economies of agglomeration and active co-operation (Rabellotti 1997; Schmitz 1995
and 1999).
Nevertheless, recent changes in production systems, distribution channels and
financial markets, accelerated by the globalisation of product markets and the spread of
information technologies, suggest that more attention needs to be paid to external
linkages9.
Furthermore, industrial boundaries are blurring and the shape of industries is no
longer conforming to the standard industrial classification (Mytelka 2000). This is the
case for instance of the footwear sector, analysed in this paper, which is increasingly
integrated in the fashion industry, dominated by a few multi-product oligopolies,
exploiting economies of scale and scope in activities such as distribution, marketing and
branding across traditionally separated industrial sectors such as shoes, clothing,
glasses, perfumes and leather accessories. Accordingly, to understand the effect of these
changes on a district it becomes necessary to adopt an analysis which pays attention to
linkages with actors external to the district. The research on global value chain seeks to
understand the nature of these relationships and their implications for upgrading, mainly
with reference to producers in less developed countries.
An important aspect stressed in the literature on value chains is that the various
activities in the chain are subject to some degree of governance or co-ordination
(Gereffi 1994). At any point in the chain, activities are defined by three key parameters:
what is to be produced (design of products); how it is to be produced (definition of
production process: technology, quality standards) and how much has to be produced
(Kaplinsky and Readman, 2001). Co-ordination may take place through arm’s-length
market relations or non-market relationships. In the latter case, following Humphrey
and Schmitz (2000), we distinguish between three types of governance: (i) the network
implying co-operation between firms of more or less equal power which share their
competencies within the chain; (ii) a quasi-hierarchy involving relationships between
legally independent firms in which one is subordinated to the other and where the leader
in the chain defines the rules that the rest of the actors have to comply with; and, (iii)
hierarchy governance when the local firm is owned by an external firm.
9 Markusen (1996) broadening the definition of industrial district discusses four types of districts. In the
“satellite platform” type, consisting of a congregation of branch facilities of externally based multi-plant
firms, she acknowledges the importance of external linkages.
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