Do Territorial Agglomerations Still Provide Competitive Advantages? A Study of Social Capital, Innovation, and Knowledge

Abstract

The emergence of new technologies together with the process of globalization and global outsourcing raise a question mark over the potential advantages of locating in an industrial district. In this context, there is a clear need for new studies to investigate whether the district effect still exists in these new circumstances. We propose that the increased availability of social capital, knowledge, and innovation would justify the firms in industrial districts obtaining competitive advantages and, therefore, greater levels of performance over the rest of the companies in an industry, allowing us to explore why the district effect is maintained in the current circumstances. The development of this study, in the footwear industry in Spain, has allowed us to analyze the existence of significant differences between industrial district firms and firms outside industrial districts. The results obtained in our study show that agglomerated firms, that is, firms located within industrial districts, achieve a greater performance than firms outside the industrial districts. With this study, we contribute to a deeper analysis of the competitive differences arising from the district effect. On one hand, we analyze if the competitive advantages of companies located in the districts will reveal differences in the obtained performance—growth, profitability, innovation performance, and general performance. We also analyze three key competitive factors in the competitive dynamics of industrial districts, with particular attention to social capital. In this sense, we look separately at the three dimensions of social capital—structural, relational, and cognitive.