Resisting Organizational Inertia: The Evolution of Industrial Districts

Industrial district success in Italy is often explained as a function oftraditional, homogenous communities, where close social ties and communityinstitutions supposedly create the trust necessary for collaborativeinter-firm relationships among small firms. However, such a functionalistapproach fails to explain why some districts prosper over time bydeveloping new process and product innovations, while others stagnatebecause they fail to respond to rapidly changing markets. We argue thatgreater attention to firm networks – both those internal and external to the district – and the role of key firms represents a more usefulanalytical method for understanding the evolution and formation ofindustrial districts.

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