The innovative network and its key variable: the trust.
                   The distretto of Mirandola as Italian experienc...
These characteristics represent advantages both for firms and areas where they are situated in terms
of competitiveness an...
Mirandola as an Italian experience

Innovative networks can be originated from different causes. An interesting case is t...
especially for the small ones, since they do not have the same chances to raise a funds in
comparison with firms belonging...

Arora Gambardella (2004) The Globalization of the Software Industry: Perspectives and
Opportunities for Dev...
Teece , Pisano G., Shuen A. (1997), Dynamic capabilities and strategic management, Strategic
Management Journal, pagg. 509...
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Paper Distretto Mirandola


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Paper Distretto Mirandola

  1. 1. The innovative network and its key variable: the trust. The distretto of Mirandola as Italian experience Mauro Franzosi 989244 Innovation is not a solitary adventure. At scientific level too, there are several studies that show the importance of simultaneous collaboration among firms, search centres and financial sector for innovation. This remark refers to networks of firms that operate both in traditional and in hi-tech sectors. Collaboration among the different actors of the network can be formal or informal and ranges from joint venture to informal network for the exchange of competence and knowledge1. According to a statistics of 1998-2000 of Third Innovation Survey, 17% of industrial firms and 22% of service firms declare that they introduce innovations into their product in partnership with other firms or non-commercial bodies. This percentage tends to rise to 22% and 31% respectively, if we talk about process innovation. It is interesting to emphasize that these activities in partnership are done, in order of preference, with costumers, suppliers, education centres and universities2. A network is not a “distretto” as we know it in Italy. According to the definition of Beccantini3 “ distretto is a limited social and territorial phenomenon of a community of people and a set of industrial firms, naturalistically and historically defined, where the community and the firms tend to mix”. They had an important part in the Italian economic growth but, in spite of this, they present objective limits in the era of knowledge economy and this require a significant evolution. There are new type of network characterized as systems made up of different actors: firms, system of knowledge, financial system and political system. They maintain the culture of the traditional district, that is to say the factor that makes possible a greater unity between community and firms. Saying this, all these factors, with the positive effects of improvement of Information Technologies, permit to carry out global networks. In this kind of situation, we must refer to the network of semiconductors and software of Silicon Valley, rather than Italian districts4. The theme of networks, at first ignored, has strongly resurfaced with globalization of economy and the increase of complexity and competition that it has involved. There are a lot of definitions of network: in the innovative context, they are considered as an open system of interconnected firms and institutions with similar interests. From this point of view, networks and clusters can be considered as synonyms. In plain words, the network is an interconnected system of firms, specialized suppliers, services, institutional bodies (for example university), that operate in certain fields where they compete and cooperate at the same time (in addiction, clusters may be not local but also national or extended between two different countries). Networks are identified as the basis of competitive advantage and they are characterized by different factors: first, the access to human resources and specialized factors, that permit to create efficiency with the local outsourcing through the partnership, instead of vertical integration. Then the circulation of complex and implicit knowledge; the complementarity of products, services and marketing; the access to facilities and public goods and, first of all, to formative and communication systems, without neglecting systems of logistic support and the constant comparison that drives to innovation5. 1 Freeman C.(1991) 2 European Communities (2004) TCIS “Third Community Innovation Survey” 3 Beccantini (2000) 4 Arora,Gambardella (2004) 5 Porter (2001) 1
  2. 2. These characteristics represent advantages both for firms and areas where they are situated in terms of competitiveness and explain why developing countries, like India and China, are concentrated on these forms of aggregation to win in global competition. In addiction, the cluster can do the function of incubation6 of new firms, that originate as spin-off of existing ones, since the necessary input and staff are amplifications available in the cluster itself. Moreover, clusters are a good local market. These different opportunities, that a network assures, allow to reduce threshold of risk and to share it among the companies taking part in it. Furthermore, they identify a more important factor on which invest to warrant permanent and lasting relationships: this factor is the trust in one’s neighbour, that is to say the need of another for the existence of one’s own firm and for the chance of its growth. Learning, flexibility, creativity are further essential dimensions as basis for innovation and are closely interconnected. According to Teece7 , human assets is fundamental for the innovative firms; at its par trust is the critical asset for the creation and the maintenance of the innovative network. It is necessary trust in oneself to face risks and take the responsibility; it is necessary trust among organizations to be competitive and trust in another to go beyond the wall of limited rationality and informative asymmetry. The lack of trust causes short-period relationships and incapacity to originate innovation effectively, because it happens in the middle-long period. Moreover, in the circle more specifically operational, it involves an increase in control costs (for example to protect the company from opportunistic behaviours of suppliers) that damage firm’s competitiveness. In fact, a lot of companies do their best to create an atmosphere of trust, both personal and operative, that permits an easier transfer of knowledge and know-how in order to reduce the risk of failure of innovation (a fine example is the Silicon Valley). Among the different actors of network, trust show itself in three different ways8: - contractual trust, where contracting parties that come to an agreement keep their word; - trust in the competence, that concerns the expectation that other firms carry out the work in a qualified way; - trust in good will, that is about the reciprocal obligations. In plain words, it is possible to sum up by saying that the existence of trust within every company is the necessary condition to create innovation in a network, besides being a glue for relationships among the different subjects of the network itself. 6 Viesti G.(2000) 7 Teece, Pisano, Shuen (1997) 8 Sako, Helper (1998) 2
  3. 3. Mirandola as an Italian experience Innovative networks can be originated from different causes. An interesting case is the experience of Mirandola (emilian commune in the province of Modena), referring to biomedical sector. Biomedical industrial pole represents an excellent division with unique characteristics in the survey of Italian industry: the area of the district affects the communes of Mirandola, Cavezzo, Concordia and Medana. In this sector operate 74 firms, with about 4200 employees and a turnover of about 630 millions of euros. In this area, biomedical industry has developed with different time and modalities, compared with the traditional process of diffusion of small-medium firms in Italy. The development of this district is not due to specific local resources, but it identifies itself with the story of a single entrepreneur, Mario Veronesi, who introduced the diffusion of plastic sterile disposable in hospital field for the first time in Italy and, most of all, built the first Italian artificial kidney in 19669. Since 1963, have been created, little by little, a lot of new firms specialized in hemodialysis, cardiac surgery, transfusion etc…Many multinationals like Mallinckrodt, Baxter, Braun Carex, Biofil and Hospital Dasco have settled or have acquired firms in Mirandola, attracted by the skills developed in this area. It is necessary to point out that the only industrial pole in the world with a similar concentration of biomedical firms is Minneapolis, in USA, where some of the most important giants of the sector, like Pfizer, have their head offices10. In time, a process of spin-off has verified too. This has allowed, in the area of Mirandola, the birth of a whole of small firms created on the initiative of former employees (qualified staff), who kept a good level of cooperation and trust with “head firm”. Very soon has been generated an induced activity of small firms, specialized in all that production and goods in process that big firms prefer to outsource for expediency. Soon a real network began to take shape, where medium firms collaborated with small firms. Barring institutional local bodies and companies of additional services (like Consobiomed, the biomedical Observatory in the district of Mirandola; the association of north communes and also the banks), we can divide the network in four main different types of firms. The first group, that by itself represents 75% of the local biomedical turnover, is constituted by big companies with external capital. They produce disposable and various equipment and outsource only the assembly of finished product. The second group is constituted by the so called independent local firms, which operate for the area leader or in market niche. This type of firms can produce a more custom-made output, because they operate in outsourcing in the final phases of productive process to meet with client’s needs. The third and the fourth group are constituted by firms that produce unfinished products third parties and firms that mainly supply labour for product assembly, respectively11. As already mentioned, the activity of financial system, and in particular that of bank credit, held a key role not only for the birth of networks, but for all Italian industrial system. In fact in the area of Mirandola, the relationship with banks has been an essential factor for development of firms, 9 Wikipedia (Mario Veronesi) ; Cainelli (2002) 10 Provincia di Modena; Distretti Italiani 11 Comune di Mirandola; Distretti Tecnologici; Osservatorio Biomedicale Mirandolese (2004) 3
  4. 4. especially for the small ones, since they do not have the same chances to raise a funds in comparison with firms belonging to big groups or linked to multinational. Another contact point of small-medium firms in the economy of Mirandola is the need to make use of staff with a wide range of heterogeneous skills, from chemical to electronic sector. The necessity of professional figures at high-medium level has pointed out the exigency of common policies among companies, local bodies and universities in the district, in order to warrant an excellent qualitative level of academic and professional system in the long period. The result of this synergy between district and local institutions is the realization of training courses “to measure”, created for the needs firms themselves in order to have a specific know-how at high level12. To sum up, the biomedical district of Mirandola includes different actors: - the system of firms, that have a key role with their economic activity; - the knowledge and formative systems, which drive innovation of firms into new market; - the financial system which promotes the birth and the growth of innovative firms; - the system of public bodies, which supplies the facilities to allow the action of these actors. In order that all these subjects originate virtuous circle of network development, it is necessary to have interconnections and lasting relationships. Mirandola is an example of this, one of the few in Italy. Intra-network subjects, like associations of small-medium firms and local bodies, have an important role, because they make possible thriving relationships among the actors of economic system13. An opposite case to this one analyzed is the breakdown of a link structure, like CIL14 (Innovation centre of Lecco). It has been wound up by provincial council of Lecco in the last June, because it did not succeed in promoting innovation and staff training within the district of Lecco and in coordinating activities of the whole network in an effective way. In conclusion a sentence of C.Freeman can be quoted to explain the importance of intra-network links, in which the economist argues that “ trust and familiarity are important both at formal and informal level…This is the reason why factors like language, education, territoriality, ideals and experiences have an essential role in the making of networks”. In plain words, it is possible to establish lasting trust relationships only through collaboration and sharing of ideals. In their turn, these will constitute an ideal environment, able to support the birth of innovative networks at this level, also in contexts not subject traditionally to this kind of organizational forms. 12 Il Sole 24 Ore (2001) 13 Consobiomed; Unione comuni modenesi area nord 14 Provincia di Lecco 4
  5. 5. BIBLIOGRAFIA Arora Gambardella (2004) The Globalization of the Software Industry: Perspectives and Opportunities for Developed and Developing Countries NBER working paper 10538 Beccantini (2000) Dal distretto industriale allo sviluppo locale, Bollati Boringhieri Cainelli Giulio (2002) L’evoluzione dei distretti Italiani last visited 30/01/2007 Comune di Mirandola le_a_Mirandola/biomedicale_a_mirandola.htm last visited, 03/02/2007 Consobiomed last visited, 05/02/2007 Distretti Italiani last visited, 05/02/2007 Distretti Tecnologici last visited, 03/02/2007 European Community (2004) Third community Innovation survey Tabella 1.2.1 e 1.2.2 pag 23 last visited 22/01/2007 Freeman C. (1991) Networks of innovators: a syntesis of research issues pagg 499-514 Il Sole 24 0re (2001) Il distretto emiliano del biomedicale corre con l'export del 28 Novembre 2001 Andrea Ghiaroni. “ o_emiliano/il_distretto_emiliano.htm last visited, 31/01/2007 Osservatorio biomedicale mirandolese (2004) last visited, 03/02/2007 Porter (2001) Strategia e competizione. Come creare, sostenere e difendere il vantaggio competitivo di imprese e nazioni, il Sole 24 ore libri pagg. 200-219 Provincia di Lecco last visited, 02/02/2007 Provincia di Modena last visited 03/02/2007 Sako, Helper (1998) Determinants of trust in supplier relations: evidence from the automotive industry in Japan and in the United States. Journal of Economic Behaviour and organisation, pagg 387-417 5
  6. 6. Teece , Pisano G., Shuen A. (1997), Dynamic capabilities and strategic management, Strategic Management Journal, pagg. 509-533. Unione comuni modenesi area nord last visited, 03/02/2007 Viesti G. (2000) Come nascono i distretti industriali, Laterza, Roma-Bari Wikipedia last visited, 26/01/2007 6