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Good business in “good places”

A doctoral thesis presented at Marche University addresses the relationship between business profitability and industrial districts. 

Good business stems from and grows out of the context in which it is conducted. The human aspects are as important as the technological ones, i.e. the social “climate, the personal stories, the ability to invent as well as to calculate. In other words, the business culture that emerges not just inside of factories and which an attempt has been made to create through business parks. This is not an easy task, but worthwhile when done well.  For this reason, the study “Industrial districts, localising business and profitability” carried out by Dimitri Storai as part of his doctoral research in Economics at Marche University, Department of Economic and Social Science, makes interesting reading.

His work looks at the theoretical and practical aspects underpinning relations between industrial districts and the financial performance and profitability of the businesses working within them.  The key aspect of the research, though, is the tenet on which Storai’s thesis hinges. He believes industrial districts are a people-friendly means of development. They represent a model in which small enterprises, working within a larger network, can overcome the same challenges as large enterprises. Within the model there is also little room for the bitter dynamics that are typical of capitalism in other contexts. It is therefore a model of efficiency and rationality, combined with something else, the effects of which the study explores.

Consequently, Storai states that one of the study’s main objectives is to verify “the impact of business location on business performance. In particular, it aims to explore the connection between the profitability of manufacturing organisations and the area in which they are located by looking at the underlying economic variables.”

Storai starts by looking at the nature and evolution of Italy’s industrial districts then moves on to examining the links between location and profitability. He also points to  business districts in the UK as a case study.

There are three noteworthy conclusions.

Most importantly, the author explains that, “the data presented in my doctoral thesis shows how location can still play an important role in the profitability of manufacturing enterprises.” But the relationship is not as simple and automatic as it might appear. Indeed, Storia explains that “many different factors are at play in the effect territory has on business performance. Moreover, the type of territorial resources sought depends on the type of organisation.” Storai doesn’t stop there. He also highlights how “understanding the factors which can boost business performance, from the point of view of the local area, is key to policies put in place to ensure the area is, and continues to be, attractive to business, thereby safeguarding the livelihoods of the local population.

The result of a complex interplay of both objective and subjective factors, the picture that emerges of the relationships between organisations and the areas hosting them is a complex one with multiple explanations. Dimitri Storai’s work is a useful way of adding to one’s knowledge of the Italian manufacturing fabric.

Distretti industriali, localizzazione d’impresa e profittabilità

Dimitri Storai

PhD Thesis  – Marche University, Department of Economic and Social Science, Economics PhD Programme.

2016