Firm Size and Regional Linkages: A Typology of Manufacturing Establishments in Southern Spain

Abstract

Romero I. and Santos F. J. (2007) Firm size and regional linkages: a typology of manufacturing establishments in southern Spain, Regional Studies 41, 571–584. Regions with different levels of development are characterized by different enterprise compositions according to firm size and regional productive linkages. Using these two variables and two additional ones – the technological level and the position in the value chain – the composition of the industrial sector in any region can be studied. In this respect, a new theoretical enterprise typology is proposed in this paper as a powerful analytical tool. Furthermore, empirical work is carried out using a data set from the survey done to estimate the regional input–output table of Andalusia, a backward region in southern Spain. Thus, the theoretical enterprise typology is applied to the industry in Andalusia, so that some strengths and weaknesses of the regional economy are identified.

Romero I. et Santos F. J. (2007) La taille de l'entreprise et les maillons régionaux: une typologie des établissements industriels dans le sud de l'Espagne, Regional Studies 41, 571–584. Les régions qui se différencient en fonction de leur niveau de développement se caractérisent par un parc d'entreprises qui se distingue selon la taille des entreprises et les maillons productifs régionaux. En se servant de ces deux variables, conjointement avec deux autres variables - à savoir, le niveau technologique et le positionnement dans la chaîne de valeur - on peut étudier la structure du secteur industriel dans n'importe quelle région. A cet égard, on cherche à proposer une nouvelle typologie théorique de l'entreprise comme outil analytique puissant. Qui plus est, on conduit une étude empirique à partir d'un ensemble de données qui proviennent d'une enquête menée afin d'estimer un tableau d'échanges inter-industriels pour l'Andalousie, une région en perte de vitesse située dans le sud de l'Espagne. La nouvelle typologie théorique de l'entreprise se voit appliquer à l'industrie andalouse, de sorte que l'on identifie quelques-unes des forces et des faiblesses de l'économie régionale.

Echanges inter-industriels; Maillons en amont et en aval; Taille de l'entreprise; Pme Grandes entreprises; Micro-entreprises

Romero I. und Santos F. J. (2007) Firmengröße und regionale Verbindungen: eine Typologie der produzierenden Betriebe Südspaniens, Regional Studies 41, 571–584. Regionen mit unterschiedlichem Beschäftigungsniveau zeichnen sich durch unterschiedliche Betriebsstrukturen aus, was die Firmengröße und die regionalen produktiven Verbindungen anbelangt. Mit Hilfe dieser beiden Variablen und zwei weiterer – des technologischen Niveaus und der Position in der Wertschöpfungskette – lässt sich die Zusammensetzung des Industriesektors jeder Region studieren. In diesem Zusammenhang wird in diesem Aufsatz eine neue theoretische Betriebstypologie als leistungsfähiges Analysewerkzeug vorgeschlagen. Außerdem wird empirische Arbeit mit Hilfe eines Datensatzes aus einer Erhebung zur Schätzung der regionalen Input–output-Tabelle von Andalusien, einer rückständigen Region in Südspanien, durchgeführt. Auf diese Weise wird die theoretische Betriebstypologie auf die Industrie von Andalusien angewandt, um verschiedene Stärken und Schwächen der regionalen Wirtschaft zu identifizieren.

Input–output; Vorwärts- und Rückwärtsverbindungen; Betriebsgröße; Kleine und mittelständische Betriebe; Großbetriebe Mikrobetriebe

Romero I. y Santos F. J. (2007) Tamaño empresarial y encadenamientos regionales: una tipología de instalaciones de producción en el sur de España, Regional Studies 41, 571–584. Las regiones con diferentes niveles de desarrollo se caracterizan por tener distintas estructuras empresariales de acuerdo con el tamaño de la empresa y los vínculos regionales de producción. Mediante estas dos variables y otras dos adicionales –el nivel tecnológico y la posición en la cadena de valor–, es posible analizar la composición del sector industrial en cualquier región. A este respecto, en este ensayo proponemos una nueva tipología empresarial de carácter teórico como influyente herramienta analítica. Asimismo llevamos a cabo un trabajo empírico con ayuda de una serie de datos obtenidos a partir de la encuesta realizada para estimar las tablas input–output de a una región atrasada como es Andalucía. De este modo aplicamos la tipología empresarial de carácter teórico a la industria en Andalucía para poder identificar cuáles son los puntos fuertes y débiles de su economía regional.

Input–output; Vínculos hacia delante o atrás; Tamaño empresarial; Pymes; Empresas grandes; Microempresas

Keywords:

• Input–output
• Forward and backward linkages
• Firm size
• Small and medium-sized enterprises
• Large enterprises
• Microenterprises

Acknowledgements

The authors are sincerely grateful to Erik Dietzenbacher and the anonymous referees for their helpful comments. Special thanks as well to the Institute of Statistics of Andalusia for supplying the data used in this study.

Notes

1. Parr et al. (2002) refer to these agglomeration economies derived from productive linkages as ‘activity-complex economies’.

2. The integration of large firms and SMEs within the territory and the performance of industrial clusters are conditioned not only by the presence of regional linkages, but also by the relationship with local and regional governments, households and other private agents. Nevertheless, this paper, for the sake of simplicity, will focus on the productive linkages without considering some other relevant economic and social aspects.

3. The position of the SMEs above and on the right with regard to large firms in Fig. 1 is in line with the widespread hypothesis about the relationship between firm size and the strength of regional linkages discussed above. These assumptions have also been tested from the data employing an analysis of variance (ANOVA) from the two indicators of regional linkages which will be introduced in the next section. In this way, it has been checked that the higher the size of establishments is, the lower the proportion of regional intermediate inputs in the total intermediate purchases is. Furthermore, the higher the size of establishments is, the lower the proportion of regional production sold in the regional market is (see Table 5). The ANOVA showed that these differences in the spatial patterns of supply and sales are statistically significant.

4. The Andalusian Statistical Institute determined the size-groups, choosing this low threshold – 50 employees – for the largest establishments to avoid revealing confidential information. In some industrial branches in Andalusia there are only a few industrial large plants; hence, if the data for large establishments referred to plants with, for instance, more than 250 employees, you could guess from which firm the data came. Therefore, it was not possible to follow the standard of the Observatory of European SMEs 2002, which defines large firms as enterprises with 250 employees or more, the SMEs as those having between 10 and 250 employees, and microenterprises as firms with less than 10 employees.

5. The reason is that in the survey made to estimate the table, firms were not asked about the firm size of their clients and suppliers. Thus, it is not known which part of the production of each size-group in each sector is purchased by each size-group in each sector.

6. Throughout this paper, the import and export terms refer to purchase and sales outside the region, including the interregional trade within a national economy.

7. This index is believed to be more suitable in this case than alternative ones, such as the inputs coefficient proposed by Chenery-Watanabe (1958). The main advantage of the RS ratio consists in its independence from the proportion of intermediate inputs or primary factors in the value of production, which do affect the value of the Chenery-Watanabe inputs coefficient.

8. This indicator focuses on what occurs within the regional market. It was decided to exclude the exported production since it is not possible to distinguish if its destination is final demand (consumption and investment) or intermediate demand by other productive activities

9. In this paper, the terms firm and establishment are both used for simplicity without making any distinction. However, it is convenient to take into account that data are used for establishments, not for firms – which can have more than one establishment.

10. From now on, the focus will be on the results for SMEs and large firms because of their greater macroeconomic importance.