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.

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Can Marshall's Clusters Survive Globalization?

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