Re-­shaping the industrial economic organization: Empirical analysis on the ceramic tile industry

Abstract

Over the past ten years Italian firms belonging to the ceramic tile cluster in Sassuolo have experienced a sound decrease in sales and worldwide export shares. This paper examines whether embeddednesss influence firms’ economic performance, R&D intensity and firms’ propensity to internationalize, as well as the relation between local linkages and firms’ age. Findings show that location in a cluster is positively related to economic growth. Contrary to the previous literature local embeddedness does not increase with firms’ age. The level of local integration seems to have a clear influence on the incidence of firms` R&D intensity. The research has also shown that districts’ firms have stronger network ties among each other than do firms located outside the district. The same applies for firms under the same ownership; however the single firm maintains strong linkages primarily with local clients and local suppliers. More, embeddedness does not limit firms’ internationalization. Findings show that firms pursued five similar strategies in order to counteract low-cost competition from emerging countries such as China. Finally, the results have shown that entrepreneurship and the formation of new firms play a critical role in the development and upgrade of the industrial district, as they are a main source of innovation and entrepreneurial spirit.