Globalization, Recession and the Internationalization of Industrial Districts: Experiences from the Italian Gold Jewellery Industry

Abstract

Globalization and the recent recession crisis are significantly challenging Italian industrial districts (IDs), leading to deep transformations in their internationalization, innovation and organization strategies. With our empirical focus on a single industry (gold jewellery) and a specific country (Italy) and through the theoretical lenses of the global value chain (GVC) approach, the evidence in this article sheds light on the differences in how three IDs within Italy's gold jewellery sector (Valenza Po, Arezzo and Vicenza) compete in the global arena. Our comparative analysis reveals striking differences among these districts with regard to their upstream and downstream internationalization strategies in response to two industry shocks: increasing global competition in the early 2000s and the world economic recession of 2008–2009. Our explanation for the varied gold jewellery district responses to these two global crises involves both internal and external factors: (1) structural differences between the three IDs; (2) distinct business strategies; and (3) how these districts are linked to the gold jewellery GVC.

Acknowledgments

The authors would like to thank Giancarlo Corò, Luca Garavaglia, Roberto Grandinetti and the seminar participants at the University of Padova and at the 15th McGill International Entrepreneurship Conference for valuable suggestions to earlier versions of this article. The support of Roberto Antonietti and Antonio Parbonetti on methodology was highly appreciated. The shortcomings of the article are our responsibility alone.

Notes

1. Cluster firms may engage in product upgrading, in process upgrading, functional upgrading by moving into new stages in the supply chain, or chain upgrading by diversifying into related industries (Humphrey & Schmitz, 2002).

2. According to ISTAT data, in 2010 jewellery accounted for 9.2% of the exports of those industries.

3. Export and import data are in values and refer to the ATECO industry code 32.1 that includes not only jewellery made of precious metals, but also precious stones, custom jewellery and mix-and-match jewellery that is currently very popular. Because of data limitations, we used the province as a proxy for districts; the fact that jewellery production is very concentrated in a restricted geographical area reduces considerably the possible bias emerging from the use of such a proxy.

4. The analysis reported uses the same industry code as the analysis of export dynamics, ATECO code 32.1, because “foreign outsourcing represents the transfer overseas of production activities that could have been done” by companies in Italy (Feenstra & Hanson, 1999). The industry code may also include imports of final products to be sold on the market. In the absence of data directly measuring how much of these imported goods are for final markets and how much are inputs for jewellery producers, we estimated the import for production (second column of Table 5) by subtracting the total provincial consumption of jewellery—estimated using data on the ISTAT consumption survey—from total imports at the provincial level (first column). The precise procedure is available upon request. While this proxy assumes that jewellery consumption is self-contained within the province and does not consider jewellery consumption by people from outside the province, such as tourists, these two effects have an opposite sign and may offset each other, and we think this proxy may be reliable for longitudinal analyses.

5. One can not rule out the possibility that these imports from developed countries are actually just an intermediate import from the developing countries that were serving the Arezzo market during the previous years. However, the fact that more than one European country became so important for Arezzo firms reinforces the consistency of our interpretation of this data as a change in the import attitude of the district's firms.

6. It may still be too early to assess the full effects of the recession on IDs, or whether and how it has changed the structure of IDs and the way ID firms operate, since the recession is not yet at an end.