are industrial districts formed by networks without technologies the diffusion of internet

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DOI: 10.1177/0969776405056592

2005 12: 247European Urban and Regional StudiesFiorenza Belussi

Applications in Three Italian ClustersAre Industrial Districts Formed by Networks Without Technologies?: The Diffusion of Internet

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ARE INDUSTRIAL DISTRICTS FORMED BY NETWORKSWITHOUT TECHNOLOGIES?

THE DIFFUSION OF INTERNET APPLICATIONS IN THREE ITALIAN CLUSTERS

Fiorenza BelussiUniversity of Padua, Italy

The industrial district (ID) model represents aspecific form of localized cluster (Becattini, 2000;Garofoli, 2002), where a specialized industrialstructure formed by a network of separate firms isembedded in a territory characterizing both acommunity of people and a population of firms.1This normally gives rise to a high level of knowledgeand innovation diffusion which enforces the districtcompetitiveness. Innovations and knowledge passthrough the numerous social and productivenetworks activated at local level, and localinstitutions provide the right incentives for

cooperation and for the development of collectivelocal goods. These clusters are built on socialinteractions and on geographical proximity(networks can also be virtual or centred around alarge firm, as described by Storper and Harrison,1991). Numerous empirical works have observedthat geographical clusters are not just a specificity ofthe Italian case (Saxenian, 1994; Markusen, 1996;Guerrieri and Pietrobelli, 2001), even if at theinternational level2 there is a too abundant use ofdifferent definitions and terminologies3 in theeconomic and geographical literature. When IDs

Abstract

★

European Urban and Regional Studies 12(3): 247–268 Copyright © 2005 SAGE Publications10.1177/0969776405056592 London, Thousand Oaks, CA and New Delhi, www.sagepublications.com

It is widely acknowledged that there has been atechnological revolution in information and com-munication technologies (ICT), centred on Internetapplications, in recent years. However, there is still agreat controversy about the extent to which ICTare transforming the competitiveness of individualfirms, clusters and large economic regions. On theone hand, the use of ICT could undermine thoseeconomic systems that are very distant from thestrategic motors where these developments aretaking place, re-establishing a re-centralization patternin both functional (size) and geographical (space)dimensions. On the other hand, the ‘virtualization’ ofthe spatial economic relations could offer economicagents located in peripheral areas a better access tothe development of distance relationships. In thisperspective, the assumptions of the ‘vanishing’ ofphysical distance could represent a fascinating‘utopia’. This paper analyses how industrial districts(IDs), which may be considered special forms ofclusters, have managed the absorption of ICT(information and communication technologies). Arethey formed by networks without technologies? In

order to answer this question we organized anempirical research in three selected Italian clusters.We chose three cases which are representative ofthe empirical variation. The investigation presentedhere is based on a selected sample of 42 firmsinterviewed (all SMEs).Their behaviours in terms ofICT technology adoption were found to be quitesimilar in the three IDs studied. We reached theconclusion that neither size nor the entrepreneurialcognitive frame matters in hindering diffusion. Ourresults seem to demonstrate that firms adopted ICTtechnologies with respect to end customers whilethey were reluctant to use B2B linkages with sub-contractors and suppliers (EDI and ERP technologies).However, this should not be interpreted as a lock-inphenomenon, but as a sign that they rely on flexibleand trustful informal communication that cannoteasily and efficiently be virtualized in electronicform.

KEY WORDS ★ clusters ★ ICT technologies ★ industrial districts ★ innovation ★ learning ★ local systems

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and clusters are mentioned, they are generallyunderstood as local–regional clusters (Enright,2001), or technological districts (Antonelli, 2000)with a specific geographical identity.

The international literature has often presentedthe case of Italian districts as specific forms wherelocalized learning occurs (Maskell et al., 1997;Asheim, 1999; Malmberg and Maskell, 1999; Aminand Cohendet, 2000; Lombardi 2000a; 2000b;Maskell, 2002; Belussi, 2003a). They have beenfound particularly successful in adapting andimproving (external to the district) processinnovations and (internal to the district) incrementalproduct innovations and in their capacity to producecustomized items (Belussi and Pilotti, 2002).

As is known (Paniccia, 2002; Becattini, 2003),Italian districts are typically formed by traditionalsectors (Quadrio Curzio and Fortis, 2000) and bynetworks of small and medium enterprises (SMEs).However, recent changes have also given impulse tothe development of district large global firms(Belussi, 2003b).

The pace of adopting new technologies has beenslow among small firms in the past. Until now thiswas not the case for Italian districts and clusters(Moussanet and Paolazzi, 1992) because thedynamic efficiency was related to the advantages ofthe network form and local external economies.However, the diffusion of information andcommunication technologies (ICT) – a new generalpurpose technology – may represent an exogenousshock and a technological rupture (OECD, 1999b;US Dept of Commerce, 1999; Cesaroni et al., 2000).People who believe strongly in the new economyseem to propose that there is a large scope fortechnologies without networks, where firms interactregardless of distance, on the basis of the mereadoption of ICT technologies, possibly withoutsharing a common culture and institutions. Doesthis new development represent a potential threatfor the Italian districts and clusters? Are they reallyslow in the pace of ICT adoption?

ICT technologies allow a very narrow andlimited transfer of information, communication andcodified knowledge. Without some commonplatforms (social identity, culture, institutions),interpretative gaps may surpass the benefits relatedto their utilization. Are Italian IDs formed bynetworks without technologies?

On the one hand, the use of these complex

technologies could isolate those economic systemsthat are very distant from the central places. On theother hand, they offer a possibility of access also toeconomic agents placed in peripheral areas. In thisperspective, the assumptions of the possiblevanishing of ‘physical distance’ (Brousseau andCurien, 2001) could represent a ‘fascinating utopia’.This could provoke a substantial decoupling ofeconomic relations from their physical localization(Foray and Mairesse, 1999).

However, in order to exchange information andknowledge (knowledge is in any case less easilytransferred than information and requires codifying)we need not only technological infrastructures butalso some common languages and sharedinterpretative codes. The absence of these factorscould constitute a block to the utilization of Internettechnologies. Following a sociotechnical perspective,we could come to admit that physical and socialproximity could remain for long a very importantfactor hidden behind ICT adoption. In other words,the delocalizing power of the Internet and ICTtechnologies, in contrast with what was initiallyforecast, could be modest or even non-existent(Brousseau and Rallet, 1999; Gottardi, 2003).

Are firms belonging to IDs generally late inadopting ICT technologies? And, then, if this is thecase, are they just encountering a temporary or astructural delay related to their prevailing smallsize?4 In order to answer this question we organized,at the end of 2000 and during the first months of2001, an empirical research project, selecting arepresentative number of final firms located in threeimportant clusters of the North East area. We choseto analyse the final firms because they are thosewhich are typically related to the internationalmarkets and are potentially more interested in theapplication of ICT.

In addition, along with the principal task ofstudying the field of Internet applications, our workoffers a more general analysis of entrepreneurialperceptions (Witt, 1996; 2000) and behaviours(Weick, 1969; 1995) in relation to the issue ofinnovation adoption. Interestingly enough, our workdemonstrates a strong divergence between theentrepreneurial visions (opinions, perceptions andsense making) and the concrete adoption paths(behaviours) in the timing of the diffusion.However, their behaviour in terms of cumulativeICT technology adoptions was found to be quite

European Urban and Regional Studies 2005 12(3)

248 EUROPEAN URBAN AND REGIONAL STUDIES 12(3)




similar among the small firms in the three IDsstudied. We reached the conclusion that, among theSMEs interviewed, neither size nor theentrepreneurial cognitive frame matters.

Here we have tried to test some importanttheoretical points.

1. Are Italian clusters slow in ICT adoption? 2. Which ICT technologies found a higher diffusion?3. In relation to ICT adoption, does the cognitive

frame of entrepreneurs matter?4. Can the supposed lack of diffusion be ascribed to

the ID model per se or to an insufficientcustomization of the suppliers of new ICTtechnologies?

5. Which was the role played by local actors inaccelerating the adoption path?

6. Are firms in districts characterized by thepresence of hierarchical networks more likely toadopt technology?

The paper is organized in the following way. Thefirst section deals with some introductory theoreticalnotes. The following three sections describe respec-tively the survey results for the district of theRiviera del Brenta, Manzano and Belluno. The fifthsection summarizes some of the empirical findings.The final section discusses from the theoreticalperspective some issues raised in the introduction.

The design of the empirical research work

Our research investigated the adoption rate of thefollowing Internet technologies: Enterprise ResourcesPlanning (ERP), Electronic Data Interchange(EDI), collective Internet web, individual andcollective firm web, e-commerce, e-mail, IntegratedServices Digital Network (ISDN), corporatebanking, video conferencing and groupware. Ourresults show an adoption rate that is absolutelysignificant, and in many cases more satisfactory thanthat observed in other contexts – see, for instance,Newlands and Ward (1999) or Premkumar andRoberts (1999) – although the different researchtiming makes comparisons quite difficult to handle.The existence of a ‘district effect’ boosting theadoption rate of innovation (Maskell et al., 1997;Belussi and Pilotti, 2002) and the adoption of ICT

technologies among the clustered SMEs thusappears to be more than plausible. For the IDsstudied we collected a detailed database on theentire firms’ population and some qualitativeinformation based on previous research(Grandinetti, 1999; 2003; Belussi, 2000; Gambarottoet al., 2001). We then selected a random sample ofthe district final firms. We focused our analysis noton the entire population of the ID firms, but onlyon the ones more interested in having externalrelationships with the market (thus excluding localsubcontracting firms which exchange goods andservices mainly within the district). The districtsrepresented three divergent evolutionary patterns ofIDs: the canonical Marshallian ID populated mainlyby small business (the shoe-making Riviera delBrenta district); the semi-hierarchical district (thechair-producing Manzano district), the heavy-hierarchical district (the eyeglasses district of theCadore district). We chose three cases which arerepresentative of the empirical variation (Yin, 1989).Sixty-four firms were initially selected and in theend 42 were interviewed (the answers refer to 66percent of the initial sample). Firms fall into thecategory of SMEs (we excluded very small firmsand the largest ones). For 23 firms the sales classwas between €2.5m and €7.5m, for 13 between€7.5m and €15m, and 6 firms declared more than€15m (data refer to 2001). Our analysis was basedon a rigid questionnaire which was compiled eitherby a telephone interview or by a direct visit to thefirms. Interviews were organized in the firstsemester of 2001. The questionnaire was focused onthe adoption rate of ICT technologies.

In order to understand the prevailing pattern inrelation to the adoption of innovation wecategorized the interviewees in three possibleniches, then we collected the year of adoption ofICT technologies. The niches correspond to threeideal-types well explored in the innovation literature(see for instance Mahajan and Wind, 1986;Rosegger, 1986; Coombs et al., 1987; Rogers, 1995).In relation to the time of adoption of first moversand laggards, and in relation to the context ofpattern-making decison, we consider the profit-maximizing entrepreneur, the rational decisionmakerwho innovates only following a strict profit rule, asportrayed by the standard economic theory. Theentrepreneurial niches proposed were, thus, thefollowing: the first category referred to subjects with


BELUSSI: ARE INDUSTRIAL DISTRICTS FORMED BY NETWORKS WITHOUT TECHNOLOGIES? 249




a high propensity towards innovation; we calledthem ‘innovators by disposition’ – entrepreneursuse any possible innovation with the strategic optionof the firm (first adopters), because they believe thatbeing first-comers provides in any case acompetitive advantage. The second group isconstituted by the ‘rational innovators’ category, andillustrates the typical behaviour portrayed byeconomists for the ‘homo economicus’ – entrepre-neurs adopt new technologies only in relation to theutility foreseen and to the profitability provided byeach specific innovation; so the opportunity of themarket guides their decisions. The third categoryincludes the laggard entrepreneurs, the‘conservative’ ones – in a wide sense they share afeeling of scepticism to novelty; so they adopt theinnovation only in a mature stage of innovationdiffusion, leaving to others the duty of experiment-ing and testing. Their preference is thus to waituntil the new technology becomes consolidated. Inthe end, these entrepreneurs can be consideredquite averse to change because they try to preservetheir organization from rapid modifications. Thiscategory is linked with last adopters of technologies.

The idea behind our work of categorization wasto relate the domain of ‘opinions’, beliefs, andinterpretative codes (related to the cognitive frameof the entrepreneurs) with the factual evidence oftheir economic behaviour, explained by theirinnovative choices. We based this categorization onthe information extracted by the questionnaire.5

This issue was clearly presented at the beginning toour interviewees before we could really checktogether the list of ICT technologies adopted bytheir firm.

The diffusion of ICT technologies in thefootwear district of the Riviera del Brenta

The intensity of ICT adoption

In order to verify the potential usage of ICTtechnologies, managers and entrepreneurs wereasked to identify which tools of Information andCommunication Technologies were in use in theirfirms. The results are illustrated in Figure 1.

Footwear firms score very high especially for thefollowing five technologies, in order of importance:electronic mail (92.86 percent), corporate banking(85.71 percent), ISDN lines (64.29), firm Internet site(64.29 percent), and CAD–CAM (57.14 percent). Ifwe consider that 21.43 percent of the sample has acollective site, the total number of Web-linked firms(firms with at least one www) increases to 78.57percent,6 a percentage which is significantly high.Footwear firms, on the contrary, score quite low inrelation to the use of communication tools forstructured interchange. The applications of ERPand EDI, are practically ignored by these firms. Inthe past only 7.14 percent implemented an EDI



Figure 1 Riviera del Brenta firms: ICT adoption

0.00%7.14%

57.14%

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64.29%

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system for the coordination of transactions withinthe market, but further adoptions never occurred.During our interview we asked non-adopters whythey did not use the technology: the majority ofnon-adopters selected the item of ‘scarce utility’. Infact, the proximity of subcontractors, and the highlevel of trust existing among the chains ofsuppliers–subcontracting–final firms allows allorders to be sent just by a telephone call, followedsubsequently by a fax (only to have some kind ofwritten record). Footwear firms do intensively relateelectronically with the bank system by ICTtechnologies, because the operations do not requirea mutual tacit understanding; they consist ofcodified operations for informational (accountcontrol) or operational ends (payments and otherinstructions). The existence of informalcommunicative channels which must be maintainedand reinforced is at the basis of the explanation forthe low level of adoption of EDI technologies; andthis is not just a sign of backwardness, because firmsrightly choose a low-cost social technology thatcould successfully be implemented in the district.

Many (64.29 percent) also possess ISDN7 lines forincreasing the speed of their connections, but theydid not adopt ERP systems at all. Also these systemswere rarely found useful and only appropriate forcomplex organizational structures. Finally, for thereasons discussed above we also found a scarce useof videoconferencing and groupware. Its use wasrestricted to the limited group (7.14 percent) ofproducers of luxury haute-couture goods that mustcommunicate and share projects (discussingeventual modifications) with stylists and designersin all parts of the world.

Timing of innovation and innovation-strategypatterns among the Riviera del Brentaentrepreneurs

In this sub-section we will discuss the timing ofinnovation adoption and the prevailing behaviour interms of innovation strategy.

Within the sample extracted, the first adoption



Figure 2 Riviera del Brenta firms: EDI adoption

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innovators by disposition

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cumulative adoptions

Figure 3 Riviera del Brenta firms: CAD adoption

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of information technologies goes back to 1975, byfirms that belong to the category of ‘innovators bydisposition’ (Figure 2). A stagnant period is thenshown which lasted about 17 years (Figures 3–9).Only after 1992 do we observe an increasing rate ofadoption of ICT technologies (Figure 10). Thediffusion curve starts slowly and, between 1992 and1995, the slope of the ‘cumulated’ adoption curve isstill quite flat (at that time less than 10 percent ofthe total technologies potentially applicable are used

in the district). It is only after 1995 that the take-offof ICT starts. In those years all types ofentrepreneurs quite simultaneously (irrespective oftheir strategic vision and perceptiveness of theinnovation phenomenon) give rise to thecharacteristic S-shape curve of innovation diffusionstudied in the literature (Davis, 1979; Ray, 1984). In only five years the high rate of adoption of allICT pushed the cumulative adoption curve to 40.71 percent.



0%10%20%30%40%50%60%70%

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Figure 4 Riviera del Brenta firms: company Internet site adoption

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Figure 5 Riviera del Brenta firms: collective Internet site adoption

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Figure 6 Riviera del Brenta firms: electronic commerce adoption




The picture that emerges from the adoptioncurves presented shows that although 57.14 percentof the interviewees defined themselves as‘conservative’ they have been intensively high-rateICT adopters. Very often first adopters were thosewho considered themselves ‘conservative’, and, viceversa, self-declared ‘innovative’ entrepreneurs weresometimes late adopters.

Within the Riviera del Brenta industrial district,which represents in our sample of IDs the canonical

Marshallian ID, the majority of entrepreneursrepresent themselves as conservative and, referringto their innovation strategy, as late adopters. The‘innovators by disposition’ are only about one-third(28.57 percent) and the ‘rational innovators’ only14.29 percent. The presence of such a greatconservative strategy is, however, in strong contrastwith the ample recourse to ICT that appears fromthe previous figure, where a clear ‘district effect’ isdistinguishable.



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Figure 7 Riviera del Brenta firms: electronic mail adoption

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Figure 8 Riviera del Brenta firms: ISDN adoption

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Figure 9 Riviera del Brenta firms: corporate banking adoption




The analysis of innovation timing allows someother considerations:

• CAD–CAM technologies and ISDN lines werefirst implemented in the district byentrepreneurs who define themselves as‘innovators by disposition’ (Figure 3). CADtechnologies in particular required a prolonged‘maturation’ time since the French LectraSystems launched them on the Italian market in1975. However, starting from 1995 we note awide acceptance by the firms located in thedistrict. At the end of 2000 about 60 percent ofthe footwear firms were using CAD technologies.Considering the prevailing small size of the firmsinterviewed, this value stresses the dynamism ofthe Riviera del Brenta firms.

• On the contrary, electronic mail, corporate banking,and collective Internet site were generally adoptedby ‘conservative’ firms. The adoption of thecollective Internet site is recent. A first group offootwear firms adopted it in 1998; after two yearsthis product was developed by software servicesfirms. However, the collective Internet site hasrecently been developed and sponsored by thelocal Association of Entrepreneurs (ACRIB). So,its diffusion has shown exponential growth; atthe end of 2001 we can estimate8 that cumulativeadoption had reached 57.14 percent of all firms.

• Electronic commerce started to be adopted in 1996and was adopted equally by ‘innovators’ and‘conservative’ entrepreneurs (one can note thatthe two adoption curves are completely

superimposed). In 2000 the rate of diffusion ofthis innovative selling modality covered 14.29percent of our sample, but in 2001 it wasestimated that in 2002 it would reach acumulated value of 28.58 percent.

The diffusion of ICT technologies in thechair district of Manzano


We now continue with an analysis of the chairdistrict of Manzano,9 presenting an identical set oftables, organized in the same sequence as in theprevious case. We will thus start with a generaloverview of the pattern of diffusion of ICT.

As can be observed in the figures presentedbelow, this pattern closely resembles that found inthe Riviera del Brenta. Also, among the sample ofthe interviewed firms in the district of Manzano theapplication of ICT technologies is quite remarkable:of the total 11 technologies considered in ouranalysis, 5 show a very high rate of penetration,such as electronic mail (100.00 percent), ISDN lines(85.71 percent), firm website (71.43 percent),corporate banking (64.29 percent), and collective firmwebsite (50.00 percent). The presence of Internetsites, both individual and collective, covers nearly all(92.86 percent) of the sample.10 As in the case of theRiviera del Brenta district, a low level of acceptanceis indeed scored by the technologies which



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Figure 10 Riviera del Brenta firms: total ICT adoption from innovators by disposition, rational and conservative by number.Note: Diffusion curves have been calculated dividing the total potentially adoptable technologies by the total number oftechnologies adopted each year by the firms sampled.




constitute tools of more structured and rigidcommunication (ADSL, EDI, ERP, video-conferencing and groupware). EDI systems were imple-mented in 1985 by a few early adopter firms, butbecause of their complexity they did not find a furtherdiffusion in the district. A similar pattern is exhibitedby ERP protocols, which were experimented withonly in the mid-1990s, but after an initial entry inthe district they were not adopted further.

We also asked entrepreneurs why they did notadopt those technologies. Significantly, in generalthey did not mention as obstacles the item offinancial resource or the lack of competentpersonnel, but the scarce utility of the technologyper se and the scarce appropriateness of those toolsfor the typical small-sized firm. Also in theManzano context, the relational and geographicalproximity of the local supply-chains of specialized

producers and subcontractors render partiallyredundant the registration of transactions throughcomplicated electronic applications.

Comparing the two districts, in Manzano we finda lower level of adoption of CAD–CAM technologies(14.29 percent), but a higher diffusion of electroniccommerce (21.43 percent). In this regard it is estimatedthat in 2001 the adoption of electronic commerce willcome to cover 28.57 percent of our sample.11

Timing of innovation and the innovation-strategy patterns among Manzanoentrepreneurs

In this sub-section we will try to detect how theentrepreneurs define and perceive themselves in



7.14% 7.14%14.29%

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Figure 11 Manzano firms: ICT adoption

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Figure 12 Manzano firms: ERP adoption




relation to their strategy of innovation adoption.Not very surprisingly, a sharp tendency seems toemerge here: the absolute predominance of‘conservative’ entrepreneurs (85.71 percent of thesample), the rest being grouped in the category of‘innovators by disposition’ (none here chooses theoption ‘rational innovators’).

Once again the existence of a perceptive gap isconfirmed: the Manzano entrepreneurs represent

themselves as ‘conservative’ in relation to theirinnovative strategies but it would be wrong fromthis premise to assume that in the district there arevery low levels of ICT application. As demonstratedby the figures presented, the diffusion of aconservative attitude does not preclude an ampleutilization of new technologies. As discussed in theprevious case (for the Riviera del Brenta), districtentrepreneurs are quite technologically dynamic but



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Figure 13 Manzano firms: EDI adoption

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Figure 14 Manzano firms: CAD adoption

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Figure 15 Manzano firms: company Internet site adoption




they exhibit a cognitive frame which is very‘conservative’. In principle, such a stance could riskpreventing them from adopting ICT but this is notthe case. Often – this case is exactly depicted insome of the following figures related to ERP andEDI diffusion – ‘conservative’ entrepreneurs arefirst adopters in the district.

A general overview of the pattern of diffusion ofICT is provided by Figure 21 which summarizescumulative adoption. The diffusion curve of the

Manzano district is quite similar to the Brenta case.Some distinctive characteristics are:

• the delayed starting of the diffusion cycle (thefirst ICT technologies entered the district only in1985, 10 years after their entry in Riviera delBrenta); and in connection with this

• the more elevated inclination of the diffusioncurve after 1997

• given the dominance of ‘conservativism’, the



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Figure 16 Manzano firms: collective Internet site adoption

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Figure 17 Manzano firms: electronic commerce adoption

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Figure 18 Manzano firms: electronic mail adoption




cumulated curve tends to follow the adoptioncurve of ‘conservative’ entrepreneurs.

However, the index of penetration of ICTtechnologies calculated on the entire population oftechnologies, is very high, and similar to the oneemerging in the footwear district of Riviera del Brenta.Cumulative adoptions in 2000 covered more than 40percent of the selected sample of district firms.

Within the various technologies adopted, one ofthe most interesting cases is the collective Internetsite, which is spread among 50 percent of the districtfirms. The supply of Internet technologies byItalian firms occurred during the first years of the1990s but only after 1994 were they able to offerdynamic sites and platforms arranged for e-commerce. In the district the first adoption of firmwebsites was by some ‘innovators’ in 1994. However,



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Figure 19 Manzano firms: ISDN adoption

Figure 20 Manzano firms: adoption of corporate banking

Figure 21 Manzano firms: total ICT adoption from innovators by disposition, rational and conservative by numberNote: Diffusion curves have been calculated dividing the total potentially adoptable technologies by the total number oftechnologies adopted each year by the firms sampled.

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70%

80%

1992

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rational innovators



0%

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the following year ‘conservative’ entrepreneurs alsojumped into the new technology. By 1998 allinnovators were adopting this technology, as werethe large majority of ‘conservative’ entrepreneurs by2000.

It took only six years to cover about 70 percent ofthe total possible number.12

The collective site was offered to the district firmsduring 1996, and in a few years its adoption covered50 percent of the total possible number. While‘innovators’ chose the individual site, the collectivesite was chosen quite exclusively by ‘conservative’entrepreneurs. Collective sites were also promotedin the district through two initiatives:

• by RETEDIS in 1998, a local district service firm,founded by the local bank and some leader firms,which promoted a telematic net within the district;

• by a second collective project, sponsored in 2000by CISLI (Centro Studi Industria Leggera) ofMilan, which promoted a closed commercial net,formed by about 10 local producers, with thescope of creating a kind of large ‘virtualcompany’ obtaining competitive advantages fromthe scale of their total activities.

In the Manzano district, as already stressed, thepercentage of firms resorting to e-commerce issignificantly high (21.43 percent). Many havededicated areas to business-to-business, with exclusiveaccess, reserved to some clients and suppliers, andto business-to-consumer. As it refers to business-to-consumer, the on-line shop is generally simple. Thepotential client follows a guided path, helped byimages and comments. The effective order is the mostambiguous part of the transaction: in some cases, theorder form is already there, and all that is needed isto indicate the article and the system of paymentselected, or the postal address; in other cases itworks with traditional forms of payments (by fax).

The diffusion of ICT technologies in theeyeglasses district of Belluno

The third district analysed is represented by a clearexample of the differentiation of the Marshalliandistrict. In fact, during the last two decades theBelluno district of eyeglasses moved away from the

typical ID morphology, which here we calledcanonical, and which in our research is representedby the first case analysed. The Belluno district nolonger consists of a flat organization formed by anetwork of small independent producers inserted ina local supply chain. The local structure is nowdominated by four large producers whose outputrepresents about 60 percent of the localproduction.13 In addition, the largest leader firm,Luxottica, founded in 1961, is now a verticallyintegrated multinational, which has recently alsoincorporated the main optical distribution outletsexisting in Europe and the US through anaggressive acquisition strategy. The hypothesis ofour work is to test if in this newly emerged structureof IDs, where we find numerous hierarchicalnetworks, the pattern of ICT diffusion is noticeablydifferent and if a divergent entrepreneurial patternemerges. It is important to specify that we excludedthe four largest firms from the analysis, because theywould clearly have substantially changed thehomogeneity of our sample.


Let us start with the analysis of ICT diffusion. Thedistrict appears to lead the diffusion of five maintechnologies: electronic mail (100.00 percent), firmwebsite (100.00 percent), CAD–CAM technologies(78.57 percent), ISDN lines (71.43 percent), andcorporate banking (50.00 percent).

As in the case of the Riviera del Brenta andManzano districts, a low level of acceptance isindeed scored by the technologies which constitutetools of more structured and rigid communication(Asymmetric Digital Subscriber Lines [ADSL], EDI,ERP, videoconferencing and groupware). Interviewedentrepreneurs declared that these complex systemictechnologies related to structured communicationsand to business data intelligence (such as datawarehousing and internal information systems) werenot adopted mainly because of the problems relatedto the size threshold and because they found themof scarce utility. Only a few firms mentioned theitem of scarce financial resources.

It can also be said of the Belluno district that thepresence of ICT is quite remarkable, but thepresence of leaders and large firms seems not to






have accelerated too much the process of ICTadoption (in 2000 one could observe only amarginally higher rate of ICT penetration). Thereare of course some peculiar features:

• unlike the other cases analysed, entrepreneurs ofSMEs did not build any collective firm websites.Perhaps it could be hypothesized that thepresence of large firms has discouraged somecollective initiatives by the local entrepreneurialassociation.

• The diffusion of CAD–CAM is in any casesuperior in the Belluno district (78.57 percent) tothat among the firms of the other two districts(Riviera del Brenta: 57.14 percent; Manzano:14.29 percent).

• Conversely, in the other two districts studied,home banking was more utilized by local firms

(Riviera del Brenta: 85.71 percent; Manzano64.29 percent) than in Belluno (50.00 percent).

In Belluno the adoption of e-commerce scoredvery high in comparison with the other two districts(21.43 percent), and estimates for 2001 even increaseits rate of penetration to 57.14 percent.

Timing of innovation and the innovation-strategy patterns among Belluno entrepreneurs

In all three districts analysed the ICT diffusioncurve showed quite a regular pattern. Should wethen assume that within hierarchical districts, too,the impact of leaders is unobservable? This is notcompletely true if we observe some research results



0.00%7.14%

78.57%

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100.00%

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100.00%

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ER

P

ED

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CA

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nd

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llective

In

tern

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Figure 22 Belluno firms: ICT adoption

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Figure 23 Belluno firms: EDI adoption




carefully. The perhaps unexpected result is that thebiggest influence is exerted in relation to the way inwhich entrepreneurs represent their entrepreneurialstrategy towards innovation. ‘Rational’ innovatorsare indeed the overwhelming majority of the districtentrepreneurs (57.14 percent) in Belluno. Theirstrategy on innovation adoption is related to theexpected profitability generated by the changes

introduced. But, notably, the category of‘innovators by disposition’ is also very important(35.71 percent). Quite contrary to the other twocases studied, self-defined ‘conservative’entrepreneurs correspond to a very marginalcategory (7.14 percent).

Looking at the cumulative diffusion curve, wenote that in this district the first ICT adoptions



0%10%20%30%40%50%60%70%80%

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Figure 24 Belluno firms: CAD adoption

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Figure 25 Belluno firms: company Internet site adoption

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Figure 26 Belluno firms: electronic commerce adoption




were made during 1990 (five years later than inManzano and 15 years later than in Riviera delBrenta), by ‘rational’ entrepreneurs who started touse CAD–CAM technologies. Subsequently,between 1990 and 1995 we note just a feeble drift.Only after 1995, as in the other districts, does theangle of diffusion become less acute and growthaccelerate. Here in Belluno, the behaviours of

entrepreneurs are matched with their propensity toICT adoption, as foreseen by the theoreticalexpectations. First adopters are generally‘innovators by disposition’, then we observe amovement among the ‘rational innovators’. Thelaggard curve is formed by ‘conservative’entrepreneurs (let us compare, for instance, themodes of adoption of firm web Internet site).



0%

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Figure 27 Belluno firms: electronic mail adoption

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Figure 28 Belluno firms: ISDN adoption

Figure 29 Belluno firms: corporate banking adoption


rational innovators






Discussion of results

After the catastrophic crash of the ‘new economy’(and the stock-market disillusionment about futureprofitability of most dot.com companies) there isnow more awareness of the realistic opportunitiesoffered by ICT. Superficial observations about thesupposed ‘inferiority’ of the district/local clustermodel are now only isolated voices, as few are stilladvocating the replication ‘on-line’ of the model oflocal clusters (Bellotti, 2001).

In this empirical work we have tried to test somemainly theoretical points which are interconnected.First, are Italian clusters slow in their level ofapplication of ICT? Second, from the ICT ‘menu’of applications can we observe a bunch oftechnologies that have found a higher diffusion?(And, as a consequence, are there less appropriatetechnologies that have been more or less rejected?)Third, is ICT diffusion hindered by the existence oflocal conservative habits about innovation diffusion?Fourth, can the supposed lack of diffusion beascribed to the ID model per se or to an insufficientcustomization and differentiation of the suppliers ofnew ICT? Fifth, what was the role played by local or national policymakers in accelerating theadoption path? Sixth, are firms in districtscharacterized by the presence of hierarchicalnetworks more likely to adopt technology?

We shall now discuss these issues in the sameorder.

First, in the three clusters analysed, the firmperformance in terms of adoption of ICT does not

show a particular situation of backwardness. Abouthalf the technologies investigated in recent yearsshowed a consistent level of application withpercentages of diffusion ranging from 50–100percent of the sample of firms analysed. The timingof the investigation was found crucial because thecycle of adoption by the district firms started in1995 as is shown by the inclination of the adoptioncurves for the various technologies. So, during 2001,at the time we ran the empirical survey, thediffusion process was still going on. Our analysiswas able to escape static evaluation, providing theclue for the analysis of the dynamic process of ICTadoption. ICT sometimes entered the district aftersome years of delay if we refer to the first Italianadoptions,14 but subsequently they were quicklyadopted by the local firms through a process ofimitative diffusion.

Second, from the menu of all ICT applications itis possible to verify that district firms havepreferably chosen relatively low-cost ready-madeICT rather than more complex systemictechnologies useful for electronic communicationand interactive data exchange among subcontractorsand suppliers (EDI and ERP). The latter areparticularly useful for organizing the managementof large hierarchies, but they seem not to have foundan enthusiastic acceptance in a model in which thegovernment of transactions is typically organized by‘pure markets’ and agents are small specializedproducers who focus their competence on the‘productive side’ and not on the governance of largeproduction chains. If trust is a low-cost device of



Figure 30 Belluno firms: total ICT adoption from innovators by disposition, rational and conservative by numberNote: Diffusion curves have been calculated dividing the total potentially adoptable technologies by the total number oftechnologies adopted each year by the firms sampled.


rational innovators






governance, and firms have free access to this socialtechnology, it is not a surprising result to discoverthat firms did not invest very much in intranetapplications or in EDI technologies. In fact,interviewed firms chose only a limited menu of theirfavourite ICT technologies: Electronic-mail, Internetwebsite, ISDN lines, corporate banking andCAD–CAM. Tools for structured communicationsand data interchange (ERP, EDI, videoconferencing)were typically limited in their diffusion. They wereregarded as not being useful supports for theexchange of intense communication, rich in terms ofknowledge, which exists within the districts, whereinformal relations, and face to face contacts, are theglue of local networking.

But this is not simply a consequence of atechnological backwardness of firms or a sign of alock-in process, but a strategic choice of maintainingthe district informal organization. Perhaps, in thenear future, the opening of the district firms tointernationalization processes will deeply changethis aspect. Clearly, all three districts face anongoing conflict between maintaining, on the onehand, the district’s informal organization and, onthe other hand, their technological competitivenessthrough ICT applications. Perhaps the ongoingprocess of internationalization and globalization willdiscriminate between less dynamic local firms(which underutilize ICT tools, and have a highpropensity towards informal communicative tools)and high-growth firms (which use a more proactivestrategy of ICT utilization).

Firms also failed to jump quickly into e-commerceapplications, even if one out of five, on average, nowpossesses this method of sale. However, in the caseof traditional goods it must still be demonstratedthat e-commerce will become a good substitute forthe traditional channels, because even other outsiderlarge firms – such as Benetton in Treviso orLuxottica in Belluno – have in recent years investedheavily in ‘solid’ commercialization activitiesdirected at the construction of megastores.15

Third, cluster firms clearly need appropriatetechnical solutions to implement some ICT such asCAD or data warehousing. They must be affordableand easy to change. The type of sophisticatedproducts supplied by the market (for instance thefirst version of CAD tools, or the Sap informationsystem for ERP) did not meet the needs of theinterviewed firms.16 So, diffusion was delayed. Here

a possible future role can be found for thegovernance of districts and clusters: the promotionof the dialogue between the users and producers oftechnology in order to create a direct mechanism ofinteraction as in von Hippel (1988).

Fourth, we found that people may have differentcognitive frames and talk in different ways but stillact similarly when they come down to business. So,as regards this aspect of innovation adoption, thedifference between different cognitive frames isirrelevant. Local district entrepreneurs shared aquite conservative view of their role in terms oftheir innovative strategy. They declared themselvesto be uninterested in innovation adoption but at thesame time they had very often adopted one or moreICT. Once innovation entered the district,sometimes after a period of uncertainty, it wasrapidly adopted by a swarm of local entrepreneursirrespective of their attitude regarding innovationadoption. But conservative attitudes amongentrepreneurs were found to be quite widespread inonly two districts, those more ‘canonical’ and lesspopulated by the presence of large firms. In fact, themajority of entrepreneurs in the most hierarchicalcluster – the Belluno district – interpretedthemselves as ‘rational’ innovators or as innovatorsby disposition. Thus we encounter here a clearcultural impact played by the largest organizations:the ‘modernization’ of cultural behaviours andmental models of local entrepreneurs.

Fifth, generally speaking, the diffusion of ICTappeared to be a market-driven process; however, insome clusters, as in the case of the Riviera delBrenta, the diffusion of ICT was sponsored by acollective actor (the local association ofentrepreneurs) which organized the testing andsome R&D projects for the adaptation of CAD orfor the building of a collective Internet site. InManzano, a private company – a ‘collective’ ICTactivator founded by the local bank and someleading local firms – sponsored the diffusion of newICT. This result shows that there are no simple bestpractices to propose, and that local collective actorscan play a significant role.

Sixth, we could inquire whether the higherdegree of hierarchy among district firms willinfluence ICT adoption. So, in other words, can thepresence of hierarchical networks in generalinfluence the adoption of new technology as regardsthe other smaller district firms located in the same






area? The elements here presented, which comparethe adoption rates of the Belluno district firms withthose of Manzano and Riviera del Brenta firms,show that these firms are not more likely to adoptICT technologies.

Conclusions

This paper has analysed how some Italian industrialdistricts, which can be considered special forms ofclusters, have managed the absorption of ICTtechnologies. Are they networks withouttechnologies? Two groups of researchers based inthe Veneto region have come up with two oppositeviews. Micelli and Di Maria (2000) have emphasizedthe historical backwardness of districts as regardsthe introduction of ICT, whereas Gottardi (2003)has argued exactly the opposite, while, consideringthe homogeneity of IDs, he has argued that theycould become the privileged locus of ICT adoption.

The investigation presented here seems todemonstrate that they are both wrong. Firmsbelonging to the districts analysed have adoptedICT technologies in respect to end customers, whilethey have been reluctant to use B2B linkages withsubcontractors and suppliers (EDI and ERPtechnologies). However, this should not beinterpreted as a lock-in phenomenon, but as a signthat they rely on flexible and trustful informalcommunication that cannot easily and efficiently bevirtualized in electronic form.

Regarding the controversy about the centralizingand decentralizing power of ICT technologies, thethree cases presented offer some inside information.Are local clusters cut out from the process ofchange and transformation of the economy? Clearlynot. And in this perspective, can we assume theextreme hypothesis of the ‘vanishing’ of the physical distance?

On the one hand, the dynamics ofcompetitiveness of individual district firms andclusters seems not to be based on the ‘virtualization’of the spatial economic relations, capable of over-imposing electronic transactions and randomlyselected economic relationships on the denseorganizational thickness of the locally organizedindustrial structure.

On the other hand, as regards the future

development of districts and clusters, externallinkages and distant interactions will tend to grow inimportance among the localized economic agents(Aage, 2001), exactly because of a larger utilizationof ICT for organizing explorative R&D, absorptivetechnological spillovers (Cooke, 2001; Oinas, 2002),access to global pipelines (Balthelt et al., 2002),global propagation and relocalization ofsubcontracting chains (Rullani, 2002), and a closerconfrontation with the model of multinationalcorporations (Lorenzen and Mahnke, 2002). We havediscussed here the question of clustering/proximityand whether it matters for the strategy of the districtfirms in relation to innovation. As Lorenzen andMaskell (2004) argued, whereas production and salesmay disperse, innovation may still need to be localized.These case-studies strongly support this argument.It is the proximity of firms in the IDs that may havehelped them intensively to adopt ICT. District firmsmay be small, they may be far from the majoreconomic centres (cities), but they appear to be quitequick in the adoption of ICT. It thus seems reasonableto suggest that localized learning in districts alsoincludes ICT adoption, and that districts hence holda competitive advantage. Considering the impact ofsize and of cognitive frame we might have expectedIDs to be slow in adopting ICT. On the contrary wediscovered that neither the prevailing small size northe presence of a conservative cognitive framemattered, and hindered a dynamic behaviour ofinnovation adoption, especially of the low-costready-made ICT technologies.

Appendix: Criteria for sampling

• Final firms of the district: industrial footwearfirms (163 out of 776), for the Riviera del Brentadistrict; chair producers for the Manzano district(154 out of 1,178); eyeglasses producers for theBelluno district (183 out of 1,182);

• Within each subsector about 20 firms weresampled for the presentation of a questionnaire;

• Some interviews with ICT experts were locallyorganized;

• Of 64 firms selected, in only 42 firms was itpossible to arrange the interview. For eachdistrict 14 questionnaires were compiled.






Acknowledgements

The interviewing phase and the statisticalprocessing of data were mainly carried out byMelissa Simonaggio, for whose competence andprofessional accuracy I would like to thank her.

Notes

1 There is a growing interest in the issue of localdevelopment, from the Italian school on IDs and localproduction systems (LPS) led by Becattini, Rullani,Garofoli, and Viesti, to the Porter analyses on clustering,to the Nordic and American geographical school (Amin,Maskell, Asheim, Cooke, and Storper).

2 Recently many international organizations have alsodeveloped regional clusters (IDs) analyses and policies,such as OECD (1999a; 2001), UNIDO (see van Dijk andRabellotti, 1997), the World Bank (see Ffowcs-Williams,1997), UNCTAD (1998), and the European Commission.

3 For sharp criticism of the cluster literature see Martinand Sunley (2003).

4 As shown authoritatively in the 1960s by Mansfield(1961), small firms tend to systematically delay theadoption of new technologies.

5 The following question was used to build the grouping ofinterviewees into three classes: ‘When in the market a newtechnology emerges, which is your typical behaviour:normally do you prefer to be among the first to adopt it,or do you prefer to wait and see if it is profitable andwhich results it produces in other firms, or again, do youtend to adopt only in a second period, because you preferto avoid changing your organization?’

6 This datum is not reported in the figure.7 Not all those who possess ISDN lines have an Internet

site: 77.78% possess only a firm web, while 11.11% have acollective website and the remaining are not linked.

8 This datum is not reported in the figure.9 For more information about the district see Grandinetti

(1999; 2003).10 This datum is not reported in the figure.11 This datum is not reported in the figure.12 Regarding the group of non-adopters (as we have seen

they are only about 30% of the total), all of them havedeclared that in future they will not implement thistechnology. This is not explained by the lack of financialresources at all, but by their perceptiveness that for themthis technology will be either scarcely useful or notappropriate to their size (data are not inserted in thisversion of the paper).

13 They also own some trademarks and are licensed bygriffes. In the recent period they have created or acquired

their own selling channels. The firms are: Luxottica,Safilo, DeRigo and Marcolin (Gambarotto et al., 2001).

14 The supply of EDI applications started in the US in thefirst years of the 1970s; however, Italian small firms hadaccess to these technologies only at the beginning of the1980s. The first adoption in Riviera del Brenta was in1995, in Manzano in 1985, in Belluno in 1992. ERP wasnot adopted in Riviera del Brenta and in Belluno; inManzano it was first adopted in 1995. CAD systemsentered Riviera del Brenta in 1975, they were launchedonly by the Lectra Systems, but their use becamewidespread later on; in Manzano they arrived in 1990;also in Belluno they arrived in 1990 and were quicklyadopted. The Internet website was provided to Italianfirms in the first years of the 1990s. Only after 1994 didthe technology improve, offering platforms and dynamicsites; in Riviera del Brenta they were first introduced in1996, in Manzano in 1994, and in Belluno in 1994. Thefirst collective sites were offered to Italian firms during1996. In Riviera del Brenta they arrived in 1998, inManzano in 1997, in Belluno they are not diffused. E-commerce is a very new technology. In Riviera delBrenta it was introduced in 1996, in Manzano in 1997, inBelluno in 1999. E-mail was introduced in the early1990s. In Riviera del Brenta the first adoption was in1996, in Manzano in 1994, in Belluno in 1994. ISDN lineswere introduced in 1994 by Telecom. The year ofadoption in Riviera del Brenta was 1995, in Manzano1995, in Belluno 1996. Corporate banking started in Italyat the beginning of 1990 (Astolfi and Negri, 1993), inRiviera del Brenta it was adopted in 1993, in Manzano in1996, in Belluno in 1996. The companies InformationTechnology Services srl, SGM srl, Telecom and LectraSystems are acknowledged for the information providedon the Italian market.

15 Information derived from a personal communication withthe managers of the two firms.

16 I would like to thank the consultant Zeno D’Agostino forhaving discussed this important point with me.

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Correspondence to:

Fiorenza Belussi (Associate Professor), Universityof Padua, Faculty of Political Science, Via del Santo22, 35123 Padua, Italy.[email: [email protected]]






are industrial districts formed by networks without technologies the diffusion of internet

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