Efficiency and Localisation: the Case of Italian Districts

Abstract

Despite the large interest devoted by the literature to the role of industrial districts (IDs) in the Italian economy, the factors underlying the successful performance of firms which are part of IDs are scarcely analysed from an empirical point of view. This paper presents a quantitative comparison between the performance, in terms of profitability and technical efficiency, of ID and isolated firms. The measurement of technical efficiency, based on statistical parametric methods, allows to assess whether the “success” of ID firms is due to factors related to a more efficient use of inputs and technologies or to causes that are external to the structure of the organisation. The analysis, based on the balance sheets of a panel of small and medium sized manufacturing firms drawn from the Centrale dei Bilanci database, covers the whole manufacturing sector and, as far as the availability of data allows, all Italian IDs. The identification of IDs utilises the procedure developed by Sforzi (1990) and Istat (1996), based on the sub-provincial aggregation of areas in the so-called “local labour systems”.KeyworkTechnical efficencyIndustrial Districts