On Promoting Regional Economic Growth in Industrial Peripheries. Hyper-Footloose Business Services - The case of Swedish teleworkers in Spain

Abstract

One of the most spectacular phenomena of the spatial organization of the industrial firm in the 1990s has been the rapid change of the staff functions surrounding manufacturing. After having been located in close contact with physical production, and organized as a wholly-integrated and completely internalized part of the business, these functions have during the last decade tended to become outsourced activities. There are several key factors behind this development. One crucial element has been the visualization of the revealed overhead costs in the manufacturing enterprise. Cost-chasing has highlighted the costs of labour-intensive administration and general management, whose contribution to manufacturing value-added is more subtle than pure manufacturing. The extremely high taxation of labour compared to capital has, in some European countries, further contributed to cutting off staff within activities such as secretarial services, security, invoicing, factoring, computer maintenance etc. Outsourcing of these activities and the creation of an independent business services sector has thus been a means to implement better cost-control, as seen from the manufacturer’s point of view. The second crucial factor that has made outsourcing possible has been the development of information technology. In this study we focus especially on outsourcing of those branches of business services, that, to a limited extent only, are dependent on frequent physical proximity between principal and sub-contractor, i.e. management consulting and software computer programming development. The field work has been carried out in the tourist resorts along the Spanish coastline, where, during recent years, a rapid growth of small enterprises, depending on cooperation with remote clients, has taken place. There has been a natural stepwise process from visiting an area as a tourist, through purchasing an apartment for semi-permanent living, to the establishment of a new company operating together with former clients in the home country. Our pre-understanding of this phenomenon was the observation that Swedish entrepreneurs, having grown up in the European periphery, in a country characterized by a large number of internationally active industrial companies, high taxation of personal income, as well as a harsh winter climate, have been forerunners in this development, and that the experiences from this relatively limited group may well spread to larger northern European countries such as U.K. and Germany. This example may thus be a starting-point in order to assess and to evaluate regional competitive advantages in promoting economic growth within a wider variety of factors than has hitherto been the case.