the evolution of italian industrial districts: challenges and perspectives

Els clústers industrials italià: reptes i perspectives de futur

[email protected]

I Workshop d’Economia Valenciana Universitat Politècnica de València

4/11/16

I Workshop d’economia Valenciana 4/11/16 Valentina De Marchi

Agenda

•  The (persistent) relevance of IDs for the Italian economy •  The key transformations that affected IDs in the last 15-20

years and how they affected the Marshallian configuration •  Interpreting the change: key trajectories of ID evolution in

Global Value Chains •  The determinants of trajectories of ID resilience in the global

economy

I Workshop de la Economia Valenciana 4/11/16 Valentina De Marchi

The Italian anomaly of the ‘70s and ‘80s

•  Traditional sectors •  Low technological content •  Small or micro enterprises

BUT •  High growth rates •  Leadership in international

markets •  Flexibility, innovation,

customization


(Marshallian) industrial districts: backbone of the Italian economy (1)

Industrial districts

• A population of firms (mostly SMEs) • Specialization in a specific business field

•  Limited territorial area • Division of labour and inter-organizational

relationships

(Marshallian) Industrial districts

•  Interpenetration between production and social structures


(Marshallian) industrial districts: firms and employment growth (2)

Source: Elaboration on ISTAT CENSUS data

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0 200 400 600 800

1000 1200 1400 1600 1800

1961 1971 1981 1991 2001

Local firms (bars, left axis) and employees (lines, right axis) in the gold jewellery IDs

AREZZO ALESSANDRIA VICENZA


(Marshallian) industrial districts: innovation (3)


1970 (Tecnica) 1974 (SIDI) ‘70 (Alpinestar)

1982 (Roces) 1982 (Lotto)


A persistent relevance for the Italian economy…

Source: Intesa San Paolo (2015). 2014 data Source: ISTAT Census 2011. 2011 Data


…But under different premises

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

0 200 400 600 800

1000 1200 1400 1600 1800

1961 1971 1981 1991 2001 2011

Local firms (bars, left axis) and employees (lines, right axis) in the gold jewellery IDs

AREZZO ALESSANDRIA VICENZA

Source: Elaboration on ISTAT CENSUS data See also: De Marchi, Gereffi, Lee (2014), European Planning Studies

Local clusters in global chains: understanding the key

transformations at stake


IDs at the globalization challenge: why the Marshallian configuration is fading out

MARSHALLIAN IDs

Interpenetration between

PRODUCTION and SOCIAL structures

a) LARGER FIRMS EMERGING (higher concentration)

b) DECREASING NUMBER OF FIRMS AND EMPLOYEES (reduction in the ID population)

Exte

rnal

Inte

rnal

1.  Global competition of intermediate and final goods & international organization of productive activities

2. Rising importance of global lead firms and concentration of distribution activities

3.  Increasing presence of immigrant entrepreneurs and workers

4. Local entrepreneurship shortage


1. Global competition of intermediate and final goods & riorganization of productive

activities at the global level (1)

Source: OSEM (2008). Survey data

Share of firms of the Montebelluna ID that have delocalized production activities, by size class


2. Rising importance of global lead firms and concentration of distribution activities

•  Global lead firms focusing on higher value-added activities (mostly retailing) orchestrating production across global chains: !  IKEA – With 31.9 billion sales in 2015 (+114.1% as of 2005) is by far the largest

furniture retailer worldwide. Its home-furnishing articles are realized mostly by 978 suppliers (subcontractors) based in 50 countries (just 13% of employees working in production units).

!  Wal-mart, Nike, Apple, LVMH,….

•  Estimates suggest that now 80% of world trade depend on such global chains (UNCTAD, WIR 2013) •  Increasing relevance of groups and medium/large sized

companies within the IDs


Prato Textile

Bassano Furniture

Belluno Eyewear

Montebelluna Sportsystem

The fading out of the Marshallian model: an increasing heterogeneity across and within IDs

Source: Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali”. Note: size of the circles indicate firms’ turnover in 2014


The fading out of the Marshallian model: an increasing heterogeneity across and within IDs (2)

Bassano Furniture

Livenza Furniture

Source: Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali”. Note: size of the circles indicate firms’ turnover in 2014


Is there still a ‘ID effect’ or which IDs are still characterized by a ID effect?

Turnover variation (median values)

International competitiveness and innovation (2014)

Share of Exporters

Patents every 100 firms

Source: Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali”. Note: median values reported


2. R

educ

tion

in th

e ID

po

pulat

ion

High Decline Hierarchization

Low

Reproducing ID

1. Concentration at firm level

Low Med/High

MARSHALLIAN

Out of the Marshallian configuration: is it possible to identify trajectories?

See also: De Marchi and Grandinetti (2012), Studi Organizzativi; De Marchi and Grandinetti (2014), Competition & Change


High

Low/null

Low/null High

Is it possible to identify trajectories? An application to the Veneto region

Decline

Source: Our elaboration based on Movimprese and AIDA data

FOOTWEAR

MARBLE

SPORTSYSTEM LEATHER

GLASS FURNITURE (TV)

CERAMICS FURNITURE (VR)

JEWELLERY

EYEWEAR

0%

10%

20%

30%

40%

50%

60%

0 500 1,000 1,500 2,000 2,500 3,000

Hierarchization

Reproducing ID 2. R

educ

tion

in th

e ID

pop

ulat

ion

(num

ber o

f firm

s, 20

04-2

014)

1. Concentration (turnover, HH index on 2014 data)

-

-

-

-

-

-

Investigating the determinants of the trajectories: lessons from

selected Veneto IDs


Footwear (Riviera del

Brenta)

Eyewear (Belluno)

Sport System (Montebelluna)


The Belluno eyewear: few home-grown global lead firms driving to hierarchization

Belluno

eyewear Var firms 04-14 -49.8% Var. employment 04-14 28.0% Turnover by top firm 46.9%

Activities mostly performed locally

Pre-production, production & post

production activities

Upgrading trajectories Vertical Integration, control of retailing

activities

Key local companies Global leaders (Luxottica, Safilo)

Global lead firms Homegrown

Firms Incidence on ID turnover

Large (turnover >50mil) 7 97.5%

Medium (10-50mil) 6 0.7%

Small (<10 mil.) 81 1.8%

Source: Own elaboration on AIDA data. Note: data refer to 2012 and to limited liability companies only.

ID composition, by size


The Montebelluna sportsystem: evolution via diversification, innovation, branding (1)

Belluno eyewear Montebelluna Sportsystem

Var firms 04-14 -49.8% -12.6% Turnover by top firm 46.9% 27.9%




Pre-production (some post-production)

Upgrading trajectories Vertical Integration, control of retailing

activities

Product diversification, internationalization of

sourcing, branding (OBM)

Key local companies Global leaders (Luxottica, Safilo)

Internationally recognized OBMs; global leaders (Geox); suppliers of

services, machineries

Global lead firms Homegrown Homegrown and foreign


The Montebelluna sportsystem: diversification (2)

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

1985

19

86

1987

19

88

1989

19

90

1991

19

92

1993

19

94

1995

19

96

1997

19

98

1999

20

00

2001

20

02

2003

20

04

2005

20

08

Winter shoes Technical shoes Other (shoes+clothing)

Source: Own elaboration on OSEM data

Apre-ski boots, trekking shoes, ski boots,…

Football, tennis, moto shoes, rollerblades,…

ID turnover by market segment, ‘85-’08

City shoes, clothing


The Montebelluna sportsystem: key actors of the change (3)

A number of capable OBM renowned on global markets (niche), developing global supply chains and retaining selective relationship

with other ID firms

KIBS or other specialized suppliers, relying on the ID as context for sperimentation but working mostly for global firms


The Riviera del Brenta footwear: evolving by manufacturing for global brands (1)

Belluno

eyewear Montebelluna Sportsystem

Riviera del Brenta footwear

Var. firms 04-14 -49.8% -12.6% -2.4% Turnover by top firm 46.9% 27.9% 21.2%




Pre-production (some post-production) Production

Upgrading trajectories

Vertical Integration, control of retailing

activities

Product diversification, internationalization of

sourcing, branding (OBM)

From OBM to OEM (producing

for global brands)

Key local companies Global leaders (Luxottica, Safilo

Internationally recognized OBMs; global leaders (Geox); suppliers of

services, machineries

Capable OEMs

Global lead firms Homegrown Homegrown and foreign Foreign

Source: De Marchi, Gereffi, Grandinetti (2017) Routledge


The Riviera del Brenta footwear: manufacturing capabilities attracting global brands (2)


What the key determinants of the different ability to find a suitable position in the new

global context?

Decline Hierarchization Reproducing

Glob

al le

ad fi

rms

Homegrown (inside-out) Present Present

Foreign (outside-in)

Loca

l dy

nam

ic a

ctor

s

Capable OEMs (manufacturing cap.)

Present (variety)

Highly-specialized suppliers (specialized

manuf. cap.) Capable OBM (post-

production capab.)

Capable local institutions

Trajectories of evolution in Italian IDs: what lessons for local development?


ID reproducing (on different premises) in global markets: getting back to the firm

•  Italian ID transforming out of the Marshallian model: !  Shrinking population & local relational fabric !  Increasing importance of larger firms

•  Globalization spurring increasing heterogeneity across (and within) IDs: !  Decline, hierarchization, reproducing trajectories

•  Moving the focus from the system to (key) firms: !  Global lead firms !  (Variety of) local dynamic actors


Local clusters in global chains: still a role for (manufacturing) SMEs?

•  Variety of (dynamic) SMEs necessary for ID resilience !  Integrating local and global knowledge & supporting

(selective) local relationships !  Beyond the (solo) ‘local lead firm’

•  Finding a suitable position in GVC via different roles, depending on key assets (manufacturing – OEM; branding & retailing – OBM; innovation - specialized suppliers)

•  Back to manufacturing (again)? !  Innovation-production nexus !  Anchor for global lead firm presence !  Diversification and new markets development


Evolving evolutionary trajectories: what roles for policy making?

•  Different trajectories, which may evolve over time !  tailored policies supporting the achievement of thriving trajectories !  Role of (entrepreneurial) district institutions

•  Vulnerable actors !  enabling consolidation (e.g., via network contracts)

•  Global knowledge integration (vs. over-embeddedness) !  supporting integration with ‘beneficial’ global actors

•  Supporting reproducibility of key assets attracting (local and foreign) companies !  Maintaining (e.g., ‘make’ skills training) !  Communicating & nurturing (e.g., context for global awareness & trust

recreation


Veneto region and Comunitat Valenciana: space for comparison?

•  Several commonalities opening up space for experiences exchange: !  Manufacturing and ID relevance !  Embedding in Global Value Chains !  Entrepreneurship (in diversified sectors) !  Innovation capabilities !  Reproducing IDs and local dynamic actors


References

•  De Marchi, V., Grandinetti R. (2012). "Dove stanno andando i distretti industriali? Un tentativo di risposta a partire da un'indagine in Veneto", Studi Organizzativi, 2, 142-175

•  De Marchi V., Lee J., Gereffi G. (2014), "Globalization, Recession and the internationalization of industrial districts: evidence from the Italian gold jewellery industry", European Planning Studies, 22(4): 866-884.

•  De Marchi, V., & Grandinetti, R. (2014). “Industrial Districts and the Collapse of the Marshallian Model: Looking at the Italian Experience”. Competition & Change, 18(1): 70-87.

•  De Marchi V., Grandinetti R. (2016) “Lo Sportsystem di Montebelluna: il distretto dalle sette vite”, Economia e Società Regionale, 34(1)

•  De Marchi V., Gereffi G., Grandinetti R (2017) “Describing the change: evolutionary trajectories of industrial districts in global value chains”, in De Marchi V., Di Maria E., Gereffi G. (eds) “Local clusters in Global Value Chains: linking actors and territories through manufacturing and innovation”, Routledge

•  Intesa San Paolo (2015) “Economia e Finanza dei distretti industriali” •  OSEM (2008) “Rapporto OSEM 2008 e previsioni 2009” •  UNCTAD (2013) “World Investment Report 2013. Global value chains: investment and trade

for development”

the evolution of italian industrial districts: challenges and perspectives

Economy & Finance