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PISANO & BUCIUNI: s.Why Hasn't Globalization Killed Manufacturing Clusters? - Cheaper Economies, Forbes

Why Hasn't Globalization Killed Manufacturing Clusters? - Forbes:

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Why Hasn't Globalization Killed Manufacturing Clusters?

Leading research and ideas from Harvard Business School faculty.

By Roberta Holland
Globalization hasn’t made manufacturing clusters obsolete, but the geographically concentrated pockets of industry have to be smart to ensure their survival, according to new research from Harvard Business School.
Gary P. Pisano, the Harry E. Figgie, Jr. Professor of Business Administration at HBS, and researcher Giulio Buciuni, of the University of Venice Ca’ Foscari, address the question of when clusters survive and when they fail in their May 2015 working paper, “Can Marshall’s Clusters Survive Globalization?
Pisano and Buciuni looked to four industrial clusters in northeastern Italy for their answer. Italy “
is a great laboratory because it’s been historically organized around these very specific districts all over the country. Every area is associated with a particular industry,” Pisano says.

Clusters are not a new concept, notably studied in the United Kingdom by Alfred Marshall—he called them industrial districts—in the early 1900s. Manufacturing clusters can seemingly happen in any industry in any location, from wine-making in Northern California to auto-making in Detroit. Clusters typically build up around a geographic location where natural resources, an appropriately educated labor force and a university or other research institution co-mingle.
In recent years, some economists have argued that manufacturing clusters are dying out because geographic location is less important to business success. In today’s global markets, companies have many choices to procure what they need to develop, build and sell product

'via Blog this' Pisano and Buciuni wanted to test the theory of the dying cluster. “I think people in general think well, there’s globalization so there’s no need for clusters,” Pisano says. “What we came to is it really depends. It’s not all or one.” The four clusters used in the field study had differing fates. Two—sports shoes and wooden chairs—declined while the other two—high-end women’s shoes and furniture—not only survived but thrived. The two shoe clusters studied are physically only 50 kilometers apart, but worlds apart in their success. The sports shoe cluster in Montebelluna dates back to the 1800s when local artisans began making hiking boots. The cluster later expanded into ski boots and sneakers, and drew investments from major brands like Nordica and Nike. Lead firms started offshoring production to cheaper economies like Romania and China, separating the R&D from production, which was high volume and mostly unskilled. They created molds for soles and other components that then could be shipped elsewhere for production. As a result, the local workforce dropped by 15% between 2006 and 2012. “What happens in some contexts is that you no longer have to be close to the sources of production. That happened with the ski boots. Once you’ve made the mold, that boot can be produced anywhere in the world,” Pisano says. The women’s shoe cluster also sprouted in the 1800s, when leather shoe production began in Riviera del Brenta. That cluster maintained production locally while also investing in R&D and engineering. The region is now producing an estimated 90% of women’s luxury shoes that sell for $500 or more per pair. Page 1 / 3 Continue Comment on this story Print Report Corrections Reprints & Permissions

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