Geography Reference
In-Depth Information
Theorisation of system weaknesses in heterarchic, localised forms of economic coor-
dination has gone furthest in industrial district theory. Two key system weaknesses have
recently been identii ed in the canonical neo-Marshallian form of the industrial district.
Writing from an evolutionary economics perspective, Varaldo and Ferrucci (1996) have
identii ed the following developmental blockages presently visible in the district form
of development. First, because of strategic cooperation between i rms in districts there
develops, of necessity, a common set of strategic expectations about behaviour among
mutually dependent entrepreneurs. Institutional memory, rules, routines, ways in which
mutual expectations are regulated, relationships ordered and rules governed - these
come to converge so that dissonance within the district becomes muted. This, the absence
of dissenting voices, reproduces district culture - in the commercial sense - but may delay
strategic
creativity at critical points when a rapid response to the need for innovation is
required. If we remember that innovation is dei ned as the
commercialisation
of original
knowledge, as distinct from invention, which is the original knowledge itself, then the
need for rapid response becomes obvious.
Second, this is not a problem until the district system experiences an exogenous shock,
such as a stabilisation, or even, as occurred in the global recession of the early 1990s, a
contraction in demand. This can cause a number of panic responses: competition may
become cut-throat and destructive; low prices make investment in restructuring impos-
sible; reduced demand limits the high l exibility levels associated with district i rms,
revealing hidden costs as margins are cut and more standardised production is resorted
to; i rms seek cheaper of shore suppliers and even production locations; retail customers
are more able to negotiate favourable contracts for themselves; new technologies may
represent a threat where they are incongruent with the technical know-how of district
entrepreneurs. All these reactions can be experienced in non-district settings too, and
there is even limited evidence that in Italy, during the 1990s recession, district i rms fared
better than similar ones outside districts (Brusco et al., 1996).
However, these forms of industrial organisation have proven remarkably resilient,
adapting skills and technologies and responding to inauspicious external conditions.
Most recently, in the mid-2000s some were thriving by absorbing large numbers of
Chinese workers and entrepreneurs, at least 30,000 in Prato, one of the most traditional
textile towns in Italy (Dei Ottati, 2009). Founded in its modern form as an initially
impoverished local economy based on the recycling of wool, in ef ect from rags, to be
re-woven into fabric by multitudes of small artisans, the district has dealt with external
acquisitions of some key i rms, the innovation imperatives of new software-controlled
machines, and much competition from low-wage economies in core markets. The arrival
of many Chinese entrepreneurs has brought new skills and upgrading of the commodi-
ties on of er, including designer clothing and accessories. There is some irony in that a
major migration l ow is from China's clothing and textiles 'industrial villages' in south-
ern China to which the Italian Communist Party, which then ruled in Tuscany (and
Emilia-Romagna), often sent consultant advisers on how to build industrial districts in
the People's Republic (Becattini, 2001).
The systemic dimension of innovation
Most economic development involving enterprise support for small and medium enter-
prises occurs in situations far removed from the industrial district model of development.
