The transformation of the Prato industrial district: an organisational ecology analysis of the co-evolution of Italian and Chinese firms

Abstract

This work analyses and measures the transformation of the industrial district of Prato in the last two decades, adopting the density dependence model of Organisational Ecology. The paper has two primary research aims: (i) to investigate the recent transformation of the Prato industrial district through the foundings and failure flows of its firms’ populations, and (ii) to examine the co-evolution and reciprocal influences between the populations of the district’s Italian and Chinese firms. Through an in-depth study of the foundings and failures that have occurred in Chinese and Italian textile and clothing firms over the last two decades, this study develops analysis of demographic and organisational ecology, and investigates the processes of legitimation and competition. The results of the study indicate that the district’s Italian and Chinese firms experienced two distinct evolutionary phases during the research period: while the former declined, the latter saw development in spite of recent economic crises. The analyses also demonstrate how the evolution of Italian and Chinese populations moved in opposite directions: as the first failed, the second saw increases in the number of its foundings. This indicates the presence of a substitution effect between each firms’ population at the district level.