Prof. Giacomo Becattini - intervention in Glasgow 2000 on industrial districts
Outline of the intervention made by Prof. Becattini in the framework of The Competitiveness Institute's 3rd Annual Conference in Glasgow, 5 October 2000
1.1 Definition
Industrial districts or territorial clusters are territorial concentrations, in a quite circumscribed area, of firms, for the vast majority of small and medium size, which produce goods or services functionally linked to a main production activity, embedded in the social life of a certain locality or a network of localities.
1.2. The origins
Situations of this kind are not new: already at the beginning of the nineteenth century, but also earlier on, in England, for example, but also in the continent, it was possible to count numerous industrial districts like Lancashire for textiles, Sheffield for steel making, etc. It was their resilience and prosperity, which moved Alfred Marshall to apply economic analysis to these productive realities. He came to the conclusion, already at the beginning of the seventies, that the way of treating productive efficiency in contemporary handbooks, stressing heavily on the internal economies of firms, admitted some important exceptions. Industrial districts were one of those.
1.3. Allyn Young
Nearly 60 years after, Allyn Young, concluded, in a famous article (increasing returns and economic progress, Economic Journal, 1928), that the expansion of the productive universe, pulsing heart of the social universe, implies, along his course, a continuous change of functional relations amongst different industrial branches and a continuous re-dislocation of productive units on the territory.
1.4. Natural Unit
What is the natural unit of this evolutionary process? It is not the mere industrial sector, nor the mere locality, but a cluster of productive and sociocultural processes, held together by relations of a technological and socio-cultural type, which changes quantitatively and qualitatively in itself and in its interrelations with other units.
1.5. Industrial district and territorial cluster
If the accent is placed on the dynamic integration amongst productive units, the elementary unit of that process of expansion comes in the form of Michael Porter’s cluster, if the accent is on the integration of the complex local society-productive apparatus, we get to the industrial district.
1.6. Convergence of investigations
It is meaningful that we arrived to the same concept, a cluster of interconnected and localised activities, walking along two totally different paths: Porter went up the analysis of firm strategies and the study of competitive advantages in the world market, Italians districtualists moved through studies of the peculiarity of the organisational forms taken by industrialisation in certain regions of central Italy (Tuscany, Emilia Romagna and Marche). What has favoured the convergence of the two streams has been, on one side, the finding of an ‘odd’ commercial success, on world-wide markets, of small firms, as it emerged from the researches of the Italian district scholars, and on the other side the verification of a ‘puzzling’ connection between competitive advantages and territorial concentration of certain productions, emerging from the comparative analysis, carried out by Porter, of industrial and commercial development across different countries.
1.7. District and/or cluster
These results from field research, indicated the likely presence of an unexpected ‘organisational formula’ rooted in the territory, making populations of SMEs - which according to mainstream economics had few or no chances of development - competitive against large firms in the production and trade of certain types of goods.
Then, both clusters and district scholars, point out towards a common conclusion: industrial evolution has to be thought of, essentially, as the formation, growth and dissipation of clusters and systems of clusters.
1.8. Different stress on consensus and competition
It might prove a worthy exercise to underline some of the differences between the two concepts. ‘Districtualists’ stress, as the basis of competitive success, the reproduction of a high level of social consensus amongst the essential social parts of a district, taking for granted the competitive atmosphere of the district; clusterists rather concentrate on the reproduction of a competitive atmosphere amongst cluster firms, taking for granted the congruency of socio-cultural relations of local systems.
1.9. Cooperation and competition
Whilst cluster ethics, considering, substantially, cooperation phenomena as means to improve competition, can be placed within the competitiveness approach, district ethics, maybe also because of a peculiarity of its own – which is nonetheless coherent with the Italian cultural context, in turn very different from the American one – tends to assign a positive value, distinctly from its effects on competitiveness, to the cooperative behaviour so typical of industrial districts.
1.10 Ideological relevance, scarce practical importance, of differences
These differences, that do have a certain meaningfulness from the point of view of social philosophy, are scarcely relevant from the point of view of industrial evolution analysis.
2.1. Flexible integration
The fundamental trait of territorial clusters and industrial districts is that they are structured in such a way as to better adapt themselves, compared to the rest of the economy, to changes in commercial and socio-cultural contexts. They are in fact, areas of coordination of refined specialisations that preserve, thanks to their organisational formula – flexible integration – a high versatility. Their relatively high, practical, resistance to real change is based on the fact that they accomplish an efficient compromise between pushes towards specialisation and towards integration, and between the competitive and the cooperative pushes, which reach them through the turbillon of socio-economic evolution.
2.2. Implications for socio-economic research
Research should be aimed at revealing the presence of territorial clusters or districts, reading the real economy of each country as a system of, more or less complete and mature, local production systems, each being a ‘focus’ for development. Economic marginality does not derive from the size of the single firm, considered in itself, but from the weakness of its grip on an expanding cluster.
2.3. Implications for education and training
We need an educational system that develops versatility without diminishing specialisation. A techno-scientific education of far reaching philosophical depth, this is what we need!
2.4. ‘Light’ industrial policies
Maximum attention not to spoil, with invasive industrial policies, the plasticity of existing clusters, risking of lessening their ability to redefine themselves in relation to change.
2.5. Promoting synergies amongst territorial clusters
Once identified territorial clusters, and once focused on their relative dynamic-evolutionary interdependencies, a policy that makes good use of existing synergies and favours the creation of new ones.
2.6.A light, complex and complete policy
A policy that supports, develops and rationalises the spontaneous adaptations that tend to occur inside those local systems and among them. Each rigid plan conceived in abstract and without a real knowledge at cluster level (internally and among them) is certainly counterproductive.
Industrial districts or territorial clusters are territorial concentrations, in a quite circumscribed area, of firms, for the vast majority of small and medium size, which produce goods or services functionally linked to a main production activity, embedded in the social life of a certain locality or a network of localities.
1.2. The origins
Situations of this kind are not new: already at the beginning of the nineteenth century, but also earlier on, in England, for example, but also in the continent, it was possible to count numerous industrial districts like Lancashire for textiles, Sheffield for steel making, etc. It was their resilience and prosperity, which moved Alfred Marshall to apply economic analysis to these productive realities. He came to the conclusion, already at the beginning of the seventies, that the way of treating productive efficiency in contemporary handbooks, stressing heavily on the internal economies of firms, admitted some important exceptions. Industrial districts were one of those.
1.3. Allyn Young
Nearly 60 years after, Allyn Young, concluded, in a famous article (increasing returns and economic progress, Economic Journal, 1928), that the expansion of the productive universe, pulsing heart of the social universe, implies, along his course, a continuous change of functional relations amongst different industrial branches and a continuous re-dislocation of productive units on the territory.
1.4. Natural Unit
What is the natural unit of this evolutionary process? It is not the mere industrial sector, nor the mere locality, but a cluster of productive and sociocultural processes, held together by relations of a technological and socio-cultural type, which changes quantitatively and qualitatively in itself and in its interrelations with other units.
1.5. Industrial district and territorial cluster
If the accent is placed on the dynamic integration amongst productive units, the elementary unit of that process of expansion comes in the form of Michael Porter’s cluster, if the accent is on the integration of the complex local society-productive apparatus, we get to the industrial district.
1.6. Convergence of investigations
It is meaningful that we arrived to the same concept, a cluster of interconnected and localised activities, walking along two totally different paths: Porter went up the analysis of firm strategies and the study of competitive advantages in the world market, Italians districtualists moved through studies of the peculiarity of the organisational forms taken by industrialisation in certain regions of central Italy (Tuscany, Emilia Romagna and Marche). What has favoured the convergence of the two streams has been, on one side, the finding of an ‘odd’ commercial success, on world-wide markets, of small firms, as it emerged from the researches of the Italian district scholars, and on the other side the verification of a ‘puzzling’ connection between competitive advantages and territorial concentration of certain productions, emerging from the comparative analysis, carried out by Porter, of industrial and commercial development across different countries.
1.7. District and/or cluster
These results from field research, indicated the likely presence of an unexpected ‘organisational formula’ rooted in the territory, making populations of SMEs - which according to mainstream economics had few or no chances of development - competitive against large firms in the production and trade of certain types of goods.
Then, both clusters and district scholars, point out towards a common conclusion: industrial evolution has to be thought of, essentially, as the formation, growth and dissipation of clusters and systems of clusters.
1.8. Different stress on consensus and competition
It might prove a worthy exercise to underline some of the differences between the two concepts. ‘Districtualists’ stress, as the basis of competitive success, the reproduction of a high level of social consensus amongst the essential social parts of a district, taking for granted the competitive atmosphere of the district; clusterists rather concentrate on the reproduction of a competitive atmosphere amongst cluster firms, taking for granted the congruency of socio-cultural relations of local systems.
1.9. Cooperation and competition
Whilst cluster ethics, considering, substantially, cooperation phenomena as means to improve competition, can be placed within the competitiveness approach, district ethics, maybe also because of a peculiarity of its own – which is nonetheless coherent with the Italian cultural context, in turn very different from the American one – tends to assign a positive value, distinctly from its effects on competitiveness, to the cooperative behaviour so typical of industrial districts.
1.10 Ideological relevance, scarce practical importance, of differences
These differences, that do have a certain meaningfulness from the point of view of social philosophy, are scarcely relevant from the point of view of industrial evolution analysis.
2.1. Flexible integration
The fundamental trait of territorial clusters and industrial districts is that they are structured in such a way as to better adapt themselves, compared to the rest of the economy, to changes in commercial and socio-cultural contexts. They are in fact, areas of coordination of refined specialisations that preserve, thanks to their organisational formula – flexible integration – a high versatility. Their relatively high, practical, resistance to real change is based on the fact that they accomplish an efficient compromise between pushes towards specialisation and towards integration, and between the competitive and the cooperative pushes, which reach them through the turbillon of socio-economic evolution.
2.2. Implications for socio-economic research
Research should be aimed at revealing the presence of territorial clusters or districts, reading the real economy of each country as a system of, more or less complete and mature, local production systems, each being a ‘focus’ for development. Economic marginality does not derive from the size of the single firm, considered in itself, but from the weakness of its grip on an expanding cluster.
2.3. Implications for education and training
We need an educational system that develops versatility without diminishing specialisation. A techno-scientific education of far reaching philosophical depth, this is what we need!
2.4. ‘Light’ industrial policies
Maximum attention not to spoil, with invasive industrial policies, the plasticity of existing clusters, risking of lessening their ability to redefine themselves in relation to change.
2.5. Promoting synergies amongst territorial clusters
Once identified territorial clusters, and once focused on their relative dynamic-evolutionary interdependencies, a policy that makes good use of existing synergies and favours the creation of new ones.
2.6.A light, complex and complete policy
A policy that supports, develops and rationalises the spontaneous adaptations that tend to occur inside those local systems and among them. Each rigid plan conceived in abstract and without a real knowledge at cluster level (internally and among them) is certainly counterproductive.
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