Global Value Chains and Manufacturing: Which Role for Industrial Districts?

Traditional literature has highlighted the many firm advantages of being part of an industrial district, where firms have better performances as a positive consequence of local agglomeration. Knowledge transfer and combination, spillovers, competitive and collaborative relationships, and specialized local services: these are some of the features of industrial districts that in the past had a positive impact on firms’ innovation, product quality and in general on firms’ competitiveness. However, since the 1990s, the opening up of industrial districts to the global market has raised many issues. In particular, the entrance of many companies – even the smaller ones – in global value chains has undermined the relationship with the local system and all the dynamics sustaining the traditional competitive advantage. Leader firms in industrial districts now organize production and services within global value chains looking for the highest efficiency in terms of cost of labor and resources, the proximity to final markets, and the best suppliers according to the product value. Internationalization processes has impacted not just on commercial activities, but also on productive ones, with often intense forms of global sourcing and offshoring of manufacturing activities by district firms.

A crucial question now is to understand if there is still a role for industrial districts in sustaining the firms’ competitiveness. Specifically focusing on the manufacturing activities, are they still dominant in industrial districts? Are local manufacturing competencies still relevant in the international competitiveness of district firms? And how this influences the GVCs organization?

The objective of the paper is to go in depth on this topic, to discuss about the relationship of industrial district manufacturing competencies and firms’ competitiveness through a qualitative analysis of the Italian context. The furniture and sport system districts in North East Italy will receive particular attention as they have had an important role in the scenario of Italian industrial districts and now they are facing globalization (both upstream and downstream internationalization) and the economic crisis in different ways.