Beyond flexible specialization: the rearrangement of regional production orders in Emilia‐Romagna and Baden‐Württemberg

Abstract

Emilia‐Romagna and Baden‐Württemberg are two highly successful industrial regions. Their economic success is based on a specific industrial and institutional order, on regionally concentrated production network based mainly on small and medium enterprises and on ‘cooperation enhancing’ institutions. This regional production order was the basis for strategies of flexible specialization’. The fundamental restructuring of mass production concepts as well as harsher worldwide competition over innovation and costs, however, undermined previous advantages of these regions. Emilia‐Romagna and Baden‐Württemburg handle these new challenges in different ways: while Baden‐Württemberg counts on technology‐ and research‐based restructuring, Emilia‐Romagna's restructuring is service‐based—increasing the demand for new production‐related services (quality control, financial services, marketing). These different patterns of reorganization and institutional learning point out institutional and industrial differences between the two regions undervalued in the concept of ‘flexible specialization’.