SOCIAL CAPITAL, LOCAL INSTITUTIONS, AND COOPERATION BETWEEN FIRMS (A. Arrighetti & M. Raimondi)

1. Cooperation and competitions among firms 2012/2013 Alessandro Arrighetti SOCIAL CAPITAL, LOCAL INSTITUTIONS, AND COOPERATION BETWEENFIRMS(A. Arrighetti & M. Raimondi) FATIMA ZOUGAR MARIATERESA PINARDI LUCA PEGORARI

2. COOPERATIVE PRACTICES AMONG FIRMS DEPEND ON: ENDOGENOUS FACTORS EXOGENOUS FACTORS EXPECTED BENEFITS OF POSITIVE RESOURCES GENERATED BY THE PARTIES VARIABLES OUTSIDE THE COOPERATIVE GAME

3. THE ARTICLE FOCUSES ON:

4. THE ROLE OF TECHNOLOGICAL VARIABLE Technological externalities play a role of paramount importance in start-up and interruption of cooperation between firms. The more rivalry between firms is based on innovation, the more results of competition are affected by the extent to which research and innovation can be appropriated (Arrow 1962). Key role of TACIT KNOWLEDGE “The main reason why firms engage in collaborative ventures is the desire to combine their own specific assets and core competencies with others which are possessed by other firms and cannot be reproduced autonomously” Colombo 1998

5. THE SOCIAL CAPITAL IN RELATIONSHIPSBETWEEN INDIVIDUALS Social capital is based on civic engagement and is expression of adherence to the norms of community life, such as participation in elections, the respect of public goods, maintenance of traditions and community identity. For individuals, social capital is defined or measured in terms of social integration or generic sharing of civic values such as “participation in the local community, proaction in social context, feelings of trust and safety, neighborhood connections, connections with family and friends, tolerance of diversity, value of life and work connections”,but its analytical usefulness in interpreting collective action is limited.

6. SOCIAL CAPITAL IN RELATIONSHIPS BETWEEN FIRMS Social capital is conceptually more useful when defined as an individual resource which can “secure benefits by virtue of membership in social network or other social structures” (Portes 1998) According to this definition it's not important the number of relations but the intensity and quality of social relationships that are established among individuals.

7. SOCIAL CAPITAL IN RELATIONSHIPS BETWEEN FIRMS The more the firm is identified with the individual, the greater is the importance of social capital. In a small or very small company, entrepreneur behaviours can be affected by incentives (information and social relationships) and by sanctions (exclusion and loss of relational goods) regulating life in the community. Collective action between small firms is encouraged by the presence of social capital. It is however predictable that the variable will become decreasingly important as company size grows.

8. THE ROLE OF INSTITUTIONAL VARIABLE Local (but also central) government institutions have a fundamental role in promoting both directly and indirectly supporting cooperation. Institutions can act to lower coordination costs by directly taking part in the project or by promoting start up. But they have an equally important role in defining “external” incentives. They can provide monetary benefits for the creation of cooperation structures. They can allow access to resources as long as applicants are a group or cluster of companies, rather than a single company.

9. EMPIRICAL VERIFICATION Through the method of linear regression were estimated a series of equations that relate the propensity of firms to join in the various Italian provinces with proxies representing the various hypothesis. The analysis pointed out that the technological hypothesis only partially explains the behavior of larger firms. In general and particularly in relation to smaller businesses the spread of cooperative conduct is consistent with a model based on variables of social capital and especially of proxies institutional activism and accumulation of experiences of economic associations.

10. INDUSTRIAL DISTRICTSEXAMPLE OF SOCIAL COHESION AMONG FIRMS THAT IS TYPICAL IN ITALY The term industrial district refers to a socio-economic entity constituted by a group of enterprises, usually forming part of the same productive sector, located in a circumscribed area and between which there is cooperation but also competition. Enterprises establish and develop cooperative and collaborative relationships generally for different reasons: to protect products against counterfeiting, to reduce costs , to enhance and uphold professionalism that would otherwise be missed ,collaboration does not prevent individual companies to maintain their own identity and autonomy. The distinctive feature of the industrial district regards the ability to generate the so-called external economies (condition of efficiency).

11. INDUSTRIAL DISTRICTS Problem: competition would transform into a price war, or cooperation would transform in collusive agreements or restrictive and protectionist practices. Districts respond to globalization with a policy of relocation aimed to counter or otherwise reduce the gap in terms of cost which penalizes Italian companies. The chances of recovery and revitalization of local development in the face of discontinuity of the external environment depends more on the ability to imagine the direction of the institutional and political leaders, in the economic sphere.

12. THE CERAMIC DISTRICT OF SASSUOLO

13. DIFFERENT PERSPECTIVES OF INDUSTRIAL DISTRICTS The economic perspective, which looks at districts as a special form of industrial organization, alternative of the large integrated firm model The business perspective, more directly linked to the strategic and organizational roles of district firms; The socio-cultural perspective, focus on the social structure that is down the structure of production and the role of social capital as a fundamental element of the district; The cognitive perspective, which emphasizes the learning dynamics and the different mechanisms of creation and transfer of knowledge in the district.

14. FOCUS ON THE SOCIO-CULTURAL PERSPECTIVE Industrial districts are characterized by a strong historical and socio-cultural identity, which is the glue between business, social actors and the territory. “Industrial district is a socio-territorial entity characterized by the active coexistence, in a territory circumscribed area, naturalistically and historically determined, of a community of people and a population of industrial enterprises” (Beccatini G. ”Industrial discrict and Cluster” 1998)

15. OTHER ELEMENTS FROM ECONOMIC It is not only the existence of a strong agglomeration of firms to be the constitutive element of the district. In our paper we have shown that the economic dimension does not expresses the peculiar nature of the industrial district. Besides the economic element in the strict sense, there is, in fact, a social, historical and cultural element, that refers to a community of people, values​​, culture, and accumulated knowledge locally.

16. TWO DIMENSION RELATED Economic aspects, such as flexible specialization and division of labor between firms, are strongly intertwined with the strong social and cultural integration within the community of businesses and people who live in the district. The two dimensions are closely related.

17. «FIDUCIARY NETWORK» The district is not only a population of firms, but a social environment, a community of people who share culture, history, language and knowledge, values ​​and rules of behavior that determine trust and social cohesion. In this context, the industrial district represents a “fiduciary network”, which is fed through the social capital formed in a given territory.

18. OTHER ACTORS Play a key role in forming the peculiar atmosphere of the industrial district not only businesses but also local institutions such as centers of training and services for businesses, universities, local government, development agencies, banks and all institutions that are expression of associationism. In different ways, depending on the context, these actors have contributed to the emergence of the district and to strengthen its identity.

19. CONCLUSION In our work we have analyzed how social capital is closely linked to the affirmation of cooperation between companies, highlighting that there is not only an economic perspective but also a socio-cultural one to explain the causes and consequences that lead a union of different societies. Thanks also to the analysis of industrial districts we have been able to explain what relationship there is between them and the social capital and how this correlation allows the cooperation not only between companies but also within the company itself.

20. THANK FOR YOUR ATTENTION