Identity and Identification in Industrial Districts

Journal of Management and Governance 5: 61–82, 2001.© 2001 Kluwer Academic Publishers. Printed in the Netherlands.

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Identity and Identification in Industrial Districts

ALESSIA SAMMARRA1 and LUCIO BIGGIERO2

1Università degli Studi del Molise; Università Luiss Guido Carli – Istituto di Studi Aziendali, V.lePola, 12 – 00198 Roma, Italy (E-mail: [email protected]); 2Università degli Studi dell’Aquila,Università LUISS Guido Carli – Istituto di Studi Aziendali, V.le Pola, 12 – 00198 Roma, Italy(E-mail: [email protected])

Abstract. The aim of this article is to extend the concept of identity and identification to the studyof industrial districts. The theoretical model presented explains how identity and identification occurwithin localized production networks and examines how the process of identification affects theindustrial districts’ performance and competitiveness. The study adopts a multi-disciplinary approachwhich integrates the traditional framework rooted in the fields of regional studies, governance struc-tures, and management theory with some theoretical contributions developed in the field of socialpsychology. The concept of district identity is proposed as the missing link between the traditionalmacro-perspective based on shared culture, history, and values and a micro-founded approach to thestudy of industrial districts. It is stated that, through the process of identification, district identityexplains at the actor level the adoption of distinctive behaviors, such as commitment, trust, andcooperation, which represent the ultimate source of competitive advantage of the district model.

Key words: industrial districts, inter-organizational networks, organizational identification, socialidentity

1. Introduction

Industrial districts are webs of inter-organizational networks mostly composed bysmall and medium firms localized in a limited territorial area and specialized inthe same economic sector (Biggiero, 1999). Increasing interest towards industrialdistricts is motivated by their outstanding performance in terms of employmentand exports. In Italy, per capita income has grown faster in district areas in rela-tion to the average of the country, and also in comparison to other industrializedareas characterized by large production scale. Moreover, in a number of sectors,industrial districts produce very high proportions of Italian exported outputs and,in a few, they are absolutely dominant in world markets (Sforzi, 1990; Storper,1993).

To date, researchers and policy makers focused on the role played by sharedvalues, history and culture to explain the constitution and evolution of the districtform (Goodman and Bamford, 1989; Brusco, 1990a,b, 1995; Pyke et al., 1990;Pyke and Sengenberger, 1992; Trigilia, 1990). This macro-based explanation issupported by the fact that most Italian industrial districts are localized in the same

62 ALESSIA SAMMARRA AND LUCIO BIGGIERO

area, namely the North and Central-East: this area is also quite homogeneous interms of social, historical and economic background, compared to the country’sNorth-West and South (Biggiero and Sammarra, 1999). This empirical observa-tion is consistent with an institutionalist perspective, which views the evolution ofeconomic systems as shaped by the external environment through the process ofcoercive, mimetic, and normative isomorphism (DiMaggio and Powell, 1983).

In the case of Italian industrial districts, the role of social and institutional forcesis particularly relevant because local proximity and economic specialization rein-force isomorphic processes, explaining much of the distinctiveness and persistenceof the district model. However, the risk of this over-socialized perspective is tolimit our understanding of the formation and evolution of industrial districts tothe role played by historical and institutional forces, independently of the actorsactually creating and fostering the district. The extensive literature on industrialdistricts does not take into account how district members perceive and evaluate thedistrict and how these perceptions affect the actual behaviors adopted by districtmembers.

This theoretical perspective does not allow the investigation of two relevantresearch questions. First, is it possible for industrial districts localized in the samecultural and historical context to follow different patterns of evolution? Second, arestructural change and innovation within industrial districts context-driven or maythey also be internally generated by district members? In order to answer thesequestions, research efforts should be re-addressed consistently with the idea that“culture is not a once-for-all influence but an ongoing process . . . it not only shapesits members but it is also shaped by them, in part for their own strategic reason”(Granovetter, 1985: 484).

In the investigation of the industrial districts’ formation, maintenance anddevelopment, different streams of research can be identified: (a) the economicperspective, focused on the study of positive externalities, proximity advant-ages, the firms’ size distribution, clustering and increasing returns; (b) the socialperspective, focused on the characteristics of the local institutions, the socialcontext and norms; (c) the historical perspective focused on the historical deter-minants of the industrial districts’ formation; (d) the geographical perspective,focused on the geographical distribution of industrial districts and determinantsof regional development, and (e) the behavioral and cognitive perspective, focusedon the content of transactions and learning within the district’s network. In thispaper, we focus on the latter perspective, which is one of the least extensivelyinvestigated.

In his study on technologically dynamic and export-oriented productionnetworks in France, Italy and USA, Storper (1993) already acknowledges thenecessity of re-focusing the investigation of regional industrial districts fromthe traditional structuralist and macro-founded approach (Piore and Sabel, 1984;Becattini, 1987; Brusco, 1982, 1986) to the behavioral basis of inter-firm relations,that is, the qualitative behaviors of agents in a network. The author points out that

IDENTITY AND IDENTIFICATION WITHIN INDUSTRIAL DISTRICTS 63

“the potential positive externalities of production networks, in the form of techno-logical learning, innovation, and flexibility are only realized – or, are differentiallyrealized – according to the concrete qualities of the transacting that is carried out”(Storper, 1993: 435). While some of these differences in outcome, could, in prin-ciple, reflect different characteristics of the social, historical, and economic contextsurrounding the production network, the question would still arise as to why somecharacteristics are shared or why, in any case, the preferences or behavior of someactors become the norms of the network. In other words, “only some characteristicsand behaviors of the social context take the form of social mutual engagements andthus become enforceable social habits of the transactional activity in the network”(1993: 435).

Even though Storper’s declared objective is to focus on the conventions andbehavioral routines shared by individuals and collective agents, his approach isnot completely successful in the attempt to avoid the theoretical reductionism ofthe traditional macro-founded approach. Storper’s model is rooted in the economictheoretical background and lacks the conceptual tools necessary to move the inves-tigation to the micro level in order to explain how conventions in a given productionnetwork actually arise and become socially shared among network members to thepoint of incorporating specific forms of cognition, practices, and social rules.

In this study, the concept of district identity is proposed as the missing linkbetween the traditional macro-perspective based on shared culture, history, andvalues and a micro-founded approach to the study of industrial districts. It is statedthat, through the process of identification, district identity explains at actor levelthe adoption of distinctive behaviors, such as commitment, trust, and cooperation,which represent the ultimate source of competitive advantage of Italian industrialdistricts (Brusco, 1995).

In order to extend the investigation of localized production networks to themicro level, this paper proposes a multi-disciplinary approach which integratesthe traditional framework rooted in the fields of regional studies, governance struc-tures, and management theory with some theoretical contributions developed in thefield of social psychology.

The next two sections elaborate the concept of district identity and identifica-tion, drawing upon social identity theory and organizational identity theory. Sectionfour discusses the impact of identity and identification on district performance andcompetitiveness.

2. Theoretical Background

Studies on identity are extremely vast and complex, crossing many disciplines(psychology, sociology, management) and different levels of analysis (individuals,groups, organizations, and inter-organizational networks).


2.1. IDENTITY AND IDENTIFICATION AT INDIVIDUAL AND GROUP LEVEL

At individual and group level, identity has been studied mostly in the field ofsocial psychology, symbolic interactionism and psychodynamics. In this context,the most important theoretical contribution is Social Identity Theory (SIT) (Tajfel,1978, 1981; Tajfel and Turner, 1979; Turner, 1982, 1985; Turner et al., 1987;Abrams and Hogg, 1988).

The basic idea of SIT is that people have a repertoire of social categories (e.g.:nationality, ethnic group, political affiliation). The particular category in whichone believes to belong provides the basis for the self-definition and self-conceptof individuals, allowing for a definition of who one is in terms of the definingcharacteristics of the category (Tajfel and Turner, 1985).

According to SIT, social identities are descriptive, prescriptive, and evaluative(Hogg et al., 1995). Prescriptive and descriptive means that social identity bothdescribes and prescribes one’s attributes as a member of that group. This has somerelevant consequences on individual behavior in terms of in-group and out-grouprelationships. Self-perception and conduct become stereotypical and normativewith respect to in-group members, while inter-group behaviors acquire compe-titive and discriminatory attitudes towards out-group members. Social identitiesare also evaluative in the sense that groups and their members are strongly motiv-ated to adopt behavioral strategies for achieving or maintaining in-group/out-groupcomparisons that favor the in-group, and thus the self.

Social identification is the perception of oneness with or belonging to somehuman aggregate. Identification is an extreme form of relational modeling allowingthe individual to define his/her identity in relation to the characteristics of perceivedsocial groups.

To explain the process of social identification and its consequences on indi-viduals’ behavior, SIT invokes the operation of two distinct processes: self-enhancement and self-categorization (Figure 1).

Self-enhancement is the psychological mechanism which assumes that peoplehave a basic need to see themselves in a positive light. According to SIT, identifi-cation and inter-group behavior are guided by the pursuit of evaluationally positivesocial identity, through positive inter-group distinctiveness. This means that iden-tification will more likely occur in groups that satisfy an individual need forpositive self-esteem, providing a positive feed-back on the self-concept, especiallyin comparison with relevant out-groups (Abrams and Hogg, 1988).

Self-categorization (Turner, 1985, 1991; Turner et al., 1987) is the cognitivemechanism by which people construct social categories in terms of prototypes.A prototype is a subjective representation of the defining attributes of a socialcategory that capture the context-dependent features of group membership, oftenin form of representation of exemplary members (Hogg et al., 1995). Groupprototypes are constructed by the principle of meta-contrast which minimizesintra-group differences and maximizes inter-group differences. The process of


Figure 1. The identification process at the individual level.

identification occurs depending on the extent to which a member, including self, isperceived to be close or similar to the group prototype.

In addition to being motivated by self-enhancement, social identification is alsomotivated by a need to reduce subjective uncertainty on how to behave and whatto expect from the physical and social environment within which one finds oneself(Hogg and Terry, 2000). In Hogg and Terry’s words, “self-categorization reducesuncertainty by transforming self-conception and assimilating self to a prototypethat describes and prescribes perceptions, attitudes, and behaviors” (2000: 124).

SIT explicitly acknowledges the behavioral consequences of the processof social identification to explain group processes and inter-group relations.According to SIT, identification explains, at an individual level, the emergenceof group phenomena, such as group cohesion, cooperation, emotional contagion,collective behaviors, shared norms, and mutual influence: “Social identificationbrings self-perception and behavior into line with the contextual relevant in-groupprototype, and thus transforms individuals into group members and individualityinto group behavior” (Hogg et al., 1995: 261).

2.2. IDENTITY AND IDENTIFICATION AT THE ORGANIZATIONAL LEVEL

Identity studies have been recently extended to the field of management andorganizations.


Albert and Whetten (1985) define organizational identity as the central,distinctive, and enduring character of an organization.

The notion of centrality refers to the core set of attributes that denote the essenceof the organization. The notion of distinctiveness expresses that organizationalidentity is built around those unique features of the organization that make itpossible to emphasize differences with respect to similar organizations. Finally, thenotion of enduring refers to the set of organizational features that are also stableand continuous.

Albert and Whetten’s definition emphasizes the cognitive nature of organiza-tional identity as a by-product of the process of abstraction and perception of themembers. Organizational identity may affect the members’ behavior through theprocess of individual identification with the organization. The link between identityand identification lies on the fact that individuals apply the same process of socialcategorization to make sense of the external environment or social context, as wellas to define their own identity (Tajfel and Turner, 1985).

Ashforth and Mael (1989) were first to systematically introduce SIT and self-categorization theory to organizational psychology, to explain the members’ iden-tification with the organization. Therefore, they define organizational identificationas a specific form of social identification.

Through the cognitive mechanism of self-categorization, the process of identifi-cation with the organization is mediated by perceived similarity between organiza-tional and individual identity. The higher the similarity between the organizationalidentity perceived by one member of the organization and his/her perceived indi-vidual identity, the higher is his/her identification with the organization (Bergami,1996). Identification provides a cognitive link between individual and organization,“embedding one’s sense of self in the organization” (Ashforth and Mael, 1996: 40).

Through the psychological mechanism of self-enhancement, the process ofidentification with the organization is mediated by the perceived attractiveness ofthe organizational identity (Dutton et al., 1994). This means that the perceivedprestige of the organization positively affects the members’ willingness to identifywith it because individuals are more likely to define themselves in terms of theattributes of the organization when those attributes provide a positive feed-back onthe individual self-concept.

As Hogg and Terry point out, reduction of uncertainty and self-enhancementare probably independent motivations for social identity processes: “in somecircumstances it may be more urgent to reduce uncertainty than to pursueself-enhancement, whereas in others it may be the opposite” (2000: 125).

The process of identification has some relevant consequences for the organiz-ation (Ashforth and Mael, 1989, 1996) in terms of the individuals’ behavior andattitudes.

First, identification leads to the emergence of depersonalized trust among theorganization’s members. That is, through the process of identification, individualsmay engage in trusting behaviors independently of prior interactions with each


other. The process of categorization in in-group and out-group members by itselfprovides valid and reliable information about other people’s behaviors. As Ashforthand Mael state “identification extends one’s network, and therefore trust, frompersonal to social ties” (1996: 42).

Second, organizational identification reinforces the individuals’ commitmenttowards the organization because the greater the members’ identification, thetighter the perceived association between personal success and organizationalsuccess. In the members’ perception, their personal esteem and interests are atrisk.

Furthermore, organizational identification positively affects the members’ tend-ency to internalize beliefs, values, meanings, and objectives implicated in theperceived organizational identity. As a consequence of the psychological needfor consistency, organizational identification motivates individuals to align andconform their own behaviors and beliefs to the organization’s norms.

Finally, organizational identification affects the individuals’ sense-making andsense-giving (Daft and Weick, 1984; Starbuck and Milliken, 1988; Gioia andChittipeddi, 1991; Thomas et al., 1993; Weick, 1995; Gioia and Thomas, 1996).By supporting the individuals’ beliefs and values, identification motivates sense-making oriented to the perceived organizational identity, defining what must benoticed and interpreted as potentially relevant to the organization’s status andperformance (Ashforth and Mael, 1996).

2.3. IDENTITY AND IDENTIFICATION AT THE INTER-ORGANIZATIONAL LEVEL

In their study on strategic groups, Peteraf and Shanley (1997) extend the conceptof identity to the inter-organizational level. As the authors point out, the notion ofinter-organizational identity implies organizations’ cognitive and learning abilities,which allow the perception of some core and distinctive attributes defining thegroup.

In the strategic field, several studies show that the managers’ mental modelsof their relevant competitive environment are built through a process of cognitivecategorization (Rosch, 1978; Lakoff, 1987; Porac et al., 1989; Porac and Thomas,1994; Porac et al., 1995). Instead of comparing all pairs of organizations withrespect to all possible attributes, managers code the similarities and differencesbetween organizations in a summary way, by clustering attributes that co-occuracross an organizational field into general categories. Firms differ in how well theyrepresent a category ideal, leading to a core-and-periphery structure. Core firms arethose who are closer, with regard to defining attributes, to the mean values of thecategory, and they are used as referents in similarity judgments to clarify ambiguityand define category boundaries (Porac et al., 1995; Reger and Huff, 1993).

The perception of the inter-organizational identity has two importantconsequences. First, the group’s boundaries are defined so that it is possible toclassify other organizations as in-group and out-group members. Second, the beha-


Figure 2. The identification process at organizational and inter-organizational level.

vior of organizations perceived as group-members become more predictable as aconsequence of the categorization process.

The focus on a selected set of central and distinctive features suggests that therewill neither be unanimity among observers regarding the group’s membership, norunanimity of expectations about the members’ behaviors.

Given a perceived inter-organizational identity, the process of identificationmay occur also at the inter-organizational level. Following the theoretical modeldiscussed at the individual and organizational level, identification is based onthe perceived similarity between inter-organizational identity and organizationalidentity and on the attractiveness of the inter-organizational identity.

The implications of inter-organizational identification are also similar to thosediscussed at organizational level (Peteraf and Shanley, 1997). The process of iden-tification affects both the organization’s behaviors and its cognition. In terms ofcognitive effects, through the process of identification, inter-organizational identityprovides a lens for perceiving and interpreting the environment, affecting strategicdecision-making through the process of sense-making and sense-giving. In termsof behavioral effects, the process of inter-organizational identification induces theorganization to align its values and beliefs in relation to the characteristics andactions of the group and to assess the reliability of other organizations in termsof group norms rather than through past dyadic relationships. Finally, Peterafand Shanley (1997) suggest that social identification processes make possible


population-level learning, in addition to inter-organizational learning, changinghow group members learn form their interactions.

The identification process at the organizational and inter-organizational levelsis explained in Figure 2.

3. Identity and Identification within Industrial Districts

3.1. DISTRICT IDENTITY IN THE LIGHT OF SIT

SIT and organizational identity theory provide a fundamental contribution whichallows to extend the concept of identity and identification to the study of industrialdistricts.

Paralleling Albert and Whetten’s definition (1985), District Identity (DI) refersto the set of central, distinctive, and enduring characteristics of the district.

Central attributes refer to common features among district members in termsof formal and structural aspects, such as the firms’ size and ownership structure; interms of relational features, such as overlapping social networks and communica-tion patterns; and in terms of informal and symbolic features, such as institutionaland historical background and social habits. Distinctive attributes refer to thosefeatures that emphasize similarities among district members and differences inrelation to outsiders. For instance, geographical localization may become a salientcomponent of DI, making it possible to distinguish district members’ from similarorganizations, such as other small and medium firms specialized in the sameeconomic sector but located in a different territory. Finally, enduring attributesrefer to those features that characterize the district with some degree of temporalstability and continuity.

The emergence of a DI presupposes a cognitive effect, the recognition that thedistrict exists as a by-product of the actors’ attempt to scan and make sense of theircompetitive and social environment. It also provides an evaluative effect based onthe appreciation of the district’s attributes, upon which a collective identity may bebuilt.

As explained in the previous section, the SIT model relies on two distinct mech-anisms to explain the process of identification: (i) a cognitive mechanism throughcategorization processes based on perceived similarities among social actors withrespect to salient attributes and features defining the group’s category, (ii) a psycho-logical mechanism through self-enhancement processes based on the perceivedprestige of the group.

Compared to SIT, this section proposes an extended model which includesalso a social mechanism that lies on categorization processes based on perceivedinterdependencies among district members. We first discuss how the cognitive andpsychological mechanism identified in the SIT framework apply to the case ofthe organizational identification with the district. Then we explain the mechanismbased on perceived interdependencies.


At the individual level, the psychological needs of self-enhancement impliesthat people are more likely to identify with prestigious social groups. In their studyon strategic groups’ identity, Peteraf and Shanley (1997) argue that this same mech-anism applies also at the inter-organizational level. Specifically, the two authorssuggest that the presence of high-status firms within the strategic group affectsthe perceived prestige of the group, and thus reinforces the adoption of mimeticactivity, which facilitates the process of identification with the group based onself-enhancement needs.

Applying the self-enhancement mechanism to the case of industrial districts,it follows that the process of identification with the district is mediated bythe perceived attractiveness of the district. This means that, based on the self-enhancement mechanism, the process of identification with the district is morelikely to occur in those districts which have an established market reputation.

Many Italian industrial districts have a world wide reputation for the highquality of their products, that involves the district as a whole rather than specificfirms. The district performs a sort of “hidden” marketing role: agents shopping forspecific products receive a strong signal through district reputation, reducing searchcosts for external buyers and marketing needs for internal producers. The district’sreputation is extended to single firms within the district, which come to benefitfrom the marketing advantage of being perceived as a district member comparedto outside competitors. The reputation effect becomes a form of positive extern-ality within the district which motivates organizations to identify with the districtand to adopt similar features and behaviors with respect to perceived prototypicalmembers of that district.

According to the SIT model, on the basis of self-categorization processes, theidentification with the district is mediated by the perceived similarity between theDI and the organizational identity. This does not mean that the district’s membersmust be perceived to be identical, because categorization and depersonalizationoccur only on attributes implicated in the DI (Ashforth and Mael, 1996; Brewer,1993).

In their study on strategic group, Peteraf and Shanley (1997) point out that, atthe inter-organizational level, the process of self-categorization occurs dependingon the structural characteristics of the industry. Specifically, they argue thatphysical proximity and network density facilitate the cognitive process of cate-gorization, drawing the attention of different organizations to one another, thusleading to a greater mutual observability and comparison. Further, because prox-imate firms often share local buyers and input sources, they are also likely toobtain information about one another through these intermediary sources. Thedegree of diversification within the industry may instead prevent the process ofidentity construction because the presence of different entrepreneurial interest andcognitive maps reduces the abilities to construct cognitive categories based onprototypes.


As Biggiero pointed out (1998), following Peteraf and Shanley’s propositions,the structural characteristics of Italian industrial districts support the emergenceof a DI and the process of identification with it. By definition, local proximityand network density characterize the district model. The degree of diversificationis generally low since district members are typically small and specialized firms.Finally, the few firms that actually market the final product within the district areoften high-status organizations.

So far, the process of identification within industrial districts has been explainedby applying the SIT model of self-enhancement and self-categorization to the caseof an inter-organizational entity. The theoretical advantage of this model lies on itsability to explain the process of identification with the district on the basis of theunderlined dynamics that occur at actor level (the single organizations that consti-tutes the district). Because of its disciplinary root in social psychology, SIT makesit possible to specify in detail how identities are internalized by social actors andhow identification produces identity-consistent behaviors. It has been suggested,however, that SIT, especially in its recent extension into the self-categorizationtheory, has become too strongly concerned with cognitive processes alone (Hogget al., 1995).

Drawing upon the SIT theoretical framework, organizational identity theoryalso overlooks the role of the self-categorization mechanism, explaining theprocess of identification based on perceived similarities within and between organ-izations, and underestimating the role of social interaction and inter-personalinfluence.

3.2. THE ROLE OF SOCIAL INTERACTION IN THE PROCESS OF

IDENTIFICATION WITH THE DISTRICT

SIT does not construct group processes from inter-personal processes. The set offactors traditionally associated with group formation (interpersonal interaction andattraction, proximity, shared goals or threat) are not necessary for identification tooccur. They can be facilitating factors to the extent that they make categorizationprocesses more immediate and salient to the actors’ perceptions.

In this model, similarity is a central aspect, being one of the antecedents ofthe process of identification but also one of the outcomes. Just as the social clas-sification of others engenders stereotypical perceptions of them, so too does theclassification of oneself. Subsequent identification engenders the attribution ofprototypical characteristics to oneself and, thus, the adoption of similar featuresand behaviors (Turner, 1984, 1985; Ashforth and Mael, 1989). In other words,similarity among social actors facilitates the construction of collective identitiesand, in turn, the identification with perceived social categories motivates socialactors to adopt mimetic attitudes that increase similarity among group members.

It is important to notice that similarity and isomorphism occur only throughcognitive and psychological mechanisms, independently of social interaction and


inter-personal influence. Thus, according to SIT, it is possible for social actorsto recognize the existence of a group, to identify with it, and to assume groupbehaviors even in the absence of direct interaction among group members.

This characteristic of the categorization theory is particularly appealing forPeteraf and Shanley’s attempt to develop a theoretical model of strategic groupidentity. Strategic groups are sets of firms with similar strategies, sub-structureswithin an industry defined by common mobility barriers (Porter, 1979). In thesesets of firms, internal relationships are mostly limited to competition, mutual obser-vation and modeling. Thus, a theoretical model that does not lie on direct socialinteraction to explain group level phenomena is particularly appropriate.

Industrial districts are instead inter-organizational networks highly intercon-nected by means of vertical and horizontal relationships (Biggiero, 1999). Onone hand, the concentration in a limited area of many firms specialized in thesame economic sector implies the existence of competitive horizontal relationships,which contributes to enhancing the overall efficiency of the district. On the otherhand, the high level of vertical specialization and inter-firm division of labor, whichcharacterizes the overall productive system, imply the existence of strong verticalinterdependencies among the district’s members. These vertical relationships aretypically based on stable cooperative relationships, by means of formal contractsand also informal long-term agreements.

In such a complex and dense organizational context, a theoretical model of theemergence of a collective identity should avoid the conceptual limitation of SITpsychological reductionism. Those limitations can be acceptable when the model isapplied to the case of horizontal networks, but not in the case of the complex socio-economic system based also on vertical relationships, such as industrial districts.Direct social interaction plays a primary role among district members and cannotbe considered a secondary or marginal factor in explaining the emergence of groupphenomena as in the case of strategic groups.

In the district organizational context, social interaction may enact also identifi-cation processes based on perceived complementarity. This means that DI may bebuilt not only grouping social actors that are perceived to be similar with respectto some salient attributes, but also grouping social actors that are perceived to beinterdependent in relation to salient goals or activities.

District identity based on complementarities rather than on similarities amongdistrict members is also consistent with the structural evolution of many Italianindustrial districts. While previous studies focused on the internal homogeneityamong the firms of a certain district (the common trait was, for instance, beingsmall-and-medium sized family-owned firms), recent empirical research showsan increasing heterogeneity among district members (including also multina-tional companies through the acquisition of district firms, private associationsand consortia, public institutions), and emphasize the inter-firm relationships andbusiness groups that crisscross them (Lipparini and Lomi, 1999; Lazerson andLorenzoni, 1999).


Figure 3. The identification process at ID level.

In terms of categorization theory, the implication is that social interactionaffects the process of identification in two different ways. First, as already acknow-ledged within the SIT framework, constant social interaction facilitates mutualobservation and comparison, and consequently facilitates the perception of givensimilarities among groups. Second, social interaction may extend the basis for self-categorization, highlighting social attributes that are not perceivable in the absenceof direct and constant interaction. This second effect shifts the cognitive basis ofcategorization from individual and social attributes that are easy and immediate toobserve, such as race in the case of individuals and size in the case of firms, tocomplementary attributes such as shared goals and mutual needs.

In short, in the extended model discussed above, district identity and identi-fication within industrial districts are explained through the enactment of threemechanisms (Figure 3):


− a cognitive mechanism through categorization processes based on perceivedsimilarities among district members with respect to salient attributes andfeatures;

− a social mechanism through categorization processes based on perceivedinterdependencies among district members with respect to salient activitiesand goals;

− a psychological mechanism through self-enhancement processes based on theperceived prestige of the district.

The next section discusses how identity and identification affect the district’sperformance and competitiveness.

4. District Competitiveness and Identification Processes

Through the identification process, DI directly affects the competitiveness ofindustrial districts, explaining the emergence of citizenship behaviors, trust, andcommitment among district’s members.

Some structural characteristics of the Italian industrial districts, such as thefirms’ proximity and social connection, support the idea of a kind of “involuntarycooperation” among the district’s members, which helps explaining the effective-ness of the district model in reducing transaction and coordination costs. Therefore,these structural features ensure an effective circulation of information that limitsthe possibility to pursue opportunistic behavior. In such circumstances, the negativereputation effects outweigh the temptation to cheat. However, positive interactionsamong the district’s members go, in certain cases, much further than what canbe considered an expression of involuntary cooperation. The existence of worksharing practices among district firms is an example. When a firm has too muchwork, it may share it out with other firms; at times, firms will even permit theirequipment to be used by workers from another firm on their premises (Becattini,1989). In Italian industrial districts, the avoidance of opportunistic behaviors, theexistence of solidarity mechanisms and the many forms of interaction are mainlyassociated with types of voluntary sharing of projects and objectives, as well aswith other manifestations of intentional cooperation, which can be better explainedon the basis of identification processes within the district.

As stated by SIT, identification affects intra-group dynamics because groupmembers become predisposed toward pro-social behaviors as an affirmation ofthe presumably shared identity with other members. The emergence of citizen-ship behaviors (Van Dyne et al., 1994) explains the activation of solidarity andreciprocal aid in informal relations or, at least, of collaborative extra-contractualbehaviors (in case of formal relations). The cooperative attitude toward buildingmulti-party collaboration is a type of citizenship behavior, which allows groupmembers to prefer shared and intra-group solutions and activities rather thanindividualistic and extra-group ones.


Following Ashforth and Mael’s concept of depersonalized trust (1996), identi-fication with the district allows the perception of district firms as reliable on thebasis of group membership rather than on direct experience. Also, the locus oftrusting behavior may change as identification processes develop: “Whereas trustbetween firms may have originally been between individual managers or manage-ment teams, under the influence of identification processes, trust becomes moreorganizationally based” (Peteraf and Shanley, 1997: 171).

The process of identification also affects the members’ commitment towardsthe district. Commitment towards a social entity (social groups, organizations,networks) refers to the pressure to continue belonging to that entity. To the extentthat members identify with the district, they become more attached to it, they feelto have more at stake in the district, they develop a stronger interest in continuingtheir membership. It is possible to distinguish among three different forms ofcommitment (Allen and Meyer, 1990): affective commitment, which is based onstrictly psychological aspects (Reichers, 1985); calculative commitment, which isbased on an evaluation of shifting costs and on the set (size and attractiveness) ofalternatives (Becker, 1960); and normative commitment (Wiener, 1982), related toethical rules linking some member to the organization.

As already said in the previous section, the process of identification impliesthe recognition that the district exists, that is, the process of identification impliesthat there is a perceived DI. However, since it enhances the members’ commit-ment towards the district, once the process of identification has developed, it alsoexplains the retention of the district identity: once the process of identification isactivated, “overall patterns of interactions will need to shift dramatically before thegroup and its identity are reevaluated” (Peteraf and Shanley, 1997: 171).

The emergence of trust, citizenship behaviors and commitment may have apositive impact on district competitiveness, enhancing both efficiency and effec-tiveness. We can distinguish three pairs of relationships (Figure 4), correspondingto the link between the three main consequences of identification processes abovediscussed – the social-psychological variables –, and the three main drivers ofthe districts’ competitiveness – the performance variables – which are: innovativecapability, high flexibility and variety of producers, and low transaction costs.Before going through the explanation of each pair of relationships it is importantto underline that this approach does not deny the primary role played by extern-alities, proximity advantages and increasing returns to explain the effectivenessof the district model. More specifically, the analytical focus on the interactionbetween socio-psychological variables and performance variables allows observeat the existence and effect of positive externalities and increasing returns througha complementary, rather than alternative, framework with respect to the industrialeconomic one, which is more focused on the structural and technological aspects.


Figure 4. ID’s identity and competitiveness.

4.1. FIRM’S COMMITMENT/INNOVATIVE CAPABILITY

The capability to introduce product and process micro-innovations is a peculiarfeature of Italian industrial districts, which is exemplified by the high varietyof products supplied and by the ability to quickly reorganize both productionprocesses and inter-firm relationships. Sometimes these abilities are addressed inthe literature as the special creativity of district firms. It is argued that the lack ofeconomies of scale and market power are compensated by the district firms’ abilityto constantly introduce micro-innovations and re-organization of the productioncycle. Within these limits, such abilities are made possible by firm commitment andcitizenship behavior: the former determines an unstinting and attentive interactionbetween district firms in serving customers and in developing new products, as wellas the availability of compensation mechanisms to face with stresses on the labormarkets. An example of this is the commitment of employees to accept overtimework when labor is scarce, and the reciprocal pledge of employers not to lowerwages when labor is abundant (Brusco and Paba, 1997, Brusco and Solinas, 1997).The latter illustrates the cooperative attitude toward multi-party collaboration, andboth entail a kind of loyalty between firms, which means not being bounded toa short-term perspective. Moreover, both citizenship behavior and commitmentfoster knowledge transfer among the district’s members, reducing search costs andpromoting a faster rate of innovations within the group (Teece, 1994).


4.2. CITIZENSHIP BEHAVIOR/FLEXIBILITY AND VARIETY OF PRODUCERS

Two factors of competitiveness of industrial districts are high flexibility in produc-tion processes and labor mobility, and a large variety of producers, in terms of size,degree of specialization, organization design, etc. Such unique features are madepossible by two relevant aspects of citizenship behaviors. The first is the role ofsolidarity mechanisms, which include social support systems aimed at reducingrisks of high vertical and horizontal labor mobility, such as educational and trans-port infrastructures, as well as special agreements for social security and wagebargaining. The second aspect is the cooperative attitude, which is recognized asthe distinctive trait of district firms, which are able to combine cooperation andcompetition. That makes it relatively easy and quick to build inter-organizationalalliances, thereby exploiting the advantages of the large variety of producers.The result is the number of formal and informal inter-organizational networks,which constitute industrial districts, and which often play a role of catalysts ormeta-organizers (Biggiero, 1999; Pilotti, 1999).

4.3. INTER-FIRM TRUST/LOW TRANSACTION COSTS

Most authors agree that trust is one of the key competitive factors of inter-organizational networks and of industrial districts. Mutual trust among districtfirms replaces the need of complete contracts and internalization even in the caseof uncertainty, long-term interactions and idiosyncratic investments (Williamson,1975, 1985), preserving vertical decentralization and organizational flexibility.Without high levels of trust, which allows savings in transaction costs, the highflexibility and variety of producers and of production processes would not bepossible (Biggiero, 1999; Dei Ottati, 1994). Moreover, through cooperative atti-tude, inter-firm trust and citizenship behavior allows for group action, such asthe formation of trade associations or the development of standards for technicalperformance.

4.4. NEGATIVE EFFECTS OF IDENTIFICATION PROCESSES

District identification processes may also produce negative effects on firms’ and thedistrict’s performance, reducing strategic variety and nimbleness of response. Theidentification processes increase the degree of homogeneity of district members,and thus reduce the diversity of their viewpoints, cultural values and behaviors.Consequently, they lower the variety of responses to environmental changes, andhence make district structure more risky.

The explanation lies on the cognitive effect of the shared norms that havedeveloped to guide behaviors within the group, which may limit the ability to anti-cipate external change and to adapt successfully to environmental threats (Peterafand Shanley, 1997).


Identification with the district may excessively focus the attention on membersof the group and away from outside competitors. Such behavior limits strategicattention to local opportunities and threats, making group members vulnerable tocompetitive attacks from outside the group (Porac and Thomas, 1990; Levinthaland March, 1993).

Moreover, a negative consequence of the process of identification may arisewhen the perceived benefits of group affiliation may exceed the actual benefits(Peteraf and Shanley, 1997). For instance, in the case of regional industrial districts,the identification with the district could prevent firms from adopting strategies ofproductive delocalization. By choosing to invest resources in the district, they mayforgo more valuable strategic opportunities that may differentiate them from otherdistrict firms.

5. Conclusions

Identity and identification are a relatively new area of research in the fieldof management and organization studies. The aim of this article is to extendthis field of research to the study of industrial districts. The theoretical modeldiscussed in this article explains how identity and identification occur within thedistrict and examines how the process of identification affects performance andcompetitiveness of industrial districts.

The concept of district identity fills in the gap of previous theorizing, introdu-cing a cognitive and behavioral perspective. Specifically, identity and identificationlink the micro-level processes by which firms interact with their macro-levelcontext. This different focus seeks to underscore that the structure of the districtboth determines and is determined by the members’ perceptions of their relevantenvironment.

With respect to the SIT and to the current literature on organizational andinter-organizational identity, this study has focused on the role played by socialinteraction in the process of identification with the district. It is argued that, indense and complex networks such as industrial districts, constant social interactionmay enact processes of categorization based also on perceived interdependenciesamong social actors.

With respect to the literature on industrial districts, and mainly to the economicperspective, which focus on structural and price-income variables, the investiga-tion of social identification processes offers three main theoretical contributions.Firstly, it introduces a cognitive perspective to explain the traditional sources ofcompetitive advantage of the district model through the effects of: (i) the firm’scommitment on innovative capability; (ii) citizenship behavior in relation to flex-ibility and variety of producers; (iii) inter-firm trust on lowering transaction costs.Secondly, it sheds light on the micro-behaviors shaping the formation and devel-opment of industrial districts, which offers a complementary approach that helpsintegrating the social and historical perspective. Finally, a deeper understanding


of the role played by identification processes to sustain the industrial district’sdevelopment and maintenance could give new suggestions useful to define welltuned policy interventions, which can affect the deep relational structure of thedistrict and better connect the social (macro) and the individual (micro) levels.

More research efforts are required to answer the many theoretical and empiricalquestions unexplored in this paper. A first attempt to test the theoretical modelabove discussed has been carried out in a study in the biomedical district localizedin the Northern Italian region of Emilia Romagna (Sammarra, 2000; Biggiero andSammarra, 2001). The study identifies and tests four antecedents of the identifi-cation with the district. The first two refer to the perceived attractiveness of thedistrict and measure: (i) the attractiveness of the perceived district identity (howthe firms perceive the district); (ii) the attractiveness of the perceived district’sexternal image (how the firms believe that the district is perceived by others). Theother two antecedents refer to the perceived similarity and perceived complemen-tarity with the other district’s members. The study identifies and tests also someconsequences of the identification with the district on firms’ behavior which impacton district’s competitiveness, such as trust, cooperative attitude, firm’s attachmentto the district, solidarity towards district members, and discriminatory behaviortowards non-district firms. The first implication that emerges from the study isthat the existence of the district is explicitly recognized by the firms in the sampleand that, for some of them, the belonging to the district is an important elementof their organizational identity. Moreover, the evidence shows that for the firmsin the sample the identification with the district is not an on/off condition but amatter of degree and that the level of identification influences the firms’ behaviortowards the other district’s members. Future researches will extend the empiricalapplication of the proposed model to other industrial districts, in order to increasethe generalizability of results and theoretical implications.

A fruitful line of future research would also address the following questions:which is the relationship between district identity and district life cycle? What isthe role of institutions in the process of identity construction? Can local institutionsbe catalysts of identification processes? How do identification processes of singlefirms vary depending on their centrality degree and/or on other network’s structuralfeatures?

Acknowledgements

The authors thank Anna Grandori, Massimo Warglien and two anonymousreviewers for their insightful suggestions on drafts of this work.

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Identity and Identification in Industrial Districts

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