Spatial agglomeration and business groups: new evidence from Italian industrial districts

among smaller firms, while outside industrial districts the presence of the groups is more
dependent on the size of the firm. This confirms the hypothesis that firms in industrial
districts (even the smaller ones) are favoured in seizing new business opportunities, both by
setting up new firms or by acquiring established ones.

According to Proposition 2 groups in industrial districts should have a lower degree of
diversification than business groups outside industrial districts. To verify this proposition
we calculated an index of the degree of specialization of groups, defined as the ratio of the
overall employees of the group that belong to the same sector of the largest company (that
in the case of district groups is the same of the district sector). Though this is not a proper
index of diversification, it is appropriate to the hypothesis investigated: i.e. that groups in
industrial districts tend to expand their activities in the sector characterising the district. To
test this hypothesis we calculated t-tests of means differences between district and non-
district groups.

The data confirm this hypothesis (Table 5)⁶. As expected, the degree of diversification
of groups is very low, both for district and non district groups. Indeed, several studies have
demonstrated that firms tend to diversify in activities that show a high degree of coherence
(synergy) with existing activities (TEECE et al., 1994). This is even more valid for the
groups examined as for the most part they are composed of small firms. Nevertheless the
degree of specialization of groups located in industrial districts is significantly higher than
that of groups located outside industrial districts, thus confirming the hypothesis suggested
by BRIOSCHI et al. (2002) of the prevalence in industrial districts of a specific type of
business groups that they define as a “district group”.

Table 5 - Degree of specialization of business groups

*** significant at 1%, ** significant at 5%, * significant at 10%

Proposition 3 suggests that groups located in industrial districts should tend to expand
within the same district area, both when setting up or acquiring new companies. To verify

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