Industrial and knowledge relocation strategies under the challenges of globalization and digitalization: the move of small and medium enterprises among territorial systems

Abstract

Owing to globalization and digitalization, small and medium firms adopt relocation strategies to transfer their activities (and implicitly also knowledge) among territorial systems, inducing transformations into both source and destination areas. Cognitive proximity and knowledge creation/transfer play a crucial role, especially critical when concerning tacit knowledge, which can be transferred only by moving people. In each industrial cluster or industrial district it is possible to identify a kernel of critical activities, which requests complex competencies and has high added value, and a kernel of tacit knowledge, which is based on repeated face-to-face interactions. The former resists globalization and the latter prevents digitalization, which impacts heavily on territorial systems lacking trust, cooperative attitude, and other socio-cognitive factors. Relocation strategies are divided into selective and replicative alternatives, depending on the ability to preserve large kernels. When replicative strategies are followed by many firms, the socio-cognitive integrity and the economic competitiveness of the territorial system are severely damaged. Thus, in order to prevent the ruinous consequences of massive replicative relocation, local and regional governments should steer territorial systems towards selective relocation strategies supporting innovation and improving human capital, paying attention and developing socio-cognitive factors too. In the final part of the paper, case studies of industrial and knowledge relocation at intra-European level are discussed, and a general model is proposed.

Keywords:

• digitalization
• globalization
• industrial relocation
• knowledge transfer
• tacit knowledge
• territorial systems

Acknowledgments

The author wishes to thank Bengt Johannisson Alessia Sammarra for their valuable comments.

Notes

Notes

1.  The label ‘territorial system’ (Giner and Santa Maria 2002, Morgan 2004) is one of the generic ones, like local production systems (Crouch et al. 2001), which can be created to refer to economic activities at sub-national levels. An albeit incomplete list of TS categories would include regional innovation systems, local production systems, industrial clusters, industrial districts, metropolitan areas, urban districts, rural districts, milieu innovator, local systems, etc. Since it is not an objective of this paper to survey the different approaches, here it is sufficient to refer to current literature (Markusen 1996, Moehring 2005, Belussi 2006) and, when useful, to specify a specific type of territorial system, such as industrial cluster or industrial district.

2.  EU contract no. HPSE-CT2001-00098. Some more insights on WEID structure and materials can be found at http://www.west-east-id.net.