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Industrial districts, urban areas or both? The location behaviour of foreign and domestic firms in an Italian manufacturing region

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Abstract

The present paper aims at exploring the location behaviour of manufacturing firms, according to their ownership: domestic firms (henceforth DOMs) and inward foreign direct investments (henceforth IFDIs). This issue is empirically addressed by using data on manufacturing IFDIs and on DOMs in Veneto (north-east Italy) from the Reprint, AIDA and ISTAT databases. Veneto is an industrial district region, specialized in the Made-in-Italy sectors, hosting a central metropolitan area (Padua) and attracting a high share of IFDIs. Geo-referenced mapping and econometric analysis (counterfactual) are developed to explore the location behaviour of the two groups of firms. In line with previous work, findings show that IFDIs are more likely to be located in areas close to the main urban centres, such as the metropolitan area of Padua, to exploit the advantages of complex environments and higher connectivity. However, they also tend to locate in district areas more often than their DOMs counterfactual, suggesting the objective of acquiring a system of specialized productive knowledge and skills developed within a district ecosystem, and hardly reproducible in other contexts.

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Fig. 1

Source: authors’ elaboration on ISTAT data

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Source: authors’ elaboration

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Notes

  1. The industrial district is a socio-economic model characterized by a geographical concentration of small and medium enterprises (SMEs), specialized in specific industries with potential productive fragmentation and high-demand variability (see, among others, Becattini 1990). These SMEs are flexible and prone to a rapid adjustment to market volatility; they share social proximity (a system of institutions, codes and rules that regulates the market), which enhances firms’ cooperation and incremental innovation (Corò and Micelli 2011).

  2. For a review, see Taylor (2001).

  3. In the early 2000s, Peter J. Taylor and the GaWC research network at the University of Loughborough developed an original methodology for analysing the World City Network, which found wide approval from the scientific community. According to Taylor (2001), the world city network is identified as an unusual form of network with three levels of structure: cities as the nodes, the world economy as the supra-nodal network level, and advanced producer service firms forming a critical sub-nodal level.

  4. We consider uni-national companies those firms that have neither been acquired in the period of analysis, nor have invested abroad.

  5. According to the article 114 of the Italian Constitution and the Act no. 56 of the 7 April 2014, Italy hosts the following 14 metropolitan cities: Rome, Turin, Milan, Venice, Genoa, Bologna, Florence, Bari, Naples, Reggio Calabria, Palermo, Messina, Catania and Cagliari. Therefore, in Veneto only Venice is a metropolitan city, while Padua and Verona are classified as metropolitan areas (OECD 2018). Further information can be found at: https://www4.istat.it/it/archivio/145343 [Last accessed 22 November 2019].

  6. The Reprint database is compiled by the Politecnico di Milano and sponsored by the Italian Institute for International Trade (ICE). This dataset provides an annually updated census of both foreign affiliates of Italian firms and Italian affiliates of foreign firms (in terms of numbers of employees and sales) since 1986 (for details, see Mariotti and Mutinelli 2016).

  7. The Local Labor Systems (LLSs), defined by the Italian Statistical Institute—ISTAT, consist of several municipalities and identify geographic areas that mimic economic activity and not administrative boundaries.

  8. Varese is well known for its white goods production and is home to important IFDIs such as Philips and Whirlpool.

  9. Further information (available in Italian language) can be found at: https://www.istat.it/it/archivio/150320 [Last accessed 22 March 2019].

  10. Further details on the classification of manufacturing industries can be found at https://www.oecd.org/sti/ind/48350231.pdf [Last accessed 22 March 2019].

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Authors and Affiliations

  1. DAStU-Politecnico di Milano, Piazza L. da Vinci 32, 20133, Milan, Italy

    Ilaria Mariotti & Stefano Saloriani

  2. University of Bath, Claverton Down, Bath, BA2 7AY, UK

    Mariachiara Barzotto

  3. Department of Economics, Ca’ Foscari University of Venice, Venice, Italy

    Giancarlo Corò

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  1. Ilaria Mariotti
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  2. Mariachiara Barzotto
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Correspondence to Ilaria Mariotti.

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Mariotti, I., Barzotto, M., Corò, G. et al. Industrial districts, urban areas or both? The location behaviour of foreign and domestic firms in an Italian manufacturing region. Ann Reg Sci 64, 523–546 (2020). https://doi.org/10.1007/s00168-020-00990-8

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