra Logiche diImpresa e Logiche di Sistema MilanFrancoAngeliVaraldo R Bellini N andBonaccorsi A (1997) Tendenze e Vie diCambiamento dellrsquoIndustria ToscanaMilan FrancoAngeliViesti G (1992) lsquoCrisi ed evoluzione deidistretti industrialirsquo in F Onida G Viestiand A Falzoni (eds) I Distretti IndustrialiCrisi o Evoluzione Milan EGEAZagnoli P (1993) Percorsi diDiversi cazione dei Distretti Industriali IlCaso di Prato Turin G GiappichelliZeitlin J (1992) lsquoIndustrial districts andlocal economic regeneration overviewand commentrsquo in F Pyke and WSengenberger (eds) Industrial Districts andLocal Economic Regeneration GenevaInternational Institute for LabourStudies pp 279ndash94


the praises of the lsquoEmilian modelrsquo of exible-specialization Suddenly Italy wasno longer Europersquos poor backwards relative to the south1 Attention focused onthese dynamic regional economies as academics and policy makers sought toexplain how systems of small and medium-sized rms could successfullycompete in world markets As is now well known they returned to the work ofAlfred Marshall and used the concept of the lsquoIndustrial Districtrsquo or in Becat-tinirsquos (1979 1987) terms the lsquoMarshallian Industrial Districtrsquo Finally itseemed Italy had a production model to go with its cathedrals something theworld could envy

The initial international interest was extremely optimistic lled with some-what idyllic descriptions of small rms with high labour standards in com-munities where co-operation was king However many of the districts includingone often seen as the canonical example Prato experienced difficulties in themid to late 1980s leading some prominent lsquonay sayersrsquo to say essentially asCooke and Morgan (1998) put it the lsquobig rms must winrsquo In the Anglophonedebate the late Bennett Harrison (1994) argued that (at the very least) hisaccount of changes in Emilia-Romagna should take some of the bloom off therose while Amin and Robins (1990) reminded us that (lsquoneed it really be saidrsquo)multinational corporations remain the real lsquoshakers and shapers of the worldeconomyrsquo Perhaps due to such lsquodebunkingrsquo or perhaps due to the problemsencountered by many of the districts that made them no longer seem a solutionthe Emilian model does not get the same press it once did

Nevertheless in Italy a law enacted in 1991 to de ne and support industrialdistricts formally moved them into national industrial policy2 and there con-tinues to be extensive study of the industrial districtsrsquo evolution with consider-able discussion of the modelrsquos future as well as arguments over what shouldlsquocountrsquo as a district In English interesting recent work includes a 1996 ILOvolume (their third edited by Pyke and Sengenberger) and a 1995 three-articlesymposium in the Journal of Industry Studies (now Industry and Innovation)looking at developments in the late 1980s and early 1990s Cooke and Morgan(1998) used Emilia-Romagna as one of their cases in The Associational EconomyRichard Locke (1996) compared developments in Prato and Biella in the pagesof this journal Finally the lsquoEmilian modelrsquo is often discussed in World Develop-ment by a group of scholars (associated particularly with Hubert Schmitz) inter-ested in the clustering of production who keep an eye on the Italian debate

Critics like Amin and Harrison were on to something ndash new pressures didemerge in the 1980s that changed and continue to change Italian local industrialsystems ndash but the Italian literature has developed a sophisticated debate that goesbeyond simple claims that large rms will either buy up or hollow out the dis-tricts or that they will remain what Amin and Thrift (1992) called lsquoMarshalliannodes in global networksrsquo The Italian debate is sporadically cited in the Anglo-phone literature but there has been to date no extensive critical treatment inEnglish of what the Italian-language literature has deemed an extremely import-ant series of questions What are the pressures of the late 1980s and 1990s thatled the districts to experience difficulties and need to restructure How are the











(Bianchi 1994 19)



















































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References

























(Bianchi 1994 19)



















































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References



















(Bianchi 1994 19)



















































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References






























































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References


























































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References



















































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References













































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References









































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References





































The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References






























The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References
























The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References

















The rm-centred view





































(Burroni 1999a 115)



























Acknowledgements


Notes




References













































(Burroni 1999a 115)



























Acknowledgements


Notes




References






































(Burroni 1999a 115)



























Acknowledgements


Notes




References
































(Burroni 1999a 115)



























Acknowledgements


Notes




References























(Burroni 1999a 115)



























Acknowledgements


Notes




References


















(Burroni 1999a 115)



























Acknowledgements


Notes




References







































Acknowledgements


Notes




References


































Acknowledgements


Notes




References




























Acknowledgements


Notes




References






















Acknowledgements


Notes




References

















Acknowledgements


Notes




References

















References














































Documents

The decline of a model? Challenge and response in the …jw2212/Writing/Main/11-jwEandS2001.pdfthe Italian industrial districts Josh Whitford Abstract The article presents an extensive