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

firms to manage the growth process is that of the business group, i.e. a set of firms legally
distinct but belonging to the same owner(s). Business groups come about by both the
setting up of new firms and the acquisition of established firms. Official statistics about
firms refer to legal units (companies) or technical units (plants) and ignore the
phenomenon of business groups.

The importance and characteristics of business groups within Italian industrial districts
have already been analysed in several studies (DEI OTTATI, 1996b; BALLONI and
IACOBUCCI, 1997; BRIOSCHI et al., 2002; IACOBUCCI, 2002). Nevertheless, these
studies present two main drawbacks: from an empirical point of view, they refer to specific
industrial districts or regions²; from a theoretical point of view, they do not attempt to
identify the general relationship between business grouping and the evolution of industrial
districts.

This paper tries to overcome these drawbacks. From an empirical point of view, it takes
advantage of a large data set on business groups recently elaborated by ISTAT (the Italian
Statistical Agency). The data set, referring to 2001, covers all the manufacturing firms
organized as a joint-stock company (see section 3 for details on the data set). From a
theoretical point of view, it discusses the relationship between the evolution of industrial
districts and business group formation and derives some propositions that can be
empirically tested using the available data. The data set on business groups allows us to
analyse the differences in the presence and characteristics of business groups in district and
non-district areas. In other words, we are able to empirically identify the potential impact
of spatial agglomeration on some ‘observed’ characteristics of firms’ organization.
Descriptive statistics as well as statistical tests are used to put forward our empirical
investigation.

Overall the result confirms the hypothesis that spatial agglomeration influences the
organizational forms of firms. Groups are more widespread in industrial districts than in
non-district areas; moreover groups in industrial districts are less diversified and more
spatially concentrated than groups outside industrial districts.

The paper is organized as follows. Section two reviews the existing literature on the
evolution of industrial districts and its relationship with firm organization. Section three
discusses the definitions used to empirically identify business groups and industrial districts
and describes the data set used for the quantitative analysis. Section four illustrates the
main empirical results. Finally, section five draws the conclusions.

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