Small Firms and Industrial Districts

Abstract

Industrial districts (IDs) are dense centres of life and work, characterised by one or a few related localised industries tightly intertwined with the local society and the local institutional setup (Becattini et al., 2009). The agglomeration of firms, and thereby industries, in specific places when it coincides with the concentration and integration of related specialisations, may generate positive external economies. The persistent variety of localised industries illustrates the widespread importance of such advantages over times and across places. Nevertheless, the same variety suggests that the “agglomeration of firms” is not a sufficient condition to guarantee sustainable beneficial effects. Instead, it requires complex mechanism that involves a broad set of local public and private agents. IDs illustrate, in general terms, that sustainable competitive strengths and collective advantages are associated with the overlap of an industrial agglomeration with a local society. In particular, this overlap has an autonomous meaning when local social-cultural and institutional relations exceed the possibility of control by a few powerful economic agents, and ensure an aggregate stability and a sense of identity. Drawing on their localised strengths, IDs are adapting to confront the open space of the current global networks. This mechanism is exemplified at best by IDs which are characterised by the evolving populations of locally embedded small-sized firms together with a local society. In line with this, we would argue that IDs thrive on small firms, namely they grow thanks to the dynamism and interaction of small firms.