Abstract
Liabilities affect a firm’s competitiveness. Currently, firms face increasingly fierce competition as they operate in a period of deep financial and economic recession. The industrial districts in developed countries are experiencing profound transformations because of globalization and because of competition from developing countries and local immigrant firms. This chapter examines the liabilities faced by the firms in Prato’s industrial district, by analyzing the failure rates of Italian and Chinese firms. This chapter aims to contextualize the concept of liabilities in the organizational ecology theory, to propose a quantitative approach to their investigation. The chapter contributes to existing studies by considering the different liabilities a firm has to overcome to survive in an organizational population. We adopt an organizational ecology approach to study multi-population failures in Prato’s industrial district in the period 1990–2012. We construct a model of the failures of Chinese and Italian firms to investigate their evolution across time. The results emphasize the importance of the position that firms hold in strategic networks, particularly at international levels (global value chains). The firms’ strategic position is important against the background of the production and the social relations in the industrial district.
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Notes
- 1.
One criticism is that the theory takes no account of firm size, whereas large and small firms clearly have very different effects in a population. A second criticism is that the theory fails to explain negative growth rates and the negative slope of the density curve beyond the peak. A third criticism is that firms differ with respect not only to size and economic activity, but also to geographical location (spatial heterogeneity) (Van Wissen 2004).
- 2.
The statistical classification codes for economic activities in the European Union (EU).
- 3.
Notwithstanding that registration and cancellation from the REA is required by law, several authors say that Chinese firms do not always respect administrative obligations (Ceccagno 2012; Pieraccini 2008). This phenomenon is partly analysed by IRPET (2013) that estimates the relevance of the informal economy of Chinese firms in Prato’s industrial district.
- 4.
The failure numbers may be over-estimated because the REA registers firm transformations first with a failure and then with a new constitution.
- 5.
In 2006, a decrease in this percentage seems to occur (70%) because of the aging of some mature and competitive firms. However, subsequently, this percentage starts increasing again (80%) (perhaps because of the 2008 crisis).
- 6.
As data on employment per firm are not available, we used the legal forms for small and large firms as proxies, respectively, individual firms/partnerships and capital-based firms.
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Lazzeretti, L., Capone, F. (2017). Liabilities in Prato’s Industrial District: An Analysis of Italian and Chinese Firm Failures. In: Guercini, S., Dei Ottati, G., Baldassar, L., Johanson, G. (eds) Native and Immigrant Entrepreneurship . Springer, Cham. https://doi.org/10.1007/978-3-319-44111-5_9
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