Industrial Districts, Relocation, and the Governance of the Global Value chain

The book builds on a conceptual framework that explores the reorganization of business networks in IDs&Cs along two dimensions. The two important flows under observation are: (1) the inflows/outflows of material resources and manufacturing activities; and (2) the inflows/outflows of knowledge. With reference to the first dimension, the wealth of experiences presented in this book shows that increasing global competition has generally resulted in the massive outflow of production activities from Western IDs&Cs through relocation. This is clearly documented in the contributions devoted to the analysis of three Italian industrial districts: the Montebelluna sportswear district (Chapter 5), the Vibrata Valley clothing district (Chapter 6), and the Verona footwear district (Chapter 4). However, as argued in the conceptual framework illustrated in Chapter 1, the effect of relocation on the industrial district’s long-term sustainability differs depending on the possibility of using the international fragmentation of the district value chain as a means of fostering different forms of upgrading. In order to discriminate between the possible outcomes, Chapter 1 proposes a taxonomy of relocation strategies. In this regard, the theoretical implication that emerges from the reading of this book is that, whereas the analysis of global value chains has a significant capacity for explaining the possibilities of upgrading for the enterprises within them, its transposition to the cluster level needs to be carefully calibrated. Any cluster may indeed comprise different global and local value chains, with complex direct and indirect effects on the development of the cluster which cannot be deterministically defined. Outflows of manufacturing activities from Western IDs&Cs can potentially favour the formation of embryonic clusters in foreign countries. In this respect, Fiorenza Belussi (Chapter 9) and Simona Montagnana (Chapter 10) illustrate the experience of agglomeration of footwear firms in the region of Timisoara, in Romania. Although the outflow of production activities characterize the evolution of most Western industrial districts, the study conducted by Fiorenza Belussi and Silvia Sedita in the Arzignano leather-tanning district (Chapter 7) accounts for an opposite trend. This chapter provides an interesting example of ‘inverse relocation’, Business_Networks_01.indd xv 16/4/09 9:13:29 AM xvi Preface which involves ‘transferring cheap labour’ into Western IDs&Cs as an alternative to the relocation of manufacturing activities to low-labour-cost countries though international subcontracting and/or FDI. The second dimension explored in the book concerns the inflow and outflow of knowledge. Chapter 2 by Fiorenza Belussi and Silvia Sedita provides a conceptual elaboration on the learning processes that occurs in IDs&Cs based on the interaction between localized and distance learning. To capture the intertwined processes of knowledge generation and acquisition from local and external contexts the concept of ‘learning at the boundaries’ is introduced and discussed. The importance of this learning model is especially evident in high-tech industries, such as biotechnology, pharmaceuticals, telecommunication and aerospace, characterized by the complexity of the knowledge base required to foster innovation. The structure of these industries seems to conceal globalization and spatial agglomeration through a small worldwide pattern of connections: spatial agglomeration and interaction in local clusters is connected globally through the participation of local firms in distant inter-organizational networks thanks to various forms of formal and informal R&D collaborations. This dual geography emerges as a central theme also from the empirical studies collected in this book. In Chapter 16, concentrating on four regions in Germany, Fornahl and Tran explore the balance between local and external linkages and cooperative knowledge generation in the biotechnology industry. In Chapter 17, Asheim, Coenen and Moodysson investigate different forms of knowledge flows among actors in the Medicon Valley cluster by breaking down a number of innovation processes into concrete activities that are analyzed with regard to the spatial distribution of collaborators involved