National labels and the competitiveness of European industries: the example of the ‘Swiss Made’ law since 1950

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ABSTRACTThis article discusses the impact of country-of-origin labels on the global competitiveness of European industries during the second half of the twentieth century. It considers ‘made-in’ labels as institutional innovations and demonstrates their role in maintaining manufacturing activities in high-wage economies. To facilitate a more detailed inquiry into the topic, the paper uses a case study of the Swiss watch industry. Swiss watch companies began facing growing competition from American and Japanese firms, which had implemented mass-production methods and started relocating low value-added activities to East Asia, in the 1950s. In Switzerland, the issue was to keep the reputation of Swiss watches intact, foregrounding the high precision of the devices, and cutting production costs at the same time. Consequently, in 1971 the federal government adopted an ordinance that allowed watch companies to use the ‘Swiss’ name on their products as long as they kept certain activities in Switzerland. Due to the advent of electronic watches, however, the new provision could not safeguard the Swiss watch industry from a severe crisis between 1975 and 1985. Policymakers updated the ‘Swiss Made’ law and it was renewed in the early 1990s within a shifting context, one in which the Swiss watch industry repositioned itself toward luxury. The law became a powerful tool for regulating the luxury-watch industry. Through the example of the Swiss watch industry, the article emphasizes that understanding the impact of country-of-origin labels requires an examination of the broader context of innovation in specific industries.