Can Marshall's Clusters Survive Globalization?

Giulio  Buciuni; Gary P. Pisano

Working Paper | HBS Working Paper Series | 2015

Can Marshall's Clusters Survive Globalization?

by Giulio Buciuni and Gary P. Pisano

Abstract

It is widely presumed that in today's globalized economy, the value of geographic clustering of manufacturing industries is no longer valuable. Manufacturing is represented as a highly mobile "commodity" that can be sourced from anywhere in the world where factor costs are favorable. This paper re-examines this assumption and suggests that not all manufacturing is highly mobile. We suggest that manufacturing sectors should be viewed along a continuum from highly mobile to highly "sticky." Manufacturing clusters can decline for two completely different reasons. The first is a change in technology that reduces the value of co-location (stickiness). This tends to lead to the decoupling of design and production activities and to a broad geographic diffusion of manufacturing. The second is a shift in the relative comparative advantage of clusters located in one region versus another. Under this scenario, geographic concentration is still valuable, but the center of production activity can shift from one location to another. The paper then analyzes how firm supply chain strategies impact stickiness and the survival of manufacturing clusters.

Keywords: manufacturing industry; manufacturing; globalization; Marshall Industrial Clusters; global supply chains; Manufacturing Industry;

Language: English

Format: Print

37 pages

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Citation:

Buciuni, Giulio, and Gary P. Pisano. "Can Marshall's Clusters Survive Globalization?" Harvard Business School Working Paper, No. 15-088, May 2015.

Working Paper | 2019

Long-Term Firm Growth: An Empirical Analysis of US Manufacturers 1959-2015

Giovanni Dosi, Marco Grazzi, Daniele Moschella, Gary P. Pisano and Federico Tamagni

Firm growth is an essential feature of market economies, shaping together macroeconomic performance and the evolution of industry structures. As a potential indicator of organizational “ﬁtness” within a competitive environment, ﬁrm growth is also a central concern to both the practice and theory of business strategy. Despite both its theoretical and practical importance, though, growth remains a poorly understood property of ﬁrms. While previous studies have documented the highly skewed nature of ﬁrm growth rates, we know far less about the persistence of growth rates over long-periods of time. For instance, do “fast growers” tend to maintain their relative growth rates advantages over long-periods or is superior growth a transitory phenomenon? Is, as predicted by evolutionary and capability based theories of the ﬁrm, the process of ﬁrm growth path-dependent or is it more akin to a random walk? The answers to these questions are central to building a robust theory of ﬁrm growth. This paper attempts to address this gap in our empirical knowledge of ﬁrm growth using a dataset that spans 50 years, which allows the abandonment of the assumption, common to all incumbent studies, that the stochastic paths of all ﬁrms stem from the same generating process. These exploratory results indicate that growth rate persistence is there and my be even substantial for some ﬁrms, but it is rare. We also study the links between the micro-properties of ﬁrm growth within sectors and the patterns of aggregate growth of these same sectors. Indeed, we ﬁnd circumstantial but widespread evidence that heterogeneity across ﬁrms correlates with industry dynamism.

Keywords: firm growth; Persistence; industrial dynamics; firm heterogeneity; Business Ventures; Growth and Development; Measurement and Metrics; Production; Analysis;

Citation:

Dosi, Giovanni, Marco Grazzi, Daniele Moschella, Gary P. Pisano, and Federico Tamagni. "Long-Term Firm Growth: An Empirical Analysis of US Manufacturers 1959-2015." Working Paper, May 2019. View Details

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